Association of Southeast Asian Nations

Our work with banks

“Banks are key enablers for ASEAN countries to achieve both their Sustainable Development Goals and commitments under the Paris Agreement.”

Anna Batenkova
Head, WWF Sustainable Banking Asia

Why banks?

Banks play a key role in facilitating growth by providing loans for new investment, but also enable day-to-day business operation through provision of working capital loans. Through our work, we strive to support regional banks in linking the cost-of and conditions-to-access capital for their clients so that financial flows are redirected to business models that best protect critical ecosystems services, support livelihoods and communities, and drive the transition to resilient and sustainable economies.

Risks & Opportunities

  • Increasing risks to business

    caused by environmental issues

    The environmental impacts or long-term sustainability of investment decisions have not, until recently, been widely considered by the world of finance. That has to change.

    Environmental issues pose real risks to business. That could be water shortages undermining a client’s business plan, dwindling supplies of natural resources hiking up prices, or extreme weather linked to climate change leading to economic losses and insurance pay-outs.

    Equally, as governments tighten environmental rules and consumers expect higher standards, finance institutions that don’t adapt will be left exposed. Being linked to deforestation can damage a company’s reputation, leading to losses for shareholders. Investments in fossil fuels could plummet in value if governments keep to their climate commitments.

  • Loss of nature

    and the decline of ecosystem services

    The World Economic Forum highlighted in their 2018 & 2019 global risk reports that environmental risks have grown in prominence in recent years. With all five risks in the environmental category being ranked higher than average for both likelihood and impact. Furthermore, the recent Global Assessment released by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) supplied clear indicators of the loss of nature and the decline of ecosystem services—valued in the hundreds of trillions of dollars—which provide the basic building blocks of the global economy, from water to energy, and food to carbon sequestration.

  • US$23 trillion investment opportunities

    By 2030

    The transition to a sustainable future offers a range of opportunities. The Paris Climate Agreement could open up opportunities worth nearly US$23 trillion by 2030 in sectors like renewable energy, energy efficiency and low-carbon technology. Achieving the UN Sustainable Development Goals is estimated to create at least US$12 trillion in market opportunities, ranging from reducing food waste to transforming urban public transport systems. The UN estimates that US$ 2.5 trillion more investment is needed per annum in order to meet the commitments of the 2030 Sustainable Development Goals.
    Encouragingly, many investors and finance institutions are beginning to recognize the benefits of making investment decisions that help to tackle the loss of nature. Some banks are already pushing their clients to adopt stronger sustainability standards, a growing number of investment funds are pulling out of fossil fuels, and there’s increasing interest in investments that deliver environmental and social returns alongside financial ones.

  • Environmental and social returns

    alongside financial ones

    Encouragingly, many investors and finance institutions are beginning to recognize the benefits of making investment decisions that help to tackle the loss of nature. Some banks are already pushing their clients to adopt stronger sustainability standards, a growing number of investment funds are pulling out of fossil fuels, and there’s increasing interest in investments that deliver environmental and social returns alongside financial ones.

  • Risks to business
  • Loss of nature
  • Investment opportunities
  • Positive impact

Supporting ESG Integration

We collaborate with banks, investors, regulators and stock exchanges to integrate ESG into mainstream finance and create a resilient financial system that supports the global sustainable development agenda. Work with us to harness the finance sector’s collective power to create resilient and sustainable economies.

Banks have a crucial role to play in financing sustainable development. In order to unfold their full potential, capture opportunities and reduces their negative E&S impact, banks set policies to guide the integration of E&S principles into internal processes and their engagement with clients.

First Step

The first step is for banks to develop an overarching sustainability strategy and recognize their role in contributing to a more sustainable economy.

Banks should then develop specific policies to guide the integration of ESG considerations into internal processes and engagement with clients.

For this to be effective, people need to be trained and have clear roles and responsibilities, with senior-level oversight and accountability. Beyond E&S risk management, banks’ should capitalize on opportunities to develop innovative products and services that support their clients in improving sustainability performance.

In order to manage enterprise-level risks and opportunities and ensure that a bank’s business model is aligned with international sustainable development objectives, it is crucial that ESG risks and opportunities are assessed at the portfolio level.

Below you can find more in depth information on our banking assessment. Also accessible at: SUSBA.org

The six pillars for integrating ESG in banks

01
Purpose
01
Purpose

Sustainability strategy and stakeholder engagement. Participation in sustainable finance initiatives and policy advocacy with regulators.

02
Processes
02
Processes

Assessing ESG risks in client and transaction approvals. Client monitoring and engagement.

03
Policies
03
Policies

Public statements on specific ESG issues. Public statements on specific sectors.

04
People
04
People

Responsibilities for ESG. Staff E&S training and performance evaluation.

05
Products
05
Products

ESG integration in products and services.

06
Portfolio
06
Portfolio

ESG risk assessment and mitigation at portfolio level. Disclosure of ESG risk exposure and targets.

Tools & Initiatives

We collaborate with banks, investors, regulators and stock exchanges to integrate ESG into mainstream finance and create a resilient financial system that supports the global sustainable development agenda. WWF as well as other organizations have developed a wide set of tools that support financial institutions and businesses to evaluate their and their clients performance related to sustainability, risk and natural resource use.

SUSBA

The Sustainable Banking Assessment (SUSBA) is an interactive tool developed by WWF in collaboration with the Centre for Governance, Institutions & Organisations (CGIO) at the National University of Singapore (NUS). The tool assesses banks’ performances on corporate governance (CG) and environment, social and governance (ESG) integration.

Water Risk Filter

The Water Risk Filter empowers users to explore, assess, and respond to water risks. You can explore state-of-the-art water risk maps and reports, assess sites & portofolios using annually-updated data layers along with a site-based operational risk questionnaire, respond with tailored response actions dynamically linked your risk assessment results.

Global Forest Watch Pro

Global Forest Watch Pro is an online tool that helps to manage and monitor changes in deforestation risk based on geospatial data. GFW Pro delivers critical decision-making analysis at the property, supply shed and portfolio levels, offering to visualize deforestation, land-use, land cover and conservation areas and the location of investments in the commodity supply chain.

Script

SCRIPT (Soft Commodity Risk Platform) is a freely-available system to help financial institutions understand and mitigate the risks associated with financing companies in soft commodity supply chains. The platform provides tools and guidance for financial institutions to establish a robust sustainable financing policy and screen their portfolios.

Encore

The ENCORE tool was developed to help users understand and visualize the impact of environmental change on the economy. Specifically, it connects the goods and services that nature provides with the idea of business risk if environmental degradation disrupts such dependencies.

Further Tools

Sight: overlays concessions and ecosystems.
3FP-Tracker: screens regulations in Europe.
Cross Check: traces palm oil supply chains.
Pacta: helps FIs to align their portfolio with the Paris Agreement.
PRI’s Academic ESG-Review: provides an overview of academic research on ESG topics