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Asean leading the way in going green

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The group can design public-private partnerships, and create markets for more corporate sustainability bonds

Sustainability issues are still often seen as long-term concerns, rather than requiring urgent attention, despite the Paris Agreement to take action to address climate change.

Within Asean, there have also been transboundary challenges - such as the fires and haze of past years - that question countries' real commitment to implementing sustainability pledges.

The recent Asean Summit noted that Thailand will take the initiative to develop an Asean Centre for Sustainable Development Studies and Dialogue.

The summit also noted steps more specific to the agri-resources sector, specifically the palm oil sector, where Indonesia and Malaysia are taking steps to ensure sustainability.

This industry has been associated with the haze and fires and is even today being accused by critics in Europe of causing the clearing of rainforest.

Changes in this sector will impact not only the companies directly involved with palm oil, but across the value chain of traders and financial institutions as well as manufacturers and consumers.

The Global Climate Risk Index 2018 shows that four Asean members - Myanmar, the Philippines, Thailand and Vietnam - are among the 10 countries in the world that are being most heavily impacted by climate change.

With the Singapore Dialogue on Sustainable World Resources on May 18, the Singapore Institute of International Affairs will assemble policymakers and experts to assess green growth across the region, and especially how this might impact markets and corporations.

GREEN CREDENTIALS

Malaysia's green growth pathway involves bringing sustainable and responsible investments into the mainstream of the financial system.

It is the world's largest market for sukuk, Islam-compliant investments that also require environmental and/or social safeguards.

In Indonesia, the country is now looking to reform its complex system of land and agrarian rights.

This would ameliorate social and economic inequalities while also shifting to more sustainable development of natural resources.

In the Philippines, the government is gearing up for a transition to renewable energy by raising its tax on imported coal by 15 times to US$3 (S$4) a tonne.

The end result, the country hopes, would be a doubling of its installed renewables capacity by 2030, so renewables account for at least 50 per cent of its energy mix.

Singapore is also betting on a carbon tax to be a game changer in greening its growth.

From 2019 to 2023, facilities that produce 25,000 tonnes or more of greenhouse gas emissions annually will be taxed $5 a tonne, with plans to raise it to between $10 and $15 a tonne of emissions by 2030.

With the tax affecting major emitters - which account for 80 per cent of Singapore's emissions - environmental issues now carry a tangible cost which these companies cannot ignore.

WHAT CAN ASEAN DO?

Asean can assist by monitoring the NDC (nationally determined contribution) implementation of its members.

More progressive members can assist in technology transfers and sharing of best practices to boost implementation of NDCs in states that are progressing slower.

Governments also need to encourage the private sector to step up and work with the public sector.

Asean can lead the way by designing public-private partnerships aimed at reducing some of the financial risks involved in taking on large-scale development ventures, such as renewable energy production and sustainable land management, so climate targets can still be met even as the region pursues economic development.

One need is to create markets for more corporate sustainability bonds to attract long-term finance for projects and companies that spur green growth and improve rural livelihoods.

To encourage this, Asean governments can promote initiatives such as the Task Force on Climate-related Financial Disclosures' recommendations.

LOW-CARBON ECONOMY

The suggestions outline how companies should disclose climate-related information, which will enable more informed investment decision-making.

They must be widely adopted so governments and other stakeholders can determine better ways of managing climate risks and facilitate a smoother transition to a low-carbon economy.

Such efforts can help harmonise standards so companies can do more and recognise those who disclose material information.

Mr Simon Tay is chairman of the Singapore Institute of International Affairs, where Ms Fawziah Selamat is the sustainability deputy director. This article appeared in The Business Times yesterday.

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