Sustainable finance to reach net zero – Inforial

Reducing carbon emissions and achieving net zero requires the active participation of multiple stakeholders, including the private sector, in implementing sustainable business practices.

Gradually, a growing number of companies have realized the importance of aligning their operations with environmental, social and governance (ESG) standards – especially as the government aims to achieve net zero emissions by 2050.

The growing awareness of both the private sector and policy makers is welcome, although the pivot towards sustainable development requires a supporting ecosystem, particularly in the areas of technology and finance.

Role of the financial sector

To help achieve zero emissions by 2050, the financial industry has made significant strides in adjusting its funding framework, policy and strategy to enable rapid transformation over the coming decades.

Research by the Boston Consulting Group and the Global Financial Markets Association has shown that meeting global carbon emissions targets will require up to $150 trillion over the next three decades. In Asia, the funding gap is estimated at $66 trillion.

Dr.Celine Herweijer, Group Chief Sustainability Officer HSBC, highlighted the importance of the Asian region in achieving net zero globally. One of the concrete actions taken by HSBC is the phasing out of thermal coal funding in the European Union by 2030 and in the rest of the world by 2040.

Recognizing the need for immediate change, HSBC and other global banks created the Net-Zero Banking Alliance to unify the banking industry framework and align their members’ investment and lending portfolios to support the transition down carbon.

Established in April 2021, the alliance currently has 115 banks from 41 countries, with $70 trillion in combined assets, or around 38% of global banking assets.

“Radical” collaboration

“There is a lot to be done that will require radical collaboration – between banks and their customers, their investors and, above all, with regulators and scientific bodies. But business-as-usual has changed: the financial world understands now that it must be at the heart of the transition to net zero,” said Dr Herweijer.

In Southeast Asia, HSBC has partnered with Temasek and the Asian Development Bank (ADB) to provide up to $1 billion in loans for sustainable infrastructure such as renewable energy and storage, water and waste treatment and sustainable transportation.

HSBC has also partnered with the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF) as part of the Climate Solutions Partnership, a $100 million partnership initiated by the HSBC Group to help overcome barriers to climate change. sustainable funding.

Currently, sustainable projects face barriers related to insufficient policy and regulatory frameworks, gaps between supply and demand, and a lack of measurement tools and mature business cases. .

Overcoming these barriers can only be achieved through collaboration between business, the banking industry, policy makers and non-governmental organizations.

At HSBC, we have an established framework and professionals to help customers access sustainable finance and find the best solution to facilitate each of their specific projects.

In Indonesia, HSBC is ready to partner with companies on their journey to become sustainable companies that align with ESG principles.

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