HSBC’s Tan said while great strides have been made in providing finance to create sustainable societies and future-proofing economies, there remains a void when it comes to the use of dedicated sustainable finance by mainstream business and society.
“Singapore is leading the way in supporting companies in their transition, but more can still be done – at a corporate level, institutional and government,” he said.
“For instance, getting some common language on what ‘green’ is would allow all players in an ecosystem - consumers, investors, regulators, companies, financial institutions – to be sure they are talking the same language, working towards the same environmental objectives, and are measuring actions and performance against the same criteria.“
Indeed, there remains concern around greenwashing globally. There remains not a single established benchmark for ESG ratings.
A 2020 Milken Institute report that compared 2018 ESG scores from three major rating agencies found varying ESG scores for most assessed companies except for the worst-performing ones when it comes to ESG standards.
In an August 2021 report, S&P Global said on top of fears over greenwashing, "sustainability-washing" concerns have become more prominent as new types of sustainable financing including social, transition, and sustainability-linked instruments come on board.
There is some relief that for now, potentially misleading practices behind the “alphabet soup” of sustainable financing labels are not found to be widespread, S&P said.
“Regulations and principles could help mitigate ESG washing risks, but the road to harmonisation is long and winding.”
HSBC’s Tan said: “Because green financing is still a relatively new concept, especially in this part of the world, achieving wide-scale green financing adoption - within any country - is like trying to finish a jigsaw puzzle without having the back-of-box picture to guide you.”
Still, many of the pieces needed to achieve critical mass in this space are already in place in Singapore, including having the sufficient depth of liquidity, and incentives designed to remove the perceived extra cost and effort of issuing green, sustainability and social bonds, he said.
“Similarly, issuing of sovereign and statutory board green bonds in Singapore in areas like transport and housing – which has yet to happen - can also be seen as other important pieces of this puzzle. Our experience of issuing sovereign green bonds across several European and Asian nations is that it provides the platform to have a granular conversation with stakeholders on topics like climate change, water renewal and the preserving of finite resources.”