1、Data Challenges and Opportunities for ESG and Sustainable Finance in Asia Pacific December 2020 REPORT PARTNERS ASIFMA is an independent, regional trade association with over 140 member firms comprising a diverse range of leading financial institutions from both the buy and sell side including banks

2、, asset managers, law firms and market infrastructure service providers. Together, we harness the shared interests of the financial industry to promote the development of liquid, deep and broad capital markets in Asia. ASIFMA advocates stable, innovative and competitive Asian capital markets that ar

3、e necessary to support the regions economic growth. We drive consensus, advocate solutions and effect change around key issues through the collective strength and clarity of one industry voice. Our many initiatives include consultations with regulators and exchanges, development of uniform industry

4、standards, advocacy for enhanced markets through policy papers, and lowering the cost of doing business in the region. Through the GFMA alliance with SIFMA in the US and AFME in Europe, ASIFMA also provides insights on global best practices and standards to benefit the region. www.asifma.org There i

5、s now global acknowledgement that the climate crisis is a real and immediate threat, climate concerns as well as broader environmental and social considerations need to start moving into mainstream risk assessment and opportunity analysis. Capital markets are not understanding and integrating materi

6、al sustainability considerations into their investment decisions, often resulting in capital being allocated to inefficient and even environmentally or socially damaging projects and assets. FoSDA has been formed to address this urgent situation from a data perspective and foster collaboration in th

7、e ecosystem. https:/ Disclaimer The information and opinion commentary in this Paper by the Asia Securities Industry and Financial Markets Association (ASIFMA) in to reflect the views of ASIFMA members as well as discussions and events organised as part of its partnership with the FOSDA alliance. Th

8、e authors believe that the information in the Paper, which has been obtained from multiple sources believed to be reliable, is reliable as of the date of publication. As estimates and commentary by individual sources may differ from one another, estimates and commentary for similar types of discussi

9、ons could vary within the Paper. In no event, however, do the authors make any representation as to the accuracy or completeness of such information. The authors have no obligation to update, modify or amend the information in this Paper or to otherwise notify readers if any information in the Paper

10、 becomes outdated or inaccurate. The authors will make every effort to include updated information as it becomes available and in subsequent Papers. Page 3 Contents Executive Summary . 4 1. Introduction . 6 Future of Sustainable Data Alliance . 6 ASIFMA Virtual Events on ESG Data Challenges in Asia

11、. 6 Definition . 7 2. Sustainable Finance in Asia . 8 Financing Gap . 10 International Cooperation . 11 IOSCO . 12 FSB . 13 Regulation and Policymaking . 13 3. Data, ESG and Sustainable Finance . 15 Data Practices Today . 15 Measuring E, S and G . 15 Data Sources and Analysis . 15 Data Challenges .

12、16 Lack of Standardisation and Comparability . 16 Data Availability . 18 Reliability of Third Parties . 19 Forward- vs Backward-looking Perspectives . 19 Accessibility and Interpretability . 20 Interoperability with Financial Risk Assessment . 20 4. Digitalisation therefore ESG monitoring is becomin

13、g increasingly critical to management of financial risk also. Sustainable Finance in Asia ESG investing in East Asia trails other regions globally with just 5% of AUM invested in sustainable projects, compared to 30% in North America; however, this is changing as institutions such as Japans Governme

14、nt Pension Investment Fund and MUFG Bank adopted wide-scale ESG criteria, and markets like China, Hong Kong and Singapore look to scale green and sustainable finance markets. The largest regional climate finance investment needed is in Asia, estimated at USD $66 Trillion over three decades, which is

15、 over half the investment required globally to achieve a scenario of limiting temperature rise to 1.5 Celsius. This is driven by the scale and pace of growth of Asias economies, growing population, increasing urbanisation, and rapid industrialisation in the region. Data, ESG and Sustainable Finance

16、Yet future growth of ESG investment in Asia is inextricably linked to data its availability, accessibility, reliability and comparability. When asked to nominate the greatest data challenge in ESG and sustainable finance, 56% of respondents reported inconsistent data. Significantly, there is no stan

17、dardisation to measurement of E, S, and G factors. Additionally, individual ESG metrics vary not only between industries and markets, but also between companies in the same industry, with the quality of company disclosures differing widely. Data Challenges Firms and investors are navigating a confus

18、ing landscape of disclosure frameworks, incentive structures, data collection methods, and external assessments developed and implemented in various markets and jurisdictions by both the public and private sectors. Variation is evident not only between markets, but also within markets. There is also

19、 no single binding global taxonomy, and the industry wants to see greater harmonisation yet a principles-based approach that allows for tailoring the each regions specific conditions, such as relative levels of economic development. Even when data is available, 35% of respondents cite poor quality d

20、ata as the greatest challenge. There are quality third party providers, however reliance on a single data source can resulting in volatile indicators over time. Another concern lies in compatibility between the vendors methodology and metrics, including in relation to what the investor is trying to

21、monitor. Digitalisation 2. Promote new technology capabilities and data by highlighting the key role that new technology and data sets must play in the transition to sustainable development; and 3. Address UN Sustainable Development Goals (“SDGs”) related data needs and how to satisfy them for inves

22、tors wanting to take greater account of SDG-related risks and impacts. ASIFMA Virtual Events on ESG Data Challenges in Asia As part of its workstream on ESG data challenges, ASIFMA, in collaboration with FOSDA, organised two virtual panel discussions Navigating ESG and Sustainable Finance in Asia 1

23、and ESG and Sustainable Finance in Asia: the Fintech and Data Challenge 2 on 14 July and 28 October 2020, respectively. The two events were attended by around 500 stakeholders, including market participants from the buy and sell sides, specialists, consultants in the ESG and sustainable finance fiel

24、d, policymakers and regulators. In addition to audience participants, ASIFMA is grateful to the following speakers and panellists who took part in the two virtual discussions (listed in alphabetic order by organisation name): - Ramesh Subramaniam Director General of the Southeast Asia Regional Depar

25、tment, Asian Development Bank; - Matthew Chan Head of Public Policy and Regulatory Affairs, ASIFMA; - Amar Gill Managing Director and Head of Investment Stewardship, APAC, BlackRock; - Gabriel Wilson-Otto Global Head of Sustainability Research, BNP Paribas Asset Management; - Elree Winnett Seelig He

26、ad of ESG, Markets - Kamran Khan Head of ESG for Asia Pacific, Deutsche Bank; - Jason Wincuinas Senior Editor, Thought Leadership Asia, Economist Intelligence Unit; - Eugene Goyne EY Asia-Pacific Financial Services Regulatory Lead, EY; - Helene Li General Manager / Founder, Fintech Association of Ho

27、ng Kong / Golmpact; - Helena Fung Head of Sustainable Investment Asia-Pacific, FTSE Russell; - Grace Hui Head of Green and Sustainable Finance, Markets Division, Hong Kong Exchanges and Clearing Limited; - Paul Andrews Secretary General, IOSCO; 1 Video recording may be accessed here: https:/youtu.be

28、/E-SiPlJc8CM 2 Video recording may be accessed here: https:/ - Satoshi Ikeda Chief Sustainable Finance Officer, Japan Financial Services Agency; and - Julia Walker member of the Cambridge Institute of Sustainable Leadership, advisor at the Asian Institute of International Financial Law, and member o

29、f the United Nations Task Force of Digital Financing of the Sustainable Development Goals Whilst it does not purport to represent the views of these individuals, this paper draws from discussion during the two events, plus research referenced during the sessions. We are grateful for the insights and

30、 thought leadership provided by the various participants. Definition For the purposes of this report, we define sustainable finance broadly to include climate, green and social finance; consideration of longer-term economic sustainability of organisations being funded; as well as the role and stabil

31、ity of the overall financial system. As such, this broader definition also includes ESG investment, and is in line with definitions used by IOSCO3, GFMA4 and ICMA5. 3 IOSCO. Sustainable finance in emerging markets and the role of securities regulators. (2019) https:/www.iosco.org/library/pubdocs/pdf

32、/IOSCOPD630.pdf 4 GFMA and BCG. Climate Finance Markets and The Real Economy. (2020) https:/www.sifma.org/wp-content/uploads/2020/12/Climate-Finance-Markets-and-the-Real-Economy.pdf 5 ICMA. Sustainable Finance High-level definitions. (2020) https:/www.icmagroup.org/assets/documents/Regulatory/Green-

33、Bonds/Sustainable-Finance-High-Level- Definitions-May-v4.pdf Page 8 2. Sustainable Finance in Asia The Covid-19 pandemic highlights the importance of ESG and sustainable finance, with high-ESG product investment flows up 40% globally in Q1 2020 as ESG continues to become mainstream.6 At t

34、he same time, climate risks are rising in Asia, with Bangladesh, China, Indonesia, Japan, India and Vietnam all particularly exposed to rising sea levels and with potential exposure to higher credit risk.7 According to some commentators, negative environmental and social impacts are starting to beco

35、me evident in some sectors, and therefore ESG monitoring is becoming increasingly critical to management of financial risk itself.8 In parallel, ESG and sustainability-related investment has become increasingly important in Asia, with EIU research, based on a 2019 survey of senior and C-suite drawn

36、from sovereign and pension funds, investment banks and insurance funds across Asia, noting 95% of respondents now believe ESG investing is important to their firm, with 92% saying it will become even more important in coming years and 80% saying ESG has a positive impact on returns, in sharp contras

37、t to sentiment as little as a decade earlier9. In addition, policymakers and exchanges increasingly see sustainable finance as a growth business. The 2020 EIU report notes that regional distribution is uneven globally, with East Asia trailing other markets at just 5% of AUM invested in sustainable p

38、rojects compared to 30% in North America; however, the same report notes that this is changing as institutions such as Japans Government Pension Investment Fund (“GPIF”) and MUFG Bank adopted wide-scale ESG criteria encourage the overall trend of ESG integration into the investment process. Though n

39、on-exhaustive, key developments in Asia include: Japan is taking a leadership position in Asia, with FSA (which is part of both the Network for the Greening of the Financial System and IOSCOs Taskforce Sustainable Finance), playing a key role in promoting sustainable finance and ESG. - Policy-wise,

40、Japan has taken a principles approach, which has helped accelerate scaling of the market and is reflected in the FSAs 2020 revision of its Stewardship Code for corporate governance.10 - Through the code and other measures, the FSA is encouraging institutional investors to focus on ESG and corporates

41、 to enhance disclosure standards. - The FSA has also been fostering dialogue between institutional investors and corporates on implementing FSB Task Force on Climate-related Financial Disclosures (TCFD) standards for consistent climate-related financial risk disclosures, including data challenges an

42、d the enablement of greater granularity in what is measured. In Hong Kong, as part of its commitment to sustainability, HKEX has launched its Sustainable and Green Exchange (STAGE), an online portal to provide information transparency on sustainable, green and social investment products. 6 ASIFMA/FO

43、SDA. Virtual Event: Navigating ESG and Sustainable Finance in Asia. (2020) https:/youtu.be/E-SiPlJc8CM 7 EIU. Sustainable and actionable: An ESG study of climate and social challenges for Asia. (2020) https:/ 8 ASIFMA/FOSDA. Virtual Event: Navigating ESG and Sustainable Finance in Asia. (2020) https

44、:/youtu.be/E-SiPlJc8CM 7 EIU. Green Intelligence: Asias ESG investing, data Integrity and technology. (2019) https:/ 10 FSA. Finalization of Japans Stewardship Code (Second revised version). (2020) https:/www.fsa.go.jp/en/refer/councils/stewardship/20200324.html Page 9 - This is intended to encourag

45、e dialogue between issuers, asset managers, investors and professional advisers on sustainable and green finance. - STAGE will promote transparency and accessibility across all product types and asset class, and is believed to be one of the first of its kind in Asia.11 - In addition, a cross-agency

46、steering group as been set up by government agencies to grow and scale Hong Kong as a green and sustainable finance centre. In Singapore, MAS is also working on a comprehensive, long-term strategy to make sustainable finance a defining feature of Singapores role as an international financial centre,

47、 alongside wealth management and FinTech.12 - SGX is investing SGD 20 million in a multi-pronged expansion of its sustainability capabilities and initiatives. - Half of this will go towards new ESG-focused products, services and platforms, while the other half will be channelled into capacity buildi

48、ng for the financial ecosystem, strengthening internal capabilities and increasing CSR commitments. - All sustainability initiatives will be housed under a newly launched multi-partner, multi-asset sustainability platform, SGX FIRST. In China, ESG is increasingly a focus for investors and asset owne

49、rs.13 From a policy perspective, the PBOC consulted the market on updating its 2020 Green Bond Endorsed Project Catalogue recently, with the proposed changes bringing it more in line with other international taxonomies in relation to fossil fuels.14 - This is part of Chinas efforts to further promot

50、e green finance, starting with top- down policy with cross agency efforts being led by the PBOC. - Other initiatives include standardising green credit guidelines, and green trust fund and insurance standards, whilst encouraging innovation, and green pilots spanning policy and other measures to fost