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Regenerative finance (II/II): transforming ASEAN's path to sustainability

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By Alex Hong

· 14 min read


This is part two of a two-part series on regenerative finance in ASEAN countries. You can find part one here.

Impact on common citizens

Regenerative Finance (ReFi) has far-reaching ramifications for ASEAN's ordinary population. It is a driving force behind improvements in living circumstances, career prospects, and community well-being. Here are some examples of how ReFi can improve people's lives:

  1. Enhanced living conditions: ReFi encourages investments in long-term infrastructure, such as green housing and efficient public transport. This improves living conditions by reducing pollution and congestion and increasing access to green spaces. Singapore's devotion to green buildings, for example, has enhanced urban living standards.
  2. Job opportunities: The transition to sustainability generates new job opportunities. Jobs are created by renewable energy projects, sustainable agriculture, and eco-tourism efforts. The wind energy sector in Vietnam is a perfect example of how clean energy projects may employ local individuals, thanks to ReFi principles.
  3. Affordable green technologies and products: ReFi encourages green technology and product innovation and investment. This means that ordinary residents will have access to energy-efficient appliances, electric vehicles, and sustainable food options, all of which will contribute to a greener lifestyle.
  4. Community well-being: ReFi supports community-based initiatives that promote social and environmental well-being. Community-led reforestation programmes in Indonesia, for example, not only protect the environment but also empower local populations by providing livelihoods.

In rural Cambodia, the development of low-cost, solar-powered irrigation systems has raised farmers' revenue and reduced physical labour, directly benefiting the local populace. There is mounting evidence that regions that embrace ReFi principles have lower income inequality and better access to basic utilities such as clean water and sanitation.

ReFi is a revolutionary force that raises living standards, offers job opportunities, and promotes community well-being. ReFi guarantees that sustainability is accessible to all ASEAN people by promoting cheap green technologies and goods, consistent with the region's NetZero aspirations.

ASEAN's readiness for regenerative finance

Adoption of Regenerative Finance (ReFi) is critical for ASEAN's path to sustainability and NetZero aspirations. Let us analyse the region's readiness and emphasise the significance of raising ReFi awareness and education.

Assessing ASEAN's readiness

  1. Policy and initiatives: ASEAN has demonstrated its commitment by enacting different laws and activities that promote sustainability. These include the ASEAN Socio-Cultural Community Blueprint, which emphasises environmental sustainability, and the ASEAN Sustainable Agrifood Systems Strategy and Framework, which focuses on sustainable agriculture.
  2. Financial institutions: ASEAN's financial institutions are progressively aligning with sustainable finance concepts. Green bonds and sustainable finance programmes are being launched. Malaysia's CIMB Group, for example, issued ASEAN's first green sukuk (Islamic bond) to fund environmentally friendly initiatives.
  3. Corporate engagement: Many ASEAN firms understand the value of sustainability. Wilmar International, for example, has incorporated sustainability into its business models, pledging to zero deforestation and encouraging sustainable agriculture throughout their supply chains.

Raising awareness and education

  1. Public awareness: It is critical to raise awareness among ASEAN citizens about the benefits and concepts of ReFi. Public campaigns, educational programmes, and community engagement can all help disseminate knowledge.
  2. Educational institutions: Sustainability education should be prioritised in ASEAN schools, universities, and vocational training programmes. This ensures that the next generation is well-prepared to comprehend and apply ReFi ideas.
  3. Capacity building: Capacity-building programmes for financial professionals, legislators, and business leaders can help to speed ReFi implementation. These programmes should emphasise sustainable financial practises as well as new solutions.

Some instances of ReFi in action in ASEAN include CIMB's issuance of the first green sukuk in ASEAN in 2017, which raised MYR 1 billion for renewable energy projects, demonstrating the financial sector's openness to sustainable finance.The expansion of sustainable palm oil production in Indonesia highlights how firms are adopting sustainability. Indonesia, a major producer of palm oil, has implemented sustainable practises, resulting in lower rates of deforestation.

There is an urgent need for climate action. According to the ASEAN State of Climate Change Report, ASEAN countries have committed to decreasing greenhouse gas emissions by 20% by 2030. This demonstrates a strong regional commitment to sustainability.

ASEAN has made tremendous progress towards Regenerative Finance readiness. The region can leverage the potential of ReFi to expedite its sustainability aims and reach NetZero ambitions with the correct regulations, corporate participation, public awareness campaigns, and educational activities.

Requirements for prosperity in ASEAN

Several conditions must be met for Regenerative Finance (ReFi) to thrive in ASEAN and contribute significantly to the region's development. These requirements include regulatory frameworks, teamwork, and financial literacy.

Regulatory frameworks

  1. Sustainable finance regulations: ASEAN member states should develop comprehensive sustainable finance regulations. These should provide financial institutions and enterprises with incentives to incorporate sustainability into their operations. Such policies have the potential to stimulate ethical investment and money allocation to environmentally sustainable enterprises.
  2. Green bonds and certifications: Green bond and certification issuing can focus funding towards sustainable activities. These instruments require strict criteria to verify that money are indeed supporting ecologically beneficial projects. There would also need to have some defined standards as to what constitute green bonds to prevent greenwashing.
  3. Incentives for sustainability reporting: Governments can offer firms incentives to reveal their environmental, social, and governance (ESG) performance. This transparency has the potential to improve decision-making and accountability.

Collaboration

  1. Public-private partnerships (PPP): Collaboration is essential among governments, the private sector, and civil society. Joint initiatives have the potential to mobilise resources for long-term projects ranging from renewable energy infrastructure to forestry activities. Measurements of PPP performance need to be in place to create transparency and accountability with all stakeholders. 
  2. Regional cooperation: Regional cooperation in ReFi activities can help ASEAN members. Sharing best practises, harmonising rules, and solving cross-border sustainability concerns collaboratively can help to speed progress. The concept of “coordinated collaboration” will also apply as sustainable challenges requires us to collaborate and iterate keenly to contextualise optimal results for communities.
  3. Engaging international organizations: ASEAN countries can gain access to expertise, financing, and global sustainability projects by collaborating with international organisations such as the United Nations. International cooperation is essential to create better efficiencies in handling complex sustainability challenges. 

Financial literacy

  1. Education and training: Improving financial literacy, particularly with regard to long-term investments, is critical. Both the general public and financial experts should benefit from educational programmes and training. This knowledge enables individuals to make informed financial decisions that are in line with sustainability objectives.
  2. Awareness campaigns: Governments and organisations should conduct public awareness campaigns emphasising the benefits of ReFi. These advertisements can reach a large number of people and emphasise how prudent financial decisions contribute to both personal and collective success.
  3. Financial inclusion: It is vital to ensure that marginalised populations have access to ReFi options. To increase involvement in sustainable finance, financial institutions might provide inclusive products and services. There are strong indications that ReFi can be the “tide that lifts all boats” to create better opportunities for previous unserved or underserved communities to access to finance in order to break the cycle of poverty. Equitable finance will also create higher chances of success for existing corporations seeking scale. 

A multifaceted approach is required for the development of Regenerative Finance in ASEAN. Strong regulatory frameworks, cross-level collaboration, and a population well-versed in sustainable financial principles are essential. By meeting these objectives, ASEAN will be able to leverage the potential of ReFi to create prosperity while also promoting sustainability and NetZero ambitions.

Implications for ASEAN member countries, especially Singapore

Singapore, as ASEAN's financial centre, plays a critical role in the region's sustainable finance transition. Due to its well-established financial infrastructure, regulatory framework, and global connectivity, it is particularly positioned to push the adoption of Regenerative Finance (ReFi) in the region.

  • Strong Regulatory Environment: Singapore's regulatory framework for sustainable finance has been gradually reinforced. Green Finance Action Plan initiatives and the issue of green bonds have provided a good framework for ReFi integration.
  • Financial Hub: Singapore's position as a premier financial centre facilitates money flow into ASEAN countries. This puts it at the forefront of facilitating ReFi investments that support regional sustainability programmes.
  • Global Connectivity: The global connectedness of Singapore draws foreign investors and corporations interested in sustainable finance. This transnational collaboration expands the resources available for ASEAN ReFi programmes.

Embracing ReFi to Position Singapore as a Leader in Sustainable Finance

Singapore can further solidify its position as a leader in sustainable finance by embracing ReFi principles:

  • Innovation: ReFi adoption is boosted by encouraging financial institutions to provide sustainable financial products and services, such as green loans and impact investment funds.
  • Support for Startups: Promoting businesses focused on sustainability and technology-driven solutions is consistent with ReFi's inventive ethos. Investment in such companies has the potential to catalyse long-term growth.
  • Education and Awareness: Singapore can fund educational programmes and initiatives to increase public understanding of ReFi principles. Both financial experts and the general public will be involved in sustainable finance practises as a result of this.
  • Cross-Border Collaboration: Collaboration with other ASEAN countries to build cross-border ReFi initiatives can show Singapore's commitment to regional sustainability. Singapore has the unique ability to be the catalyst for ASEAN’s ReFi ambitions and to accelerate the region’s sustainability ambitions.
  • Measurable Impact: Continuously assessing and reporting on the impact of ReFi projects on carbon reduction, social benefits, and economic growth will demonstrate sustainable finance leadership.

Singapore's role as ASEAN's financial hub places it as a key driver of ReFi throughout the region. Adopting ReFi can help Singapore cement its position as a leader in sustainable finance, easing the transition to a more sustainable and NetZero ASEAN.

Conclusion and call to action

Regenerative Finance (ReFi) has emerged as a powerful force that has the potential to revolutionise ASEAN's sustainability environment and contribute considerably to the region's NetZero objectives. As we come to the end of our investigation into the ramifications of ReFi, it is evident that this innovative financial method has enormous promise for ASEAN and the rest of the world.

Transformative Potential of ReFi for ASEAN and the World

  1. Resilient Communities: ReFi investments can help communities adapt to climate change by emphasising regenerative principles. For example, across ASEAN, resilient infrastructure projects have been completed, increasing catastrophe resilience and improving the quality of life for vulnerable communities.
  2. Sustainable Economic Growth: ReFi encourages long-term investments that create jobs, boost economic growth, and reduce carbon emissions. In ASEAN, for example, ReFi-funded sustainable agriculture projects have not only raised food security but also improved livelihoods for local residents.
  3. NetZero Emissions: ReFi has the important role of distributing financial resources towards renewable energy and clean technology projects more efficiently. ASEAN has the potential to become a pioneer in renewable energy adoption, significantly contributing to global efforts to battle climate change.

Call to action

To harness the full potential of ReFi and drive sustainable development in ASEAN, we call upon individuals, businesses, and governments to take the following actions:

  1. Education and Training: Invest in education and training programmes to increase understanding and awareness of ReFi concepts. Courses on sustainable finance can be offered by educational institutions, providing a stream of ReFi-savvy workers. Education (Sustainable Development Goal 4) is also the catalyst to support and enhance the development of other SDGs. 
  2. Collaboration: Encourage collaboration among governments, corporations, and civil society organisations to establish an environment favourable to ReFi. Multilateral collaboration can help to scale up sustainable projects. It has the opportunity to build stronger ties between ASEAN member countries and eliminates the outmoded concept of “zero sum game” towards shared prosperity.
  3. Regulatory Frameworks: Governments should create and improve regulatory frameworks that encourage ReFi. This includes tax breaks, green bonds, and favourable policies for environmentally friendly firms. The recently release ASEAN Taxonomy Version 2 is a good indication that ASEAN is working closely towards financial standard for common interests. 
  4. Transparency and Reporting: Encourage firms to report on their ReFi projects, including their environmental and social impacts, in a transparent manner. This encourages accountability and fosters trust among stakeholders. The ability to compare projects across time and space enables knowledge transfer and best practices to develop.
  5. Investment and Innovation: Businesses can set a good example by incorporating ReFi ideas into their financial plans. Investing in sustainable technologies and new solutions is part of this. The concept of sustainability and net-zero needs to be incorporated in the corporate vision and embedding across its value chain to be successful and meaningful to all stakeholders.

ReFi has the potential to transform finance and drive sustainable development, making it a critical component in ASEAN's journey to NetZero and global sustainability. Embracing ReFi is not a choice; it is a necessity for a greener, more prosperous future.

Suggestions for the Future of Regenerative Finance

ReFi has great promise for altering ASEAN's sustainability environment and promoting the region's NetZero goals. We argue for the following essential ideas for the future of ReFi to assure its sustained success and maximise its impact:

  1. Research and Development: Encourage academic, think tank, and financial institutions to invest in research to improve ReFi principles, tactics, and implementation. This may result in more effective and targeted approaches to unique ASEAN concerns. Success in projects often require contextualisation and community involvement. 
  2. Innovation: Encourage the development of financial products and instruments that adhere to ReFi principles. Encourage the development of innovative financial structures that attract a broader spectrum of investors, particularly retail investors, into sustainable ventures.
  3. Cross-Sector Collaboration: Promote collaboration among financial institutions, sustainability specialists, and governments. Multidisciplinary collaborations can produce creative solutions with long-term impact. To be cross trained enables ReFi practitioners in the future to operate more effective and create better impact for their projects. 
  4. International Standards: Advocate for the creation and adoption of global ReFi standards. International norms that are consistent will encourage cross-border investments and cooperation, allowing ASEAN to access into global ReFi networks.
  5. Climate Diplomacy: Increase ASEAN's participation in international climate negotiations and agreements. Work with worldwide partners to ensure that the ideas of ReFi are incorporated into climate diplomacy activities. To have “a seat at the table” cannot be overstated as it provide better understanding of ASEAN’s place in the global effort towards sustainability vice versa. 
  6. Knowledge Sharing: Facilitate knowledge transfer among ASEAN members and other regions. Exchange best practises and lessons learnt in ReFi implementation to accelerate its global acceptance. Sustainability challenges are often multifaceted and it is only through use cases and best practice can we start to iterate better solutions, via coordinated collaboration. 
  7. Financial Inclusion: Promote financial inclusion as an essential component of ReFi. To alleviate inequality, ensure that underserved populations in ASEAN have access to ReFi-driven financial goods and services. Pushing for greater financial access will accelerate many unserved and underserved community to gain new opportunities to enhance their income thereby reducing a range of poverty related issues (health, sanitation, education, etc). 

ASEAN can capitalise on the full potential of ReFi to foster sustainable development, eliminate inequality, and accelerate progress towards a NetZero future by advocating for research, innovation, collaboration, and global cooperation. These recommendations will assist not just ASEAN but also the global fight against climate change and social inequities.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the author

Alex Hong is the Executive Director of Digipulse Data and strategic advisor. He is the Chief Sustainability Coordinator of the Youth Networking Business Committee (YNBC). Alex is LinkedIn’s Top Voices (Green) in Singapore 2022 and represents the Global Blockchain Business Council (GBBC) as the Ambassador of Southeast Asia.

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