Giving Compass' Take:

• Bradley Wo, writing for avpn, discusses how five trends in sustainable finance will help guide Asia's potential for more social investments. 

• How can donors in Asia follow trends to seek out new ways of charitable giving?

• Read more about the social investment landscape in Asia. 

Despite the dramatic growth in sustainable finance mechanisms in recent years, Asia has yet to realise its full potential and continues to lag behind the US and Europe. While the market for green bonds has grown globally from $87 billion in 2016 to $167 billion in 2018, only 2 Asian countries – China and India – were included in the top 10 countries based on cumulative green bond issuance.

The fact that 83% of ESG assets under management in Asia are concentrated in Japan reveals an even wider gap between most of Asia and the more advanced ESG markets. In our recent report, “Financing the Future of Asia: Innovations in Sustainable Finance,” by FSG Advisory Services Pvt Ltd. and AVPN with the support of the Rockefeller Foundation, we delve into the importance of sustainable finance in Asia and the innovations coming out of the region.

Sustainable finance is pivotal for Asia for 5 reasons:

  1. Sustainable finance takes a more holistic perspective of development.
  2. ESG practices can offer more opportunities to generate strong returns.
  3. Asia has the ability to lead in prototyping new models.
  4. Finance innovations are making communities more resilient.
  5. Sustainable finance can be aligned with other trends in investing.

Asia’s growing interest and momentum in sustainable finance sends a strong signal that the region can fulfil its potential as a leader in sustainable finance. But to realise this potential, cross-sector and cross-national collaboration is needed to engage stakeholders along the continuum of capital and replicate successful models in other areas.

In order to enhance sustainable finance, stakeholders must first create new financial vehicles. Second, risk capital must strengthen these untested vehicles to make them investment-ready. Finally, sector participants must collaborate and mobilize capital to mainstream these vehicles.

Read the full article about trends in sustainable finance by Bradley Wo at avpn.