Summary:

Companies, governments, and international bodies are increasingly working together to develop innovative technologies and policies that will drive the transition to a net zero future and mitigate the impacts of climate change. However, financing this massive transformation requires a significant infusion of capital. The green bond market will be an important source of financing to drive the climate transition. 

Although green bonds share similarities in terms of financial attributes like structure, risk, and return with conventional bonds, they only fund projects or activities that have a clear and defined environmental goal.

In 2018, the ASEAN Capital Markets Forum (ACMF) introduced the ASEAN Green Bond Standards (ASEAN GBS) that helped to push for a standardised set of rules for green bonds across ASEAN member countries. Since 2018, green bond issuance has steadily increased in ASEAN with Singapore at the forefront.

Corporates have largely led the green bond issuance in the region. This changed post-pandemic as the share of government-issued green bonds in ASEAN increased from 12% in 2021 to 68% in 2022. Singapore largely drove such an increase with the issuance of the inaugural sovereign green bond – known as Green Singapore Government Securities (Infrastructure) or “Green SGS (Infra)”.

Highlights:

• The green bond market will be an important source of financing to drive the climate transition. 
• ASEAN Capital Markets Forum (ACMF) introduced the ASEAN Green Bond Standards (ASEAN GBS) that helped to push for a standardised set of rules for green bonds across ASEAN member countries in 2018.
• Since 2018, green bond issuance has steadily increased in ASEAN, with Singapore leading in the issuance.
• The share of government-issued green bonds jumped in 2022 owing to Singapore’s inaugural sovereign bond issuance.

Article By GEORGE, Ammu

Graphic By GE, Yixuan