Finance
Empowering a Greener Future: The Crucial Role of Sustainable Finance
Global Banking & Finance Review®
Company
By Yong Liang, Education Programme Manager, Elevandi
By Yong Liang, Education Programme Manager, Elevandi
Yong Liang
As the sustainability crisis intensifies, the financial sector is pivotal in steering capital towards environmentally and socially responsible investments. Sustainable finance serves as a potent instrument for expediting the shift to a low-carbon economy, mitigating climate risks, and nurturing sustainable development. Nevertheless, a comprehensive understanding of the core principles and best practices is vital for sustainable finance to achieve its maximum potential.
Each year, my company, Elevandi, co-organises the Singapore FinTech Festival, and this year, the demand for sustainable finance education was unequivocal. At the Singapore FinTech Festival 2022, Kattiya Indaravijaya, CEO of Kasikorn Bank, noted that the most significant challenge in addressing the crisis is the limited knowledge borrowers and investors possess regarding the impacts and opportunities of climate change and increased ESG awareness. Consequently, educating the masses is the first step in averting this crisis.
By examining conversations from prominent speakers such as Eric Lim, Chief Sustainability Officer at UOB Group, Mark FitzPatrick from Prudential plc, and Helge Muenkel, Chief Sustainability Officer at DBS Bank, it becomes evident that numerous challenges arise from a lack of education, including:
Complex trade-offs: Achieving sustainability requires a delicate balance, necessitating trade-offs between short-term costs and long-term benefits. The economic development goals and sustainability goals, particularly in developing economies, often conflict, further complicating the decision-making process. Both goals significantly impact people’s well-being, making it crucial to navigate these trade-offs effectively.
Misalignment of incentives: In many instances, businesses and individuals prioritise short-term incentives that conflict with the long-term objective of achieving net-zero emissions. Companies, responsible for maximising shareholder value, may not allocate adequate resources to invest in green opportunities or adopt sustainable practices. Likewise, consumers might continue to prioritise convenience and cost over generally more expensive sustainable options when making purchasing decisions.
Greenwashing: Among the most insidious challenges in the transition to net zero is greenwashing. By making exaggerated or misleading claims about the environmental benefits of their products or operations, businesses can enhance their brand image and attract consumers. Furthermore, the absence of clear and enforceable standards for determining sustainable practices or products can make it challenging for consumers to differentiate between genuinely sustainable products and those merely marketed as such.
In conclusion, enhancing knowledge in sustainable finance is a collective responsibility that requires individuals, financial institutions, regulators, and policymakers to work together in addressing the sustainability crisis. By cultivating a robust understanding of sustainable finance principles, promoting transparency and standardisation, and encouraging collaboration, we can unleash the full potential of the financial sector in driving a sustainable future.
To this end, Elevandi has launched its Sustainable Finance Knowledge Certificates in partnership with SMU Academy, Singapore Management University. This program aims to extract insights from industry experts and opinions from regulators and policymakers at the most recent Singapore FinTech Festival held in November 2022. This bite-sized online course enables professionals and individuals to upgrade their knowledge in sustainable finance and earn a Knowledge Certificate issued by Elevandi Education and SMU Academy, Singapore Management University, in this critical area.
The time for urgent action is now; our planet and future generations depend on it. By fostering a culture of sustainability education and collaboration, we can catalyse the necessary changes within the financial sector and beyond. As more stakeholders embrace sustainable finance principles, we can collectively build a resilient, prosperous, and sustainable future for all.
About the Author:
Yong Liang is Education Programme Manager at Elevandi, where he oversees learning and mentoring initiatives across its platforms, including the Singapore FinTech Festival. In his previous role in Enterprise Singapore, he championed the growth and expansion of Singapore’s EdTech ecosystem.
Sustainable finance refers to financial services that consider environmental, social, and governance (ESG) criteria to promote sustainable economic development.
Climate change refers to significant changes in global temperatures and weather patterns over time, primarily driven by human activities such as burning fossil fuels.
Investment opportunities are chances to invest capital in various assets or projects that are expected to generate returns or profits over time.
ESG awareness involves understanding the impact of environmental, social, and governance factors on investment decisions and corporate behavior.
Greenwashing is a deceptive practice where companies exaggerate or falsely claim their products or policies are environmentally friendly to improve their public image.
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