KUALA LUMPUR – Malaysia’s GSS (green, social and sustainability) and sustainability-linked debt marked its third year of consecutive growth, with a 30.5% increase in issuance in 2021, as compared to the previous year.
In a recent statement, HSBC bank stated that the recorded GSS was worth more than US$1 billion attributed to sustainability-linked bonds (SLB) and sustainability-linked loans (SLL) along with eight other deals last year.
The bank explained that the sustainability label is still the most prevalent financing instrument in the country with approximately 51% of the cumulative market share.
Aside from that, the statement said that green debt (made up of bonds and loans) accounted for 29% of the market. This was followed by 20% from sustainability linked instruments.
The bank’s managing director, head of sustainable finance & investments (ASEAN), Kelvin Tan, stated that they are encouraged by the expansion of the sustainable finance market in the nation, which HSBC has played a significant role in facilitating its growth over the past years.
He said that last year, the bank had supported the Malaysian government on the issuance of the world’s first sovereign US dollar denominated sustainability sukuk as well as facilitating the country’s first ever sustainability linked sukuk with Vinson Holdings Bhd.
Despite the growth of the sustainable finance industry in the country and the broader ASEAN region, he stated that substantially more financing must be deployed in order for the region to adapt to climate change.
“The mobilisation of finances will be essential for achieving the Paris Agreement goals while at the same time minimising the devastating effects of climate change for Southeast Asia,” he said.
Sustainability debt for ASEAN on uptick
Meanwhile, on the sustainable debt market front, the statement said that the six largest economies in the ASEAN region, namely Malaysia, Singapore, Indonesia, Thailand, Vietnam, and the Philippines, have been expanding rapidly last year.
It said that the GSS debt issuance reached a total of US$ 24 billion in comparison to the US$13.6 billion recorded in 2020. The amount increased by 76.5% year-on-year.
As for sustainability-linked debt, the amount rose 220% from US$8.6 billion in 2020 to US$27.5% billion in 2021.
The statement explained that the recorded growth indicates the region’s enthusiasm to allocate funding for the COVID-19 pandemic and to facilitate long-term, low carbon, and climate-resilient economic growth.
According to HSBC, green-labelled debt, which includes green bonds and green loans, remained the most popular on the GSS debt market last year.
It said that out of ASEAN’s GSS deals last year, 63.9% were green while sustainability followed with 35.5%, with the latter marking a 26% growth in comparison to 2020.
ASEAN region also recorded a marginal amount of social debt issuances with 0.6% in 2021.
It stated that buildings and energy remained the primary use of earnings from green-labelled loans in ASEAN.
For the period between 2016 to 2021, the combined sector accounted for 79.5% of the total usage of funds from green loans issued by the ASEAN area.
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