ASEAN Capital Markets Forum and Sustainable Finance Institute Asia team up to speed up adaptation finance within the ASEAN region
In a bid to address the significant funding gap for climate resilience in ASEAN countries, a new collaboration has been formed between the ASEAN Capital Markets Forum (ACMF), the Sustainable Finance Institute Asia (SFIA), and the United Nations Environment Programme Finance Initiative (UNEP FI). The initiative aims to mobilize greater climate adaptation finance to support ASEAN countries in their efforts to build resilience against natural hazards and physical impacts of climate change.
The collaboration, which was announced earlier this year, seeks to catalyze adaptation finance, enhance regional sustainable finance frameworks, and steer investment flows to effectively support ASEAN countries' climate adaptation and resilience goals. The key purpose and goals of the collaboration include developing a regional adaptation guide, introducing the mitigation co-benefit and Adaptation for Resilience (mARs) Guide, and supporting ASEAN countries in increasing funding and investments toward resilience-building efforts.
The regional adaptation guide, which complements and enhances the existing ASEAN Taxonomy for Sustainable Finance, will help identify activities critical for climate adaptation and building resilience to natural hazards. It will also take into account mitigation co-benefits, ensuring that the investments made contribute to both climate adaptation and mitigation efforts.
The mARs Guide, on the other hand, is designed to improve the usability and functionality of the ASEAN Taxonomy, thereby facilitating the flow of both public and private capital toward climate resilience projects across ASEAN. This guide will provide a common language for building resilience to physical climate change impacts and adapting to challenges.
The collaboration is being carried out under the ASEAN Taxonomy Board's work, of which ACMF is a member. The ASEAN Taxonomy Board, established in 2021, is jointly driven by the ACMF, ASEAN Insurance Regulators Meeting (AIRM), the Senior Level Committee on Financial Integration (SLC) and the Working Committee on Capital Market Development (WC-CMD).
The UNEP Finance Initiative, a network of banks, insurers, and investors that collectively catalyze action across the financial system to deliver more sustainable global economies, will also play a crucial role in the collaboration. The organization will help financial institutions apply industry frameworks and develop practical guidance and tools to position their businesses for the transition to a sustainable and inclusive economy.
The collaboration comes at a critical time as countries in ASEAN are experiencing the physical impacts of climate change. According to Dato' Mohammad Faiz Azmi, Chairman of the Securities Commission Malaysia, the mARs Guide project is timely as developing countries in the region need between USD 215 billion and USD 387 billion annually by 2030 for climate adaptation, but currently receive only around USD 21.3 billion.
Laura Canas da Costa, Global Policy Co-Lead at the Sustainable Finance Institute Asia, mentioned that the organization has been exploring how the finance sector can build resilience to physical climate change impacts since 2018. The Sixth ASEAN State of the Environment Report, published in 2023, highlights the urgent need for increased investment in climate adaptation and resilience.
The UNEP Adaptation Gap Report 2024, to be released on 7 November 2024, is expected to provide further insights into the adaptation finance gap and the need for collaborative efforts like this one to bridge the gap. The Securities Commission Malaysia, established in 1993, will play a crucial role in regulating and developing the Malaysian capital market, ensuring that investments made through the collaboration are aligned with sustainable finance principles.
In summary, the collaboration between the ACMF, SFIA, and UNEP FI aims to mobilize greater climate adaptation finance in ASEAN countries, develop a regional adaptation guide, and introduce the mARs Guide to enhance the usability and functionality of the ASEAN Taxonomy. The collaboration seeks to catalyze adaptation finance, enhance regional sustainable finance frameworks, and steer investment flows to effectively support ASEAN countries' climate adaptation and resilience goals in the face of escalating climate risks.
- The new collaboration between the ASEAN Capital Markets Forum (ACMF), the Sustainable Finance Institute Asia (SFIA), and the United Nations Environment Programme Finance Initiative (UNEP FI) aims to introduce the mitigation co-benefit and Adaptation for Resilience (mARs) Guide, a tool designed to improve the usability and functionality of the ASEAN Taxonomy for Sustainable Finance, thereby facilitating the flow of both public and private capital toward climate resilience projects in ASEAN.
- The collaboration also intends to develop a regional adaptation guide, which complements and enhances the existing ASEAN Taxonomy for Sustainable Finance. This guide will help identify activities critical for climate adaptation and building resilience to natural hazards, considering mitigation co-benefits to ensure investments made contribute to both climate adaptation and mitigation efforts.
- The United Nations Environment Programme Finance Initiative (UNEP FI), being a network of banks, insurers, and investors, will aid financial institutions in applying industry frameworks and developing practical guidance and tools to position their businesses for the transition to a sustainable and inclusive economy, contributing to the collaboration's mission of catalyzing adaptation finance and steering investments toward resilience-building efforts in ASEAN countries.
