Climate disclosure and transition finance: APAC’s way forward

The Asia-Pacific connection

2024 has been a crucial year for the climate, marked by record hurricanes, devastating floods, and the imminent milestone of exceeding the 1.5°C warming threshold, a benchmark set by the Paris Agreement that represents a point of tipping to avoid severe weather impacts. change It has also been a turbulent year in global politics with governments and multinationals slowing climate action. On a positive note, convergence has been achieved around the disclosures set by the International Sustainability Standards Board (ISSB), also in the Asia-Pacific (APAC) region. The region has witnessed landmark transition financing deals, such as the first sovereign climate transition bonds from Japan, but challenges remain around the availability and quality of ESG data.

Disclosures – a global basis
The ISSB was formed in 2021 at COP26 in Glasgow to develop global standards for high-quality comprehensive sustainability disclosure focused on the needs of investors and financial markets. Although ISSB establishes a global base, progress in sustainability differs between regions. Jules Bottlaender, Head of Sustainable Finance in APAC, Securities Services at BNP Paribas, said that innovation and regulation around sustainability have moved very quickly in the European Union, while in contrast, there has been a reaction in the United States. He described the progress in APAC as being between the last two regions and more driven by the government, since there is a fragmented regulation in different countries of the region.

“APAC is on a good path, closely monitoring industry developments to quickly implement successful formulas,” he added. For example, following a public consultation, the Exchange Regulation of Singapore (SGX RegCo) said it will incorporate the ISSB climate requirements into its sustainability reporting regime. From fiscal year 2025, all issuers will be required to report Scope 1 and Scope 2 greenhouse gas emissions. Boon Gin Tan, Chief Executive Officer of SGX RegCo said in a statement that this is an important step to enable to the largest emitters to report their Scope 3 GHG emissions from the financial year 20261.

Similarly to Singapore, the Australian Government Treasury published a Sustainable Finance Roadmap and commissioned a sustainability report aligned with ISSB by early 2025. The Australian Sustainable Finance Institute (ASFI) launched a second round of public consultation on the development of a sustainable Australian. financial taxonomy. ASFI is seeking feedback on climate change mitigation criteria for all six priority sectors for development (including electricity generation and supply; minerals, mining and metals; buildings; manufacturing and industry; transport; and agriculture and land use), a Do No Significant Damage. framework, minimum social safeguards and ways in which the taxonomy can be used2.

New Zealand was the first country in the world to legally submit a climate change report for financial institutions in October 2021 and required a sustainability report from the beginning of 2023. The country also has a 2030 roadmap , which includes plans for a sustainable financial taxonomy that has. was published by the industry Aotearoa New Zealand Sustainable Finance Forum3.

New Zealand’s External Reporting Board (XRB), the country’s standard-setting authority, has implemented climate-related disclosure standards for specific companies, dealt with by the Task Force on Climate-Related Financial Disclosures ( TCFD). The council plans to review the country’s climate standards from December 2025 to assess whether updates are needed to align with current or future requirements4.

In November 2024, the XRB published a consultation on the proposed amendments to its climate and insurance standards and approved three of the four proposals. XRB authorized a one-year extension to the adoption provision for Scope 3 GHG emissions disclosures due to current data challenges; a one-year extension to the adoption provision for anticipated financial impact disclosures and a new one-year adoption provision related to Scope 35 GHG emissions assurance. However, it did not adopt a proposal to delay the transition planning an additional year due to strong user demand for this information.

“Data has become critical for businesses in New Zealand. As a local custodian, our role is to help these businesses provide the necessary data and reporting services to meet these obligations,” said Iain Martin, Head of Securities Services, New Zealand at BNP Paribas.

Martin said: “For Securities Services at BNP Paribas, we have been focused on ensuring that our organization has a positive impact on the world. This has meant embedding ESG functions in our core solutions, sharing ESG insights in the world and give clients access to market-leading ESG and sustainability reports.

Transitional finance
It has been estimated that USD $3 trillion per year by 2030 is needed to support the global transition to a net-zero economy by 2050. More than half of this is needed in APAC, and especially in emerging markets6. Bottlaender said: “You can only improve what you can measure. The ISSB has filled this gap by framing climate disclosure in jurisdictions that cover more than half of the world’s GDP. The next big challenge is the transition of our economies “.

There was a landmark in transition finance this year when the Japanese government issued the world’s first sovereign climate transition bonds in February and raised 1.6 trillion JPY7. The Hong Kong Monetary Authority has also announced that it wants to extend its Green and Sustainable Finance Grant Scheme and extend the scope of the subsidy to cover transitional financial instruments8.

Data challenges
However, Bottlaender highlighted that APAC lacks data on the energy transition and in addition to the lack of availability, there are challenges around quality and consistency. He said: “Countries in APAC such as Indonesia, India, Thailand have significant populations and need to create an ecosystem to collect transition data.”

Nearly three-quarters, 71%, of respondents to BNP Paribas’ 2023 ESG Global Survey of 420 asset owners and managers, hedge funds and private equity firms said that inconsistent and incomplete ESG data is a significant barrier to the greatest adoption of ESG, an increase of 17% by 2021. To overcome these data challenges the majority, 65% of respondents, said they use and compare multiple data sources, while more than a third, 37%, conduct their own research methodology9.

To help institutional investors with their ESG data challenge, Securities Services at BNP Paribas allows them to store their fund data on a central platform, Manaos (a fintech that is a subsidiary of BNP Paribas), to obtain a complete and transparent view of their investments. and estimate their ESG footprint. The platform was developed to respond to the advent of regulation in Europe around the Sustainable Financial Disclosure Regulation (SFDR), and thus can now benefit companies in APAC. Manaos can seamlessly connect client portfolios with a wide range of third-party ESG and fintech data vendors, all secured by bank-level security standards.

In October 2024, BNP Paribas’s Securities Services also launched an ESG investment compliance monitoring service in Australia and New Zealand to support local clients and avoid potential compliance breaches. The service, which has also been successfully implemented in Europe, includes a wide range of ESG criteria and provides external assurance that funds comply with their ESG commitments through an automated post-trading assessment10.

Martin said: “BNP Paribas’ ESG monitoring solution can help each client screen their portfolios against customized and flexible criteria using a range of data from external and internal sources. They can include or exclude specific activities, compare portfolios with ESG assessments and benchmarks, reviews carbon intensity against a benchmark and reviews adherence to global standards.

Embrace a wider path forward
Now that climate disclosure has been enforced in many parts of the world, we need to be more specific about the distinctions between green finance and transition finance, as well as between climate mitigation and adaptation.

Indeed, by focusing only on green assets, the fact that most of the economy needs to transition is overlooked. Similarly, focusing only on mitigation, the need to adapt to the physical risks of climate change is neglected, and it becomes more pronounced every year.

In addition, 2024 will be the first full year since the creation of the TNFD (Taskforce for Nature related Financial Disclosure). It will be interesting to see the results of the first disclosures. Meanwhile, the Taskforce on Inequalities and Social (TISFD) was created in September 2024, charged with the challenging mission of developing a framework to address the most neglected aspects of sustainability.

While the journey to full adoption and implementation will require collaboration between governments, businesses and financial institutions to address regional nuances and challenges, it also presents an opportunity to drive meaningful change. For APAC, a region rich in diversity and economic dynamism, embracing these standards is not only aligned with global ESG trends, but also positions companies to lead in sustainable innovation and resilient growth.