MANILA, Philippines — Association of Southeast Asian Nations (Asean) banks need to shore up regulatory safeguards to address environmental and climate crisis, but World Wide Fund For Nature (WWF) Singapore said.
According to WWF’s Sustainable Banking Regulations in Asean report, 62 percent of 29 banks in Indonesia, Malaysia, Singapore, Thailand, and Vietnam recognize climate-related risks and 48 percent recognize risks associated with environmental degradation.
“As found in WWF’s review, regulators and banking associations are coming together, raising the standards and creating a level playing field for sustainable banking,” Association of Banks in Singapore (ABS) Director Ong-Ang Ai Boon said, as quoted in WWF’s statement Tuesday.
While the report shows progress, WWF’s Head of Asia Sustainable Finance Jeanne Stampe called on Asean banks to be more “proactive” in addressing environmental issues.
“Over the past 18 months, financial regulators across Asean have made it clear that addressing the climate and environmental crisis should be a priority for the financial sector,” Stampe said, as quoted in the same statement.
“While this positive momentum is heartening, Asean banks should be more proactive and not wait for regulations to address the mounting risks in their portfolios and capture the business opportunities brought about by the transition to a more resilient and sustainable economy,” she added.
In Malaysia, Singapore, Thailand and Vietnam, WWF found out financial regulators and banking associations expect banks to develop environmental policies on environmentally or socially sensitive sectors.
But WWF said 43 percent of the banks assessed in these four countries mention having such policies in place, while only 15 percent disclose these policies.
WWF said most Asean banks “lack the strategic understanding” of the environmental and social (E&S) risks associated with their business activities.
In light of this, WWF recommended regulators “to provide more prescriptive guidance to enhance resilience and attractiveness of the finance industry.”