In an interview with Maritime Faritrade, Yuki Yasui, managing director, Asia Pacific Network, Glasgow Financial Alliance for Net Zero (GFANZ), talked about firming up the robustness of the financial ecosystem for net-zero economy.
Yuki Yasui, managing director, Asia Pacific Network, GFANZ. Photo credit: GFANZ
GFANZ was launched in mid-2022. What were the immediate tasks and priorities?
Recognizing that the transition must be both globally-inclusive and locally-tailored, GFANZ created regional networks to expand its global representativeness. This was to bring a broad array of perspectives and expertise to the heart of GFANZ’s work.
In 2022, GFANZ launched regional networks in Africa and Asia Pacific, and in Latin America and the Caribbean network in 2023. We have also launched dedicated chapters in Japan, Hong Kong, and Brazil.
The GFANZ APAC Network’s mandate is to accelerate the region’s transition, through uniting the financial sector across developed and emerging APAC markets to accelerate an inclusive and just transition to a net-zero economy. It aims to bring “GFANZ to APAC and APAC to GFANZ” via contextualization of GFANZ’s global voluntary guidelines and resources to be applicable to the region.
In the midst of all this, we are committed to reflect local perspectives during global discussions – ensuring that GFANZ’s work is inclusive and applicable to all.
To illustrate, one of its key outputs in its first two years of operation is a publication, Financing the Managed Phaseout of Coal-Fired Power Plants in Asia Pacific (December 2023), which contextualizes GFANZ’s November 2022 report on The Managed Phaseout of High-emitting Assets.
The publication provides practical, voluntary guidance on the specific considerations financial institutions should regard in their independent consideration of financing the early retirement of coal fired power plants. It also involves input from leading financial institutions and a consultative group of knowledge partners from think tanks and civil society.
This work contributed to the growing global awareness and interest on managed phaseout by offering greater clarity on what constitutes best practice for a credible managed phaseout transaction.
What drives the trajectory to an efficient and profitable net-zero economy?
I will respond to this in the context of developments in sustainable finance. There are many successful initiatives in this region by governments and financial institutions that have accelerated the development of sustainable finance. Here are some examples:
- Malaysia’s Joint Committee on Climate Change (JC3) is a regulator-industry platform working collaboratively to build climate resilience within the Malaysian financial sector. JC3 involvement enables the GFANZ APAC Network to combine regulatory engagement and capacity building on net-zero transition planning with the objective of ensuring consistency within the APAC financial system and connectivity to the global financial systems for countries to mobilize domestic and international finance.
- Monetary Authority of Singapore issued the Sustainable Finance Jobs Transformation Map in April 2024 that found 56 percent of Singapore’s financial services sector job roles will be, highly or moderately, augmented with new sustainable finance-related job tasks added within the next three years and set aside funding to support upskilling, reskilling and development for specialists in sustainable finance. The GFANZ Net-Zero Transition Plan Framework also alludes that to effectively address the scale and speed needed for financing the net-zero transition, financial institutions must undergo their own organizational change, integrating sustainability expertise across all levels of the organization.
- The GFANZ Japan Chapter convenes CEOs from local net-zero committed financial institutions through high-level events such as its inaugural Japan Summit in March 2024. At the Summit, Leaders across the country’s financial system agreed on the need to work together to accelerate the country’s transition to net zero. A joint Statement reaffirming the importance of transition-planning and highlighting existing individual commitments was signed by 17 organizations.
The financial ecosystem needs to align with businesses for a net-zero transition . What challenges are different stakeholders facing?
The GFANZ APAC Network, with the support of the central bank, organized a survey in June 2024 among Malaysian financial institutions (FIs) on training and capacity building to support their net-zero transition.
Its findings suggest access to quality climate data is still a challenge, with some citing resistance from their real economy clients to disclose climate-related information as a reason for their lack of data. Some also suggest the need for training on how to analyze and use external sources of data, and how to house them internally to support their institutional-wide implementation of their net-zero transition plan.
The survey also pointed to a limited sustainability talent pool in the market as a roadblock for financial institutions in mainstreaming sustainable finance. This affirms the need for more training and capacity building, including formal training curriculum for early to mid-career professionals.
The fundamentals of GFANZ are mainstream transition planning, mobilizing capital to emerging markets and developing economies, and broadening and deepening membership partnerships. Please share the core purposes of these three pillars.
Mainstreaming Transition Plans – It is a net-zero transition plan with a set of goals, actions, and accountability mechanisms to align an organization’s business activities with a pathway to net-zero greenhouse gases (GHG) emissions that delivers real-economy emissions reductions in line with achieving global net zero.
A net-zero transition plan can benefit a financial institution on its journey to net zero by: translating commitments into action; integrating net-zero targets with the broader company strategy; enabling effective communication with the real economy on transition planning; enhancing policymaker and regulator understanding of efforts for risk mitigation; and assessing progress toward one’s Nationally Determined Contribution (NDCs).
GFANZ has been supporting the financial sector in developing and disclosing transition plans on a voluntary basis, a testament to the commitment and action of GFANZ and its many partners. The GFANZ APAC Network is undertaking in-market capacity building work, publications of case study reports that feature good practice examples of transition plans, and execution strategies from the region to inspire action and highlight opportunities for financing the transition.
For example, the second case study report, Catalyzing Climate Action: Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans, was issued in July 2024. The Network also launched the Southeast Asia Public Policy Workstream in early 2024 as a platform for public engagement, which is another critical lever used to facilitate an enabling environment for transition finance to be scaled and to drive uptake of capacity building efforts.
Broadening and deepening membership partnerships, the GFANZ Hong Kong Chapter was announced in 2023. With Hong Kong a cornerstone of global capital markets and vital link between regional capital and transition finance opportunities, and China demonstrating strong leadership in green finance, the Chapter aims to further engage and build capacity with Greater China on transition planning and scaling of transition finance through enabling knowledge sharing and deployment of GFANZ resources.
Receiving support and endorsement from key regulatory authorities (e.g., Japan’s Financial Services Authority (JFSA) and Hong Kong Monetary Authority (HKMA)) have been pivotal in the APAC Network’s engagement work, through sending clear signals to the local financial system that climate is a top priority, and ensuring interoperability and alignment between global guidelines and local regulations.
Photo credit: iStock/yaom