Taking Deforestation out of Banks Portfolios in Emerging Markets - 18_III_098 - 10191 - Internationale Climate Initiative (IKI)

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Taking Deforestation out of Banks Portfolios in Emerging Markets

As of: December 2019

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.
  • Indonesia: In collaboration with WWF, the Financial Services Authority OJK works on a series of guidelines for the palm oil sector (publication planned for end of 2019). Moreover, the team is working on a study analysing the potential impact of deforestation on withdrawal of water in Sintang, West Kalimantan (publication planned for beginning of 2019).
  • Malaysia: In March 2019, an introductory workshop was held with the Association of Banks in Malaysia, and the Association of Islamic Banking Institutions Malaysia on WWF's Sustainable Finance work and the Sustainable Banking Assessment (SUSBA).
  • Myanmar: Due to the limited amount of publicly available information on the sustainability of banks in Myanmar, the country is not yet part of the SUSBA assessment. To get an overview of the state of the banks in terms of the SUSBA criteria, the team is conducting a separate bank assessment based on bilateral interviews in the fall of 2019.
  • Philippines: The WWF team has trained more than 100 bankers in the reporting period on how to anchor E&S Safeguards in their strategy. There is a close exchange with one of the banks to examine their loan portfolio w.r.t. climate risks and to identify SDG-relevant investment opportunities in urban areas.
  • Thailand: On 13 August 2019, the Thai Bankers' Association published the Sustainable Banking Guidelines - Responsible Lending at the Bangkok Sustainable Banking Forum 2019. During the event, several Thai banks have pledged to implement Responsible Lending and ESG criteria as required by the Guidelines.

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, State Ministry of National Development Planning (BAPPENAS) - Indonesia
  • World Wide Fund for Nature (WWF) - Singapur

BMU grant:
€ 4,402,569

Duration:
05/2018 till 04/2021

Website(s):