INTHEBLACK June 2022 - Magazine - Page 23
Government has also passed legislation making
climate-related disclosures mandatory for some
organisations.
“Climate risk is now globally recognised as
financial risk, and it’s driving investor decisions,”
says Nancy Wang, director sustainable finance at
ANZ in Hong Kong. “Debt and equity investors
realise that we need that level of disclosure
transparency, so that people can make the right
decisions.
“Companies across the globe also want
to demonstrate an alignment between their
sustainability strategy and capital structure,”
adds Wang. “That’s a very powerful story for
them.”
CUTTING THROUGH THE GREENWASH
While the sustainable finance market continues
to grow across the region, there are obstacles for
companies and investors to navigate.
Sean Kidney, Climate Bonds Initiative CEO,
says a key barrier is education about opportunity
in the market.
“We’ve got the investors onside, but markets
aren’t as rational as they make out that they are,”
he says. “Organisations are slow to get their act
“Green investments
are lower-risk and
have lower volatility.
If you’re not green,
you’ll clearly have
more risk to
volatility and more
risk of some sort
of default or
downgrade going
forward.”
SEAN KIDNEY, CLIMATE
BONDS INITIATIVE
together and slow to notice a change, and that’s
the case everywhere.
“We’ve shown now with the green bond
market that green investments are lower-risk and
have lower volatility,” adds Kidney. “That’s why
investors like it and it keeps growing well. The
corollary is if you’re not green, you’ll clearly have
more risk to volatility and more risk of some sort
of default or downgrade going forward.”
The lack of a universal green definition, or
taxonomy, across global markets presents another
barrier to growth. It can also amplify the risk
of greenwashing of financial products, where
environmentally friendly, sustainable or ethical
practices are overrepresented.
Jeyaretnam says the assurance process can
enhance investor protection from greenwashing.
“When you think about where ESG
information has been focused over the past two
decades, it was generally about telling a good
story about corporate social responsibility,”
he says. “Today, it’s about core risks and
opportunities to business, so you have to put
some controls in place to manage inherent biases.
“I don’t see [sustainability assurance] as that
different to financial assurance,” adds Jeyaretnam.
“In financial assurance, you are required to look
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