China and other emerging markets are seeing a shortfall in sustainable financing as global investors overwhelmingly focus their asset allocations on Europe and other developed markets, which threatens the ability of the United Nations to reach its sustainable development goals in the next decade, according to Standard Chartered.But, China's commitment last month to achieve carbon neutrality by 2060 could be a "game changer" for sustainable financing, said Daniel Hanna, global head of sustainable finance at Standard Chartered."We believe the markets that offer the greatest opportunity to leapfrog to low-carbon technology, to move to more sustainable business practices and create good green sustainable jobs, are in the emerging markets," Hanna told the Post. "The sad reality is, currently, they are not getting the financing required."Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.Nearly two-thirds of investors are directing their sustainable financing investments to Europe and North America, according to a new Standard Chartered survey of big investment managers responsible for a combined US$50 trillion in assets under management.About 22 per cent of their investments are being directed to Asia, which include developed markets in Japan and South Korea, the report found.The United Nations adopted 17 sustainable development goals (SDGs) in 2015 to address some of the biggest problems affecting the world by 2030, including poverty, hunger and climate change.To meet those goals, global asset managers will need to shift more of their allocations to emerging markets and SDG-linked investments, according to Standard Chartered.One issue is investors still overwhelmingly see emerging markets as more risky than their developed market counterparts, with risks including market volatility, bribery and corruption and heightened political dangers."There is this lack of good quality information about the opportunity and the risk," Hanna said.Renewable energy investments - a key to reaching the UN's climate goals - continue to lag behind as well, reaching just US$322 billion in 2018, according to the latest report by the Climate Policy Initiative and the International Renewable Energy Agency on Tuesday. About one-third of global renewable energy financial commitments were in East Asia and the Pacific region in 2017-2018, the report found.The coronavirus pandemic also caused renewable energy investments to decline by 34 per cent in the first half of the year, report found."The pace must accelerate considerably for the world to meet internationally agreed climate goals," the report said. "To ensure a climate-safe future, annual investment in renewables - including various types of power generation, solar heat and biofuels - would have to almost triple to US$800 billion by 2050."To spur a bigger focus on renewable energy and other climate issues, governments are searching for ways to encourage a greater focus on sustainable finance by lenders - turning banks from "brown" to "green" institutions.Annual renewable energy investments need to nearly triple to reach international climate goals, according to the Climate Policy Initiative and the International Renewable Energy Agency. Photo: AFP alt=Annual renewable energy investments need to nearly triple to reach international climate goals, according to the Climate Policy Initiative and the International Renewable Energy Agency. Photo: AFPOn Monday, the Hong Kong Monetary Authority joined a new alliance with International Finance Corporation to help commercial banks address climate change as the city seeks to tap some US$18 trillion in green and climate investment opportunities in Asia over the next decade.The Hong Kong government also announced a programme two years ago to issue up to HK$100 billion (US$12.9 billion) in green bonds, raising US$1 billion with its first bond under the programme last year.In addition to China's carbon neutrality commitment, the coronavirus pandemic also has investors thinking about social issues, such as the Black Lives Matters movement and gender equality, Hanna said."The big shift this year versus last year [among high-net-worth individuals] is their area of focus has become more social. I think environmental will stay important, but I think there will be a greater focus on social [issues]."This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
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