INTHEBLACK June 2022 - Magazine - Page 25
OPEN VIDEO IN A NEW WINDOW
created by CPA Australia and Xiamen National
Accounting Institute.
“At the technical level, the related skills of asset
managers and accountants need to be improved.
More importantly, at the theoretical level, the
theory of sustainable development, economic
externality and corporate social responsibility fit
with the ESG concept of advocating business for
good, which is the theoretical basis from which
ESG can absorb rich ideological nutrients.”
As the sustainable finance market continues
to grow across Asia-Pacific, so too will the
requirements for ESG disclosure.
“I think there’ll be a test for the accounting
profession around how ESG data is measured,
managed and reported and how it’s integrated
into financial performance,” says Jeyaretnam. “If
you look at the climate-risk space, we’re starting
to have guidance around how it may impact
contingent values, stranded assets and write-offs,
so there’s a bit of learning to do in terms how
that intersects with financial reporting.
“I think accountants can bring a lot to the ESG
field in terms of better data governance and better
hygiene in data management,” adds Jeyaretnam. “So,
I actually think it goes both ways – accountants will
have a lot to learn, but also a lot to bring.”
SUPPORTING
THE GREEN
TRANSITION
Sustainable finance is playing a vital
role in supporting – and accelerating
– the move to a low-carbon
economy. Its transition finance
segment can help businesses in
hard-to-abate sectors, such as
aviation and petrochemical, to
reduce their emissions.
Transition bonds remain a nascent
segment of the overall ESG-themed
bond market, with only three
transition bonds issued in the
third quarter of 2021, at a total
of US$930 million (A$1.3 billion).
Castle Peak Power Company, for
instance, issued a US$300 million
(A$430 million) Energy Transition
Bond last year, with the proceeds
earmarked for construction of a
gas turbine unit at a power station
in Hong Kong.
Emily Tonkin, executive director
sustainable finance at ANZ in Sydney,
expects the transition label
to mature in the loan market before
growing in the bond market.
“The transition-labelled bond market
is still very much in its infancy, with
issuers typically using ‘green’ or
‘sustainability linked’ instead,” she says.
“We may need to see a few more
large global transactions go through
with a transition label before it really
takes off.
“When we talk to customers in
high-emitting sectors, they are very
keen to hear about what’s happening
with this product. I think we just need
to get a bit more momentum in the
transition label as we think there is
still a great opportunity for this type
of product.”
Dr Ruoyu Weng, director at China’s
Xiamen National Accounting Institute,
says transition finance has the
potential to facilitate real change
in the global economy, but that it
requires mandatory standards that
underpin tangible contributions
towards a future energy system.
“As capital providers examine their
options for accelerating progress on
climate change mitigation,
transparent criteria in managing
continued funding to hard-to-abate
sectors will play a crucial role.”
intheblack.cpaaustralia.com.au June 2022 25