(Sept 12th, Nur-Sultan) The International Seminar on Greening the Financial System in Central and South Asia, co-hosted by Tsinghua University and Astana International Financial Centre (AIFC), with support from UK PACT, took place Sept 11-12, 2019, in Nur-Sultan, Kazakhstan.
The seminar was the fourth event under the Global Green Finance Leadership Program (GFLP) jointly launched last year by Tsinghua University and the International Finance Corporation (IFC). It was also a special addition to the annual Green Growth Forum hosted by AIFC.
As developing economies with rich natural resources, most Central Asian countries face similar environment and climate-related challenges, including extreme weather events, such as summer heatwaves and winter freezes, frequent floods and droughts, and pollution, particularly air pollution from burning coal. Furthermore, energy shortages loom like the sword of Damocles in most cities in the region, where extreme conditions make it hard to harness renewable energy.
Experts and participants discussed sustainable development effort made in the region, such as the decision to transition to a green economy by Kazakhstan’s top leadership, and the promotion of ESG management in Kyrgyzstan. However, the implementation of these efforts has been met with challenges from a series of institutional and market barriers. Clearly, now is the time to learn from external solutions like green finance through the establishment of a market-based ecosystem.
“We need to mobilize green money for green projects, and protect financial institutions from financial and legal risks related to environmental and climate issues,” said Dr. Ma Jun, Director of the Research Center for Green Finance Development at Tsinghua University and Chairman of China Green Finance Committee. Dr. Ma in his welcome remarks also emphasized the importance of developing green finance. “The top-down methodology in developing a green financial system might work here as well,” he said.
Dr. Ma Jun, Director of the Research Center for Green Finance Development at Tsinghua University and Chairman of China Green Finance Committee
Michael Gifford, the UK Ambassador to Kazakhstan, pointed out in his keynote speech that “the UK has been in a leadership position in combating climate change through the development of green finance, and will be in full support to the Astana International Financial Center for building its own green financial system and for the green transition of its economy.”
“As part of the development of the Islamic finance market, we are working on the issue of green Islamic papers, green sukuk. In addition, the AIFC is actively cooperating with the akimats of the cities of Nur-Sultan and Almaty to form a pool of green projects for which new green financial instruments can be used,” said Kairat Kelimbetov, Governor of the AIFC, “The AIFC has created all the conditions for the financial center to become a leader in the system of green finance in the entire Central Asian region.”
To build the capacity for developing green finance, experts and participants shared their knowledge and experience on global and regional initiatives for green finance, green banking, green bonds, financial technologies, and regulatory frameworks.
Much of the discussions focused on how to develop the key elements of the green financial market, i.e. a green taxonomy that distinguishes green assets from brown ones, policy incentives to encourage private investments in green assets, innovative green financial products for different investors, and information disclosure requirement.
Participants agreed that in developing and emerging economies, clear and consistent policy signals and planning are urgently needed to promote the development of green finance and explicit green taxonomies. Participants also addressed the necessity of raising awareness in these countries. “As we have seen both top-down and bottom-up momentums on developing green finance, we found that it is those who feel the environmental risks that are taking initiatives”, one participant said.
The need for capacity-building was also voiced strongly by key stakeholders, who expressed their wish to be informed of viable options for green financing, such as issuance of green bonds, green credits, or green guarantees.
Another highlight of the seminar was a new element of green FinTech in the panel discussion topics, which particularly resonated with the increasing popularity of blockchain. Experts from London, Stockholm, Shanghai, and Nur-Sultan presented products that integrate blockchain technology into green asset management and green project finance. These cases greatly intrigued the members of the audience, and many expressed interests in the future development of such technologies and the potential of application in Central Asian countries.
The two-day seminar drew over 130 participants from 19 countries, including those from Central and South Asia, representing national ministries, public and private financial institutions, international organizations, green enterprises and other stakeholders of the financial sector. The GFLP Secretariat is considering hosting the next capacity-building event early next year in Southeast Asia, another important region with growing awareness of environmental and climate risks and interest in developing green finance.