The GFANZ Asia Pacific Advisory Board convened on November 16, 2022 for its first meeting in Singapore where it endorsed the GFANZ Asia Network strategy and workplan for 2023 and beyond. The Board’s four strategic priorities for 2023 and beyond include: (a) engagement and recruitment of regional financial institutions; (b) driving the regional dissemination and contextualization of GFANZ research (c) engaging relevant public sector agencies; and (d) supporting capital mobilization to emerging markets and developing economies (EM&DEs).
The Asia Pacific Network also launched its first engagement initiative later that day – the GFANZ Asia Pacific CEO Roundtable. The Roundtable convened 40 senior executives from key regional financial institutions to discuss net-zero ambition setting. This is the first of three knowledge-sharing activities that seeks to narrow the net-zero knowledge gap and raise the net-zero ambition amongst regional C-suite executives.
The Net-Zero Landscape in the Asia Pacific
Decarbonizing the Asia Pacific is key to the global net-zero agenda. Today, the Asia Pacific accounts for ~50% of global emissions and emissions are highly concentrated in a handful of sectors and geographies.
Sectorally, electricity/heat generation and industry/buildings collectively account for ~70% of regional emissions. Geographically, just four countries – China, India, Japan and Indonesia –drive ~80% of regional emissions.
There is good momentum toward net-zero, although challenges remain. The largest emitters (China, India and Indonesia) are committed to net-zero beyond 2050. Nonetheless, emissions growth outside of Australia and Indonesia is slowing across the region with Japan and S. Korea seeing negative emissions growth since 2014, and China and India drastically curtailing emissions growth from 5% (2009-2014) to 1-2% (2014-2019). GFANZ Asia Pacific Network feels the time is right to unite the financial sector across developed and emerging economies in the region to accelerate an inclusive and just transition to a net-zero economy.
Overall net-zero commitment amongst financial institutions is low outside of developed economies, but most have some awareness of climate risks & opportunities. Amongst the largest financial institutions in the Asia Pacific, only about a third (by both number of firms and assets) are committed to net-zero – most of whom are headquartered out from Japan, Australia, Korea and Singapore. Nonetheless, amongst those not yet net-zero aligned, most have a baseline understanding of climate risks and opportunities (e.g. TCFD aligned, Principles for Responsible Banking signatories, etc.), providing a good foundation for net-zero engagement.
GFANZ’s strategic priorities in the Asia Pacific
The Network will take a systematic approach to accelerating the net-zero transition in the region through four key strategic priorities:
- Engagement and recruitment: Drive net-zero awareness and commitments through closing the knowledge and capability gap, particularly in China, India and Indonesia. Specifically, the Network will launch a 3-part knowledge-sharing series to raise the net-zero ambition and buy-in amongst senior-executives of regional financial institutions. The Network will also launch a Net-Zero Transition Programme to support financial institutions already on the net-zero journey to make 2050-aligned net-zero commitments.
- Research and analysis: Drive the regional dissemination and contextualisation of GFANZ research, and incorporate Asia-Pacific insights into GFANZ’s output. Specifically, the Network will develop voluntary guidance by middle of 2023 on the managed phaseout of coal power generation to provide clarity for net-zero committed financial institutions interested in participating in such transactions. The Network will also develop an Asia Pacific Supplement to the GFANZ Financial Institution Net-zero Transition Plan focusing on “how” transition planning can be implemented in the region.
- Public sector engagement: Engage relevant public sector regulators across both the financial and real economy. Specifically, the Network will launch a structured engagement platform to engage public sector agencies in Southeast Asia on net-zero polices/regulations.
- Mobilize capital into EM&DEs: Support platforms for piloting and scaling financial solutions for transition finance mobilization in Emerging Markets and developing economies. Specifically, the Network will support ongoing efforts such as the Just Energy Transition Partnership (JETPs) in the region.
Launch of GFANZ Asia Pacific knowledge-sharing series
As part of the Network’s engagement initiatives, the Network launched its inaugural CEO Roundtable on ambition setting on November 16, 2022. The Roundtable convened ~40 senior executives from key regional financial institutions to discuss their role in steering and mobilizing their organization toward the net-zero vision.
The Roundtable also saw a lively fireside chat between Jin Liqun (President & Chair of Board of Directors of the Asian Infrastructure Investment Bank), Ravi Menon (Chair of the GFANZ Asia Pacific Network and Managing Director of the Monetary Authority of Singapore), and Bill Winters (Group Chief Executive Officer of Standard Chartered) where they discussed how private financial institutions, regulators and multilateral development banks can help catalyze transition financing in the region.
The CEO Roundtable is the first of three knowledge-sharing activities that seeks to narrow the net-zero knowledge gap and raise the net-zero ambition amongst regional C-suite executives. The next instalment will take place in March 2023 focusing on metrics and targets.