While many of Asia’s governments have declared long-term net zero targets - including China, which finally made the commitment in 2020 - their financial institutions have not.
The report from Singapore-based environment group Asia Research & Engagement (ARE) said they can mitigate future risk by setting funding strategies that adhere to market developments that favour climate-positive business ventures.
However, it warned that a “reactive approach”, where practices are only shifted in the face of tighter carbon regulation, would negatively impact their business in the long term.
The report looked at 32 leading banks listed in nine major Asian markets and found they have not kept pace with changing expectations when compared with banks in other markets.
“Asia’s banks are mispricing exposure to carbon-intensive assets that are increasingly difficult to re-finance or transfer,” ARE said. “Without urgent course correction, widespread misallocation of...