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Taking Deforestation out of Banks Portfolios in Emerging Markets

As of: December 2020

Major causes of deforestation in Southeast Asia include unsustainable production of agricultural and forest commodities and infrastructure development. Aside from producers, buyers, consumers and government, the financial sector is one of the most powerful actors to stimulate sustainable commodity production as well as infrastructure development through its financial leverage and capital allocation decisions.To reduce negative impacts, this project will support the implementation of Environmental and Social (E&S) safeguards incl. deforestation free criteria in target countries’ financial institutions and financial market actors. It will provide sector specific guidance, review existing and improve or develop new  financial products.In addition, the project will support the development and piloting of green financial products incl. green credit lines at landscape level with a focus on smallholders. Pilots will be carried out in at least one of the implementing countries.

State of implementation/results

  • On September 07, 2020, the updated regional WWF bank assessment of the largest national banks in ASEAN was published. New this year is the assessment of sector-specific guidelines of ASEAN banks, which was initiated with the guidelines for lending to the palm oil sector.
  • In Dec 2019, WWF published the report "Sustainable Banking Regulations in ASEAN - Raising the Bar" in which WWF assesses the sustainable banking guidelines of five countries (Indonesia, Malaysia, Singapore, Thailand, Viet Nam).

Indonesia:

  • The WWF team is currently working with the OJK (Financial Market Authority) on a new guideline for the land-based sector. The guidelines contain recommendations for protective measures against deforestation, such as the evaluation and protection of areas with high conservation value (HCV) and areas with high carbon stock (HCS).
  • In the context of the bank assessment, BCA and BRI made the greatest progress among Indonesian banks, with an improvement of 16 points and correspondingly 15 points (out of a total of 70).

Malaysia:

  • WWF-Malaysia was officially included as an "Invited Expert" and "Observer" in four sub-committees of the Joint Committee on Climate Change (JC3) to advance and coordinate the financial industry's joint response to climate risks.
  • Two more Malaysian banks are now part of the bank assessment: Bank Islam and Bank Rakyat. In general, all banks in Malaysia are showing signs of improvement regarding ESG integration.

Myanmar:

  • The team in Myanmar is expanding its partnerships with other NGOs and DFIs, active in sustainable finance.
  • One of the banks supported by WWF in its ESG integration has published its first sustainability report.

Philippines:

  • Between March and August 2020, WWF implemented training with three banks and 20 bank employees on ESG integration and the assessment of climate and environmental risks in banking transactions and loan portfolios.
  • Overall, the Philippine banks increased their scores on the 70 assessment indicators. Improvements are evident in the areas of disclosure, sustainability strategies and stakeholder engagement on sustainability issues.

Thailand:

  • In June 2020, WWF organized a virtual bilateral training on environmental and social risk management for high-risk sectors, and an introduction to the Science-Based Targets initiative (SBTi).
  • In connection with the bank assessment, a total of five Thai banks have shown progress over the last year. Two banks meet more than 50% of the criteria.

Further Links

Project data

Country:
Indonesia, Malaysia, Myanmar (Burma), Philippines, Thailand

Implementing organisation:
World Wide Fund for Nature (WWF) - Germany

Partner institution(s):
  • Department of Environment and Natural Resources (DENR) - Philippines
  • Ministry of Natural Resources and Environment (MoNRE) - Thailand
  • Ministry of Natural Resources and Environment (NRE) - Malaysia
  • Ministry of Natural Resources and Environmental Conservation - Myanmar
  • State Ministry of National Development Planning (BAPPENAS) - Indonesia
  • World Wide Fund for Nature (WWF) - Indonesia
  • World Wide Fund for Nature (WWF) - Malaysia
  • World Wide Fund for Nature (WWF) - Myanmar
  • World Wide Fund for Nature (WWF) - Philippines
  • World Wide Fund for Nature (WWF) - Singapur
  • World Wide Fund for Nature (WWF) - Thailand

BMU grant:
4.402.569,00 €

Duration:
05/2018  till  04/2021


Website(s):



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