【世界经济论坛】2024东南亚净零转型的标签债券_33页_2mb

Summary of "Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward"

Core Content

This white paper explores the role of labelled bonds in financing the net-zero transition in Emerging Markets and Developing Economies (EMDEs), with a specific focus on the Association of Southeast Asian Nations (ASEAN). It highlights the importance of these financial instruments in channeling private capital towards sustainable development and climate action, while addressing the unique challenges faced by EMDEs in their adoption.

Main Points

• Net-Zero Transition Needs: Achieving net-zero by 2050 requires significant investment in clean energy, sustainable industry, transport, and land-use. Over $70% of this investment in EMDEs must come from private sources, with nearly $60% being debt-based.

• Labelled Bonds as a Tool: Labelled bonds, including green, social, sustainability-linked, and transition bonds, are crucial for directing capital to sustainability projects. They also enhance transparency and accountability, pushing issuers to align with broader ESG goals.

• Current Market Status: While labelled bonds have grown in developed markets, their adoption in EMDEs remains limited. Green bonds dominate the market, accounting for 57% of global labelled bond issuances in 2022. ASEAN countries contribute only 2% globally and 23% of EMDEs’ total labelled bond issuance.

• Challenges in EMDEs: EMDEs face high perceived risks, limited financial infrastructure, and a lack of awareness and capacity. Additionally, the cost of issuing labelled bonds can be higher than traditional financing, and the benefits may not be sufficient to justify the investment.

• Need for a Favorable Environment: A functioning labelled bond market in EMDEs requires alignment between an enabling market environment, issuer priorities, and investor expectations. This includes developing robust debt capital markets, creating clear regulatory frameworks, and promoting sustainability standards.

• Key Stakeholders: The paper emphasizes the importance of collaboration among various stakeholders, including local governments, international bodies, investors, and issuers, to support the growth of labelled bonds.

Key Solutions and Roadmap

The paper outlines a set of potential solutions to overcome the challenges in EMDEs:

• Early Engagement: Encouraging close alignment between investors and issuers to build trust and understanding.

• Market Environment Development: Strengthening local financial systems, improving liquidity and depth, and creating a supportive regulatory environment.

• Regulatory Framework: Establishing clear and applicable standards for labelled bonds, including levels of "greenness" and standardized post-issuance requirements.

• Organizational Preparedness: Enhancing the readiness of issuers to meet the requirements of labelled bonds, including internal ESG strategies and reporting frameworks.

• Knowledge Sharing: Promoting education and awareness, especially among local investors, and encouraging sovereign issuances as first-movers to set benchmarks.

• Investor Incentives: Implementing policies that increase investor demand, such as enhanced returns, reduced financial risks, investment mandates, and tax incentives.

• Direct Support: Providing grants and direct issuance support to help EMDE issuers overcome initial costs and build capacity.

Country-Specific Insights – Viet Nam

Viet Nam has shown potential for green bond issuance, with a relatively mature market compared to other EMDEs in ASEAN. However, the country still faces challenges in terms of awareness, infrastructure, and alignment with international standards. The paper suggests tailored strategies and support mechanisms to further enhance its labelled bond market.

Expected Potential

• EMDEs Overall: If EMDEs achieved the same proportion of labelled bonds as developed economies, the market could see an increase of up to $353 billion in labelled bond volume, with $142 billion specifically in green bonds.

• ASEAN Specifically: The region could see an increase of approximately $19 billion in labelled bond volume, with $8 billion in green bonds, assuming the general bond market remains stable.

Conclusion

Labelled bonds offer a promising avenue for financing the net-zero transition in EMDEs. However, their successful deployment requires a combination of policy support, market development, and stakeholder engagement. By addressing the challenges and implementing the proposed solutions, EMDEs can leverage these financial instruments to drive sustainable development and climate action.

Key Recommendations

• Enhance Market Maturity: Develop more liquid and deep debt capital markets to attract investors.

• Strengthen Regulatory Frameworks: Align with international standards and establish clear, enforceable guidelines.

• Promote Awareness and Education: Increase knowledge among local investors and issuers about the benefits and requirements of labelled bonds.

• Provide Financial Incentives: Implement tax incentives, investment mandates, and other measures to boost demand from investors.

• Support Issuers: Offer grants and direct support to help issuers overcome the initial costs and complexities of labelled bond issuance.

• Tailor Strategies: Develop country-specific plans to align with local needs and opportunities in the net-zero transition.

Contributors and Disclaimer

This paper was produced by the World Economic Forum's Giving to Amplify Earth Action (GAEA) programme, with technical support from ETH Zurich's Climate Finance and Policy Group. It is based on stakeholder consultations and workshops in the ASEAN region and internationally. The findings do not necessarily represent the views of the World Economic Forum or its members.