All Eyes on Asia: Momentum for Sustainable Finance

From green bonds to transition finance, from biodiversity to renewable energy investment, Asian markets are experiencing a surge in sustainable financing, boosted by supportive regulatory environments. Read on to find out how the continent is advancing on the path towards sustainable finance!

• Despite (and due to) its heavy reliance on coal, Asia will be a key player in the transition towards net-zero. As the International Monetary Fund notes, Asia contributed about two-thirds of global growth last year and is projected to do so again in 2024. And, fortunately, Asia is currently making bold strides in sustainable finance: according to the United Nations ESCAP, issuance of green, social, and sustainable bonds in the region rocketed from $5 billion in 2015 to $206 billion in 2022.
• Green bonds, in particular, are gaining momentum, making Asia the world’s second-largest issuer, set to account for 20% of the global supply in 2024. “It is very encouraging to see asset managers take a science-based approach towards sustainable financing instruments, as well as the willingness of issuers to realise their ESG commitments via financing activities that support their action plans,” notes Chaoni Huang , Head of Sustainable Capital Markets, Global Markets APAC at BNP Paribas.
• Japan is among the countries stepping up their game in the green bond market. In October 2023, Tokyo’s Metropolitan Government successfully raised $271 million via its seventh green bond, funding 22 projects ranging from renewable energy installations in public housing to storage battery projects. As Japan’s Prime Minister Fumio Kishida recently claimed, shifting from fossil fuels to clean energies “is a great challenge, but also an opportunity for growth” for the country.

• Transition finance (i.e., investing in the decarbonisation of polluting industries), too, is making significant progress in the region. Japan is pioneering this trend with the recent launch of a $11 billion climate transition bond aimed at supporting green initiatives and research, part of a bid to raise $1 trillion over the next decade to reach net-zero by 2050. China, too, is intensifying its transition finance initiatives, as evidenced recently by Bank of China Luxembourg’s release of the world’s first steel sector specific green transition bond, supported by BNP Paribas. “This successful transaction marks a step forward in scaling up transition finance for carbon-intensive sectors in Asia”, comments Chaoni Huang.
•  Another tell-tale sign of Asia’s increasing maturity in sustainable finance? The uptick in biodiversity investments. The region is addressing the impact of deforestation (responsible for 11% of global GHG emissions, says the IPCC ) with significant reforestation efforts. China has already pledged to plant the equivalent of Belgium’s surface area every year until 2030, writes the World Economic Forum .
• In a context where the International Energy Agency (IEA) anticipates fossil fuel imports in South Asia could jump by 50% by 2040, investments in renewable energy infrastructure are emerging as a priority for the region. Fortunately, Asia holds great potential in the area, thank to supportive policies and favourable conditions across many of its economies. Among recent successful ventures, ReNew ’s $1 billion energy project, India’s largest loan for a single project in the renewable sector, set to build 1,300-MW capacity wind and solar farms built across India. Solar investments are also on the rise, with BNP Paribas leading the NT$9.4 billion (US$277 million) refinancing of BlackRock’s 186MW vast solar portfolio in Taiwan.

• The bottom line: an increasing demand for ESG exposure and taste for green bonds show that Asian markets are ready to move on to the next step of their sustainable finance journey. The future's looking bright in the east!

This summer, as fans cheer on world-class athletes at the Paris Olympics, they’ll be getting up close and personal with Le Pavé® ’s ground-breaking new material… right beneath them in the stands!

• Across France, Le Pavé is on a mission to turn plastic waste into valuable raw material for the construction sector. The start-up’s process transforms discarded plastic into versatile, workable panels, just as handy as wood and bursting with the vibrant colours of the original waste. In 2023, Le Pavé produced 15,500 panels out of 350 tons of plastic.

• At BNP Paribas, the circular economy is at the top of our sustainable finance priorities, and we believe that eco-materials produced from waste will soon become the new norm. That is why we chose to support Le Pavé from the very beginning, and to be there at every stage of the company’s growth. We have indeed invested in equity in Le Pavé few years ago and have worked hand in hand with the company to grow their impact.
• The start-up Marius Hamelot co-funded in 2018 at the bright age of eighteen is now a bustling business with a team of 35 employees set to provide material for 11,000 seats at the Paris Olympics. At ChangeNOW , we snagged some time with Marius. Tune in to find out more about Le Pavé!

Innovative clean cement could put a dent in carbon emissions:

• Did you know cement alone generates a staggering 7% of the world's CO2 emissions? Founded in 2018, MATERRUP Ciments bas carbone set out to decarbonise the construction sector with its clean cement, crafted from an innovative, widely available resource: uncalcined clay sourced from waste.
• Boasting 70% raw clay (far more than the 5% usually found in traditional cement), Materrup’s creation slashes construction sites’ carbon footprint in half and can be adapted to 80% of concrete needs.
• Spotting this innovation’s unrivalled potential for decarbonisation, BNP Paribas Real Estate chose to be the first property developer to place its trust in Materrup. Together, they have embarked on five pilot projects in Lyon and Bordeaux to put Materrup’s innovative products to test in 2024.

On March 28, ten of France's largest institutional investors, including BNP Paribas Cardif , joined forces to channel flows more effectively towards biodiversity.

• How? By setting up biodiversity-targeted investment funds. The goal: to raise capital to finance companies who are working towards reaching international biodiversity protection and restoration goals.
• Institutional investors have a major role to play in funnelling financial flows towards biodiversity and in helping meet the objectives set out in the Kunming-Montreal Global Biodiversity Framework… And they are well aware of it.
• Through this unprecedented collaboration, French institutional investors are proving their central role in protecting nature and, ultimately, society.

Want to explore the psychological dimensions of environmental change?

• Pick up “Earth Emotions: New Words for a New World”, by Glenn Albrecht, says Thibaut Heurtebize , ESG Structurer at BNP Paribas CIB Global Markets.
• A book in which the author proposes a new paradigm and the term “Symbiocene” as the successor era to the Anthropocene. Read Thibaut’s takeaway below: