Asia’s private sector warms to climate-change investments
While the role of government remains central in responding to climate change adaptation and mitigation, the private sector is showing keen interest in become a major player in the same field.
Sensing the mood of consumers as mainly wanting to ensure the products and services they buy are not making climate change any worse, a new array of greener investment products is being introduced.
In finance, there are a few pioneers leading the charge. Recently the World Bank, with the support of BNP Paribas, launched two potentially revolutionary products that could change traditional ways of thinking about financing development. The first was a new ten-year Sustainable Development Bond that provides an opportunity for retail investors to combine their financial objectives with social and environmental sustainability goals.
The second, announced earlier this month, is a bond tied directly to the SDGs, linking returns to the stock market performance of companies in the Solactive Sustainable Development Goals (SDGs) World Index, backed by BNP Paribas. The Index includes 50 companies that are recognized industry leaders on environmentally and socially sustainable issues, or that dedicate at least 20 percent of their activities to sustainable products.
Indeed many big private sector companies worked alongside governments to reach the Paris Agreement. The World Economic Forum’s CEO Climate Leadership effort, including CEOs from 79 companies and 20 economic sectors, with operations in more than 150 countries and territories, provided a major push. Other private lenders such as Crédit Agricole CIB, and HSBC had pledged to scale up their own investments in renewable and clean energy, green bonds, low-emission transport and agriculture.
“While the public sector has set about creating the enabling environment for the implementation of the Paris Agreement and also the SDGs, it is the private sector that needs to do much of the heavy lifting. Luckily there are incentives,” said Kundhavi Kadiresan, Assistant Director-General and Regional Representative for Asia and the Pacific of the UN’s Food and Agriculture Organization (FAO).
Kadiresan made the comments today, during a gathering of Asian private sector specialists in agribusiness, infrastructure and finance. The event was co-organized by FAO, Asia LEDS Partnership and the USAID Regional Environment Office.
She pointed out that investment opportunities based on the Paris Agreement and the SDGs in the food and agriculture sectors could be substantial. Research commissioned by the Business and Sustainable Development Commission indicates that by 2030 global business opportunities from implementation of the SDGs related to food could be worth well over US$ 2 trillion annually for the private sector.
“More interesting still for those of you here, the commission reckoned that more than two-thirds of the value associated with these opportunities, and over 90 per cent of the potential job creation, would be located in developing countries,” Kadiresan added. “So there is a clear business case for everyone because business as usual won’t cut it in this new environment. Your innovation, partnerships and new ways of thinking will be essential in responding to climate change adaptation and mitigation.”
For their part, countries in the Asia-Pacific region have highlighted the need for improved and more resilient crops, more efficient irrigation systems, improved animal and fisheries management, and enhanced fertilizers, among other things as their core priorities in adapting to and mitigating the worst effects of climate change.
“Therein lies the opportunity for the private sector,” Kadiresan pointed out, noting that the use of information and communication technologies is another area where innovation could unlock the potential for climate-smart agriculture and commodities.
FAO and Google have recently signed a strategic partnership that will make geospatial data and analysis more accessible to users around the world. The partnership will combine the latest Google technology with FAO’s unparalleled access to international expertise to address the complex issues relating to forestry, land cover, land use and their effects on climate change. FAO and the International Telecommunication Union have also been developing e-Agriculture strategies with the support of country governments in the region – including the Philippines in Southeast Asia.