In Asia’s emerging markets, sustainable debt financing can be a powerful force for change as the region works to couple rapid economic development with the essential need to reduce carbon emissions.
Currently, significant reputational, governance and business challenges exist for companies and investors pioneering this type of finance in the region, as the sustainable finance market, and the frameworks that govern it, are still being developed.
In an article published by Nikkei Asia, ADM Capital’s Co-founding Partner, Christopher Botsford, notes that claims of “greenwashing” remain prevalent and are often made with little understanding of the local context or the complexity of Southeast Asia’s green transition. This makes it difficult for smaller companies, which have the greatest need for both finance and intervention, to comply even with existing standards.
Given the urgency of the environmental challenge, smallholders, companies and investors must be given the room to innovate, explore new ways to finance and deliver the transition from “brown” to “green.” It is widely accepted that improved ESG performance will facilitate better financial performance, enabling investment exits and increases in valuation as compliant and forward-thinking companies are considered more bankable and attractive to strategic acquirers.
Sustainable finance needs to mature quickly, with clear standards for performance and disclosure, in order to stimulate greener growth, protect biodiversity and improve the lives of people in the region.
Read the full article on Nikkei here.