Progressing the ESG Agenda to Become Greener Cleaner and More Competitive

Bringing together money and purpose The motivation in Asia Pacific for investing in sustainability — both within the business and across supply chains — is growing. For example, CDP estimates that on average, supply chain emissions are around 11.4 greater than direct emissions 1 . As a result, global multinationals are increasingly focused on setting consistent sustainability targets throughout their supply chains, the bulk of which are located in Asia Pacific. Asia Pacific exports will also be impacted by environmental policies in other regions. For example, products manufactured in Europe must comply with certain environmental standards. To avoid unfair advantage to foreign exporters in carbon-intensive industries, such as iron, steel, electricity produced outside Europe are subject to a carbon tax under the European Commission’s Carbon Border Adjustment Mechanism 2 . This is a direction of travel that is likely to develop globally. As a result, sustainability-linked financing, such as supply chain finance, is particularly important in Asia Pacific to ensure that suppliers and exporters continue to be competitive and viable in an increasingly ESG-focused business environment. Inevitably, some industries find it easier to improve their ESG metrics than others, so a visionary approach to financing is required to help companies and industries that have a more difficult transition. 1 https://www.cdp.net/en/supply-chain 2 https://ec.europa.eu/commission/presscorner/detail/en/ qanda_21_3661 The pandemic has amplified the need for all businesses to manage ESG concerns to build resilience. Every company and industry has a slightly different roadmap towards sustainability. We support this roadmap through both financial and non- financial services. For example, we work with other financial institutions to share knowledge and best practices as well as providing finance and building robust pricing mechanisms to incentivize sustainable business practices. Digital technologies are helping to accelerate sustainability efforts, such as replacing manual processing, collecting data, training, monitoring and analysing supply chain performance trends. Rana Karadsheh-Haddad Regional Industry Director - Manufacturing, Agribusiness & Services, South Asia & East Asia and Pacific, International Finance Corporation (IFC)