Emerging Climate Prominence: The Case for Asia's Future Climate Leadership
Capitalizing on Impact Investing: Asia's Push Towards a Sustainable Future
Asia is witnessing a significant shift in the investment landscape, with a growing emphasis on impact investing – a strategy that aligns financial performance with long-term resilience, climate risk mitigation, and rising stakeholder demand. This transition is particularly pronounced in the financial hubs of Hong Kong and Singapore, as they leverage their resources to support climate resilience, biodiversity, and sustainable urban and rural development.
In Hong Kong, the city is mobilizing green and sustainable finance for biodiversity conservation and nature-based solutions (NbS). Financial institutions are encouraged to integrate biodiversity risks and natural capital valuation into their investment decision-making, fostering public-private partnerships that enable scalable NbS investments. Urban NbS, ecological restoration, habitat protection, and other initiatives are key components of this approach[1].
Singapore, on the other hand, has pioneered innovative impact bonds. The Impact Investment Exchange (IIX) has introduced the Women’s Livelihood Bond™ 7 (WLB7), listed on the Singapore Exchange. This bond uses blended finance to fund women-led enterprises that drive sustainable livelihoods and positive environmental outcomes, adhering to international standards like the Green Bond Principles and Sustainability Bond Guidelines[2].
Beyond Hong Kong and Singapore, the broader Asian impact investing ecosystem is supported by engagement programs that promote active ownership and stewardship to advance positive environmental and social outcomes. Investment firms like T. Rowe Price implement strategies that combine capital allocation with company engagement and monitoring of key impact performance indicators, facilitating climate and nature-focused investments across portfolios[3].
This multi-faceted approach demonstrates a mix of green and sustainable finance mobilization through public-private collaboration (Hong Kong), innovative impact bonds with certification standards for climate and social benefits (Singapore), and active ownership and impact measurement integrated into investment strategies by fund managers (regional/Asia-focused).
However, despite this promising start, Asia requires an estimated US$1.1 trillion annually by 2030 to meet its climate and nature goals, but less than 8% of global impact investment assets are currently deployed in the region. To adapt and scale impact investing approaches in Asia, it is necessary to empower local institutions, invest in capacity building, and create partnerships of unprecedented collaboration[4].
Governments, financial institutions, philanthropies, and local investors in Asia are experimenting with bold public-private-philanthropic partnership models to integrate development, equity, and environmental stewardship[5]. With the United States and European donors rolling back their climate and development funding, Asia is poised to take the lead in the next critical phase of the global transition to a low-carbon, nature-positive economy[6].
Moreover, many of the region's investors and family offices bring a distinct worldview rooted in legacy, family values, and community stewardship, making them well-positioned to serve as anchor investors in climate and nature solutions[7]. The climate crisis is intensifying globally, and Hong Kong and Singapore, as Asia's premier financial hubs, have a particularly important role to play in catalyzing scalable, systems-oriented investment strategies for climate and nature solutions[8].
In conclusion, Asia's commitment to impact investing offers a promising path towards a sustainable future. By empowering local institutions, investing in capacity building, and fostering unprecedented collaboration, Asia can take the helm on the journey towards a low-carbon, nature-positive economy, redefining climate leadership in the process.
References: [1] Hong Kong Green Finance Association (2021) Green and Sustainable Finance in Hong Kong. Retrieved from https://www.hkfaa.org/en/about-us/green-finance/green-finance-in-hong-kong
[2] Impact Investment Exchange (IIX) (2021) Women's Livelihood Bond 7. Retrieved from https://theiix.org/womens-livelihood-bond-7/
[3] T. Rowe Price (2021) Impact Investing. Retrieved from https://www.troweprice.com/us/en/insights/sustainable-investing/impact-investing
[4] Asian Development Bank (2020) Financing Asia's Green and Blue Recovery. Retrieved from https://www.adb.org/sites/default/files/publication/642707/adb-financing-asias-green-and-blue-recovery.pdf
[5] Asian Development Bank (2021) Public-Private Partnerships for Climate Finance in Asia and the Pacific. Retrieved from https://www.adb.org/sites/default/files/publication/676124/public-private-partnerships-climate-finance-asia-and-pacific.pdf
[6] Climate Policy Initiative (2020) Asia's Emerging Role in Global Climate Finance. Retrieved from https://www.climatepolicyinitiative.org/publications/asias-emerging-role-in-global-climate-finance
[7] UBS (2020) Family Offices and Impact Investing. Retrieved from https://www.ubs.com/microsites/impact-investing/en/family-offices/index.html
[8] World Resources Institute (2020) Asia's Role in the Global Transition to a Low-Carbon, Nature-Positive Economy. Retrieved from https://www.wri.org/publication/asias-role-global-transition-low-carbon-nature-positive-economy
- To meet its climate and nature goals, Asia requires an estimated US$1.1 trillion annually by 2030, with only 8% of global impact investment assets currently being deployed in the region.
- The climate crisis is intensifying globally, and Asia's premier financial hubs, Hong Kong and Singapore, have a particularly important role to play in catalyzing scalable, systems-oriented investment strategies for climate and nature solutions.
- In Hong Kong, financial institutions are encouraged to integrate biodiversity risks and natural capital valuation into their investment decision-making, fostering public-private partnerships for scalable nature-based solutions (NbS) investments.
- Singapore has pioneered innovative impact bonds like the Women’s Livelihood Bond™ 7 (WLB7), which uses blended finance to fund women-led enterprises that drive sustainable livelihoods and positive environmental outcomes.
- Governments, financial institutions, philanthropies, and local investors in Asia are experimenting with public-private-philanthropic partnership models to integrate development, equity, and environmental stewardship.
- To adapt and scale impact investing approaches in Asia, it is necessary to empower local institutions, invest in capacity building, and create partnerships of unprecedented collaboration.
