At last year’s Ecosperity Week conference, Minister in the Prime Minister’s Office Indranee Rajah announced the Singapore Green Bond Framework, while Senior Minister Teo Chee Hean warned that companies might be “written off” if they refuse to keep up with sustainability demands.
There was also an opening address, albeit pre-recorded, by BlackRock CEO Larry Fink and the launch of GenZero, Temasek’s wholly-owned subsidiary.
Things were calmer this time around. On the last day of Ecosperity Week 2023, the Monetary Authority of Singapore (MAS) and the financial industry announced they would establish the Singapore Sustainable Finance Association (SSFA). The SSFA will initially focus on initiatives to scale voluntary carbon markets, transition finance and blended finance.
The Association of Banks in Singapore (ABS) is leading the coordination and setup of the SSFA. According to MAS, the SSFA will include representatives from financial institutions, financial industry associations, relevant corporates and service providers, such as environmental, social and governance (ESG) rating agencies.
Senior Minister Tharman Shanmugaratnam, also chairman of MAS, says he does not see carbon taxes “coming in time” to meet global net-zero targets. “If we don’t have carbon taxes rising to adequate levels globally, without lots of free-riders, [then] we need financial regulation as a major public policy tool, and we must use it. Otherwise, the markets will be too slow.”
Many of our banks are taking a forward-looking view, says Tharman, but there is “a lot of unevenness”. “The leading banks and financial institutions have to be provided clear guidance, so none of them has to move ahead of the rest and feel [a] competitive disadvantage. That’s why we need guidance across the board.”
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The government is exploring how to develop a new vehicle to catalyse blended finance in Asia by working with regional partners, says Tharman. This ranges from collaborating with government agencies to Singapore-based infrastructure financing vehicles like Clifford Capital and Pentagreen Capital, as well as commercial banks and multilateral development banks like the Asian Infrastructure Investment Bank (AIIB), the Asian Development Bank (ADB) and the World Bank, he adds.
Along with other government agencies, MAS says it is collaborating with industry players to explore platforms to channel blended finance at scale into transition and green infrastructure projects in the region. “MAS aims to bring together patient, concessionary capital from philanthropies, multilateral development banks, development finance institutions and donor partners. This will help crowd more conventional infrastructure financiers, including banks and institutional investors.”
MAS says further details will be announced, “when the plans are more developed”.
Compared to the jam-packed conferences of years past, this year’s edition — which wrapped on June 8 — was a quieter affair, until the end.
Tharman, who gave the keynote address at the inaugural Financing Asia’s Transition (Fast) Conference — held as part of Ecosperity Week 2023 — announced his intention to quit politics after the close of the main event on June 8.
He will resign from the People’s Action Party and step down from his ministerial posts on July 7, to run for president in the upcoming election.
Private sector and climate resilience
There are US$7 trillion ($9.43 trillion) worth of benefits on the table if private sectors invest in climate resilience by 2030, but at this moment, only 7% of investments are channelled into adaptation and resilience, says Lauren Sorkin, executive director of the Resilient Cities Network.
At the same time, more than half the world’s emissions come from Asia. This makes the region a core part of the problem and the solution, says Isabel Chatterton of the International Finance Corporation (IFC).
Panellists at Ecosperity Week agree that public-private partnerships have a huge potential in tackling net zero but cite the same hurdles in realising such collaboration.
See also: Singaporeans must be prepared for 'difficult' change in order to meet net zero: Desmond Lee
Those in the financial sector looking to fund nature-based climate solutions say such ventures are still too risky, as there needs to be a consistent, comparable metric to link physical climate with financial risk.
While there have been successful examples of using nature-based solutions to solve climate issues in cities, the industry needs more concrete data points to prove a solid business case for investing, say experts.
While there is much interest in funding new green technologies, the bigger challenge is getting money to flow into emerging markets and then scaling those solutions, which require much more capital, says Temasek chief investment officer Rohit Sipahimalani.
He believes it boils down to stable regulatory policies and frameworks that can mitigate risks and give investors the confidence that what is being done can be delivered.
But not all governments have been completely transparent or open to adopting nature-based climate solutions, says Zoe Knight, group head of the centre of sustainable finance at HSBC.
She says there are still difficulties in ironing out frameworks without more transparency from policymakers on how they might want to implement resilience and adaptation through nature-based solutions and ecosystem services.
William McGoldrick, regional managing director for The Nature Conservancy’s Asia-Pacific division, says there is a “bias, or some sort of psychological barrier to even begin thinking [of] or taking it seriously”.
The goal is incredibly difficult, “like trying to fix a Rubik’s cube”, Claire Perry O’Neill offers. The former UK Minister for Energy and Clean Growth adds that the world cannot wait for a perfect solution to achieve zero-carbon cities.
Instead, all players must experiment very quickly with different models at small city levels, which will eventually cascade into the future, says O’Neill, who is currently the sustainability advisor for Singapore-headquartered climate-tech venture Terrascope.
Fellow panellist Wang Tianyi, the former chairman of China Everbright Environment Group, summarises the partnership between public and private sectors, describing it as “a lasting marriage, not a short wedding ceremony”.
Jakarta’s big move
Without major policy announcements this year, much of the buzz at the conference came from Indonesia’s leaders who attended in person.
President Joko Widodo was the conference’s headliner, and his speech on June 7 started light-heartedly: “I would like to take the opportunity to ask you: Who will win next year’s Presidential election?” The 61-year-old will end his second and final five-year term in 2024.
Around the time Joko leaves office, Indonesia hopes to complete the first phase of its new capital city Nusantara in East Kalimantan, Borneo. About three times the size of Singapore, the project was announced three years ago and is reportedly estimated to cost IDR466 trillion ($42 billion).
Joko started the project in his second term. The pilot stage is due for completion in August 2024. Indonesia’s government has committed to finance 20% of the project but will need other investors to fund the balance. Japan’s SoftBank pulled out of the project in March 2022.
“Your investment in Indonesia will continue to be safe and also the continuity of the Nusantara new capital city,” says Joko. “Everything will be fine, don’t worry.”
His 11-minute speech and a separate panel discussion between Nusantara project chairman Bambang Susantono and Bloomberg’s Haslinda Amin were dedicated to showcasing the new capital city’s investment potential.
Bambang says five countries are in a “serious due diligence process” to invest in Nusantara: South Korea, Japan, China, Germany and the United Arab Emirates. Joko announced in July 2022 that South Korea has agreed to pledge a total investment of US$6.37 billion.
A first look at the new capital city may be ready next August, but Nusantara will only be fully complete by 2045, and Indonesia aims to house 1.9 million residents there. Between now and then, governments, laws and even the constitution will be changed, says Haslinda. How can Indonesia ensure the project reaches completion?
Bambang replies: “The owner of the city is the one that moved there. The city’s owner is the one that [is] also doing a lot of business there.”
He adds that investors of all sizes, even micro-, small- and medium-sized enterprises, will be the city’s owners. “They will be the one[s] that guarantee the city’s sustainability in the future.”
Photos: Ecosperity Week 2023
