THE expansion of green finance is the result of the greater focus of governments on climate change and sustainable development, and rising investor demand, says Moody’s Investors Service.
It says in Asia, investor interest in sustainable finance and issuance has expanded rapidly in recent years, although with weaker issuance from China in 2020 through the third quarter.
The agency says the pandemic is leading to intensified focus on environmental, social and governance or ESG factors beyond public health to other issues with potential for high impact, such as climate change.
Pandemic-related fiscal stimulus that invests in environmental projects such as climate change adaptation can have positive long-term credit advantages for public- and private-sector debt issuers in the infrastructure, construction and auto sectors.
Spending on environmental stimulus generally has targeted specific projects such as green buildings, infrastructure, electric vehicles and the protection of biodiversity.
It said for Asia-Pacific sovereigns, differing policy space and approaches to green stimulus measures may amplify their divergent credit quality, as wealthier sovereigns are better able to absorb the discretionary costs of green stimulus programmes and at a lower cost of borrowing.
Green stimulus will be a positive credit driver for utilities, construction companies and battery manufacturers, while creating credit challenges for oil refiners and operators of captive coal power plants, it adds.
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