Taking Deforestation out of Banks Portfolios in Emerging Markets
In Southeast Asia, large-scale logging is primarily the result of unsustainable production practices in the agriculture and forestry sectors. Alongside producers, purchasers, consumers and government, the finance sector is a key actor in steering the sustainable production and ecologically sound infrastructure expansion. The project supported the inclusion of environmental and social standards into credit decisions made by financial institutions in target countries. This included a set of criteria for deforestation-free production. Together with the partner institutions, the project developed sector-specific guidelines and made improvements to existing financial products. Consulting and training measures also ensured that financial market regulators adopted and integrated environmental and social standards or are planning to do so. In addition, the project identified criteria for the development of investable projects at the landscape level in Southeast Asia as a basis for the development and implementation of (new) green financial products in this sector.
- Countries
- Indonesia, Malaysia, Myanmar (Burma), Philippines, Thailand
- IKI funding
- 5,598,854.00 €
- Duration
- 05/2018 till 12/2024
- Status
- completed
- Implementing organisation
- World Wide Fund for Nature (WWF) - Germany
- Political Partner
-
- 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
- Implementing Partner
-
- 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
State of implementation/results
- Project completed.
- Global
- Publication of the report “Financing Nature-based Solutions in Southeast Asia“ (August 2024). Five WWF offices contributed to this study (Germany, Indonesia, Malaysia, Philippines, and Singapore). The report provides valuable insights that help to understand and address the challenges around developing bankable Nature-based Solutions in Southeast Asia.
- Publication of the report ‘Unlocking smallholder financing for deforestation free commodities production in ASEAN’ (2021). The report presents the business case for smallholders to transition to sustainable farming practices in ASEAN countries.
- WWF Singapore
- Assessment of Sustainable Banking (SUSBA) 2023: WWF Singapore completed the annual assessment/benchmarking of the largest national banks in ASEAN and published the report in March 2024 on wwf.sg/susba/reports.
- Assessment of Sustainable Financial Regulations and Central Bank Activities in ASEAN (SUSREG) 2023: WWF Singapore published the updated annual report in December 2023 on wwf.sg/susreg/reports.
- WWF Indonesia (ID)
- Since 2021, WWF has been engaging with the Central Bank of Indonesia (Bank of Indonesia) on the relevance of integrating climate change and biodiversity loss in national financial regulation and monetary policy. Initial collaboration led to a Finance Track side event and joint campaign on green finance held by WWF-Indonesia and the Bank of Indonesia during the G20 Presidency in 2023. Furthermore, WWF-Indonesia contributed to a green taxonomy developed by the Indonesia Financial Services Authority (OJK) and collaborated with the Bank of Indonesia in a climate stress test, which is expected to be published in 2024. In January 2024, WWF's ID project proposal for a capacity building and technical assistance programme on climate transition plans was approved by the Indonesian Financial Services Authority (OJK). In the first six months, the WWF ID successfully conducted two training sessions on GHG emissions accounting, covering scope 1, 2 and 3 emissions. A total of 148 financial regulators and 473 employees from 94 out of 105 Indonesian banks participated in these trainings.
- Based on WWF's Sustainable Banking Assessment (SUSBA) 2023, compared to the previous year (2022), 11 banks in Indonesia showed a 19.5% improvement in E&S integration in products and services. This improvement is also a result of WWF's engagement with the banks based on the SUSBA assessments.
- UNEP FI, ASFI (Asian Sustainable Finance Initiative) and WWF offices in Southeast Asia, including WWF ID jointly convened the Climate Target Setting Training Series for banking sector in Indonesia. 11 Asian national banks representatives participated in the training. Between July and December 2023, WWF-ID provided capacity building for almost 400 employees of financial institutions and regulators.
- WWF Malaysia (MY)
- The WWF-MY co-authored a report with The NbS Accelerator titled "Attracting Investment in Nature-based Solutions: How NbS Projects Can Apply the TNFD Reporting Framework" (released in June 2024). The report helps to identify corporates that can benefit from NbS in addressing nature-related supply chain issues. The Metrics Workbook aids in selecting project indicators, and the Suggested Guidance assists in applying the TNFD LEAP approach.
- In October 2023, WWF-MY was engaged by the Malaysian bank CIMB to review their up-and-coming Palm Oil Net Zero Targets and Plans. In November 2023, CIMB released a White Paper outlining the pathways by establishing decarbonisation targets for its palm oil, power, coal and cement portfolios.
- In 2023, WWF-MY was part of the Climate Change and Principle-based Taxonomy (CCPT) Implementation Group, a sub-group of Committee on Climate Change (JC3), formed to pilot the implementation of the Taxonomy in Malaysia. Following this, the WWF-MY to provide technical support to the Central Bank of Malaysia (Bank Negara) for refining the associated Guidance Notes and Questionnaires. The collaborative effort aimed to strengthen these guiding principles, becoming mandatory in 2024.
- WWF-MY supported the Central Banks Joint Committee on Climate Change (JC3) in the organization of the three days “JC3 Journey to Zero-Conference” (23-25 October 2023). The event brought together influential speakers and leaders to engage in substantive discussions on strategies, innovations, and best practices for achieving a net-zero and nature-positive future.
- By October 2023, WWF-MY completed the collection and analysis of data for the vulnerability and resilience study on 20 largest public listed companies using the WWF Biodiversity Risk Filter (BRF) Tool. Results from the study were shared during the “Nature, Finance and the Macroeconomy: Risks, Impact and Feedback Effects” Conference by INSPIRE on 25 October 2023.
- The engagements with Asset Owners in Malaysia have resulted in the publication of a collaborative report entitled Net-Zero Commitments and Targets for Asset Owners (NZAOA) with inputs from various WWF country offices, including Malaysia (October 2022): www.asfi.asia/…
- In 2022, WWF-MY continued to be the knowledge partner for CIMB’s The Cooler Earth (TCE) Sustainability Summit which took place under the theme ‘Facilitating a Just Transition’.
- WWF-MY participated in the development of the TCFD Application Guide for Climate-Related Risk Disclosure for Financial Institutions in Malaysia by JC3 (Joint Committee on Climate Change), published by the JC3 in June 2022.
- WWF Philippines (PH)
- SUSBA assessment 2023: compared to 2022, seven Philippine banks showed a 48% score improvement on ESG integration. The improvements coincided with issuance of the Sustainable Bank Circular 1085 by the Central Bank of the Philippines (BSP) issued in 2020. In their sustainability reports, all banks reported initiatives with ESG governance, capacity building, green products and ESG risk management. However, gaps still remain in portfolio-level risk exposures, sectoral policies and disclosure on progress to align portfolios to net-zero targets.
- The Capacity Development Department (CDD) of the BSP adopted the e-Learning Modules on Sustainable Banking of the Finance Flows Sustainable Banking Academy co-developed by WWF (May 2024). CDD will roll out the courses to main office and branch personnel to raise their awareness and understanding of ESG integration in support to the Sustainable Central Banking Strategy of the BSP.
- WWF-PH developed a methodological guidance for banks to set their baseline financed emissions and assess transition risks using the national emissions model. The guidance was presented to banks (November 2023). A post-event survey showed willingness of banks to use the tool to comply to BSP-stress-testing and scenario analysis guidelines and to the new reporting standards under review by the Security and Exchange Commission (SEC).
- WWF-PH developed a national emissions model using input-output and energy balance tables to quantify the baseline emissions for 242 intermediate and final demand sectors. A paper titled “Input-Output Analysis of Carbon Emissions using Energy Balance Tables” which applies the model was presented to the governor of BSP for validation (October 2023) and researchers of the BSP Research Academy (April 2024). The paper was submitted for publication in a peer-reviewed journal and is downloadable at DOI: 10.13140/RG.2.2.23110.48962/1.
- During October 2022 and February 2023, WWF-PH and the UNEP Finance Initiative (UNEP FI) organized three Climate Target Setting Workshops for Philippine and Asian Banks to gather feedback. For instance, the 2nd workshop introduced methods and tools to measure financed emissions using the protocol developed by the Partnership for Carbon Accounting Financials (PCAF). During the 3rd workshop there was positive feedback on the timing and learning as the Philippine banks are engaging consultants. The lack of data was acknowledged as a constraint and cited as a barrier to TCFD reporting by the Philippine banks. The WWF has developed sectoral metrics using available government datasets to help non-PCAF member banks quantify their financed emissions.
- In their 2022 annual meeting, the Bankers Association of the Philippines (BAP) endorsed the Finance Flows Sustainable Banking Academy - co-developed by the WWF - to the ASEAN Banking Association (ABA). This expanded the potential for training to bank industry members in the ASEAN Region.
- WWF-PH and BSP convened 11 banks participating in a pilot project to map climate risks to gather feedback on project implementation (September 2022). The results showed that most banks do not gather locational data of their financed assets. However they understand the need to collect site-based data as part of their E&S risk monitoring framework.
- WWF-PH and the Bankers Association of the Philippines (BAP) organized a webinar introducing the skills framework on sustainable finance (24.08.2022).
- WWF Thailand
- In August 2022, the Thai Bankers’ Association (TBA) launched its ESG Declaration which aims to set the banking industry’s clear common direction in addressing the Environmental, Social, and Governance (ESG) agenda.
- WWF Myanmar
- Due to the military coup in Myanmar in 2021, the project suspended its activities in the country in 2022.
Latest Update:
02/2025
Further links
- SUSREG Website
- 2022 Sustainable Banking Assessment (SUSBA)
- SUSREG Annual Report: 2022 An Assessment of Sustainable Financial Regulations and Central Bank Activities
- Report: “Financing Nature-based Solutions in Southeast Asia” (08/2024)
- Report: “Unlocking smallholder financing for deforestation free commodities production in ASEAN” (2021)
- Report: Attracting Investments in Nature Based Solutions: How NbS Projects Can Apply the TNFD Reporting Framework
- and Climate/Nature Scenario Analysis and Stress Testing”
- Paper: “Measuring the Macroeconomic Effects of Carbon Taxes using Input-Output Analysis“
- WWF Bank Assessment
- SUSREG Annual Report 2023: Assessment of Sustainable Financial Regulations & Central Bank Activities
- SUSBA Annual Report 2023: Sustainable Banking Assessment in ASEAN
- SUSBA Webseite
Project relations
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