Taking Deforestation out of Banks Portfolios in Emerging Markets
As of: September 2020
Objective and activities
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
- In August 2019 WWF's Sustainable Banking Assessment (SUSBA) has been published. Out of the 35 ASEAN banks assessed, 26 made some improvement compared to last year. In total, only four banks from Singapur and Thailand fulfilled at least half of the criteria. 18 banks fulfilled less than a quarter of the criteria.
- In Dec 2019, WWF published the report "Sustainable Banking Regulations in ASEAN - Raising the Bar" in which WWF assesses the sustainable banking regulations of 5 countries (Indonesia, Malaysia, Singapore, Thailand, Vietnam).
- On 30th Dec 2019, OJK revised and published its 2016 guidelines for sustainable palm oil lending with WWF support. In addition, six new banks joined the Indonesia Sustainable Finance Initiative (IKBI) in 2020, the first market-driven initiative for sustainable finance at national level.
- The Value Based Intermediation (VBI) Strategy and Impact Assessment Framework was formalised in November 2019. The WWF supports the sector guidelines for palm oil, renewable energy and energy efficiency.
- WWF Myanmar has made recommendations to two target banks regarding their internal E&S policies. One bank already has a basic E&S policy and WWF will provide further technical support for E&S risk and management. The team conducted 5 training sessions on E&S Safeguards with a total of 165 participants from the national banks. To date, four banks in Myanmar have answered the SUSBA "light" bank assessment (E&S questionnaires) and three banks have signed a MoU with WWF to integrate E&S Safeguards into their core banking systems.
- WWF organized the Sustainable Finance Dialogue Forum on Oct 10, 2019 together with the Bankers Association of the Philippines and the Association of Development Financing Institutions in Asia and the Pacific.
- Thailand: In October 2019, WWF supported the Bankers Association in organizing the 3rd Workshop for Thai bankers. The focus was on the implementation of the guidelines, which were introduced in mid-2019.