Almost half of the global emerging market (EM) economies to have initiated key financial markets reforms to drive development and fight climate change are in the Asia-Pacific region, according to the second Global Progress Report of the IFC-facilitated Sustainable Banking Network (SBN).

These reforms require banks and other financial institutions to assess, manage, and report on environmental, social and governance (ESG) risks in their lending operations and put market incentives in place for banks to lend to green projects.

Of the 38 countries that make up the SBN, 16 are in Asia-Pacific, displaying a commitment within the region to sustainable finance and industry innovation. Ten Asia-Pacific economies have adopted national sustainable finance policies and voluntary principles while China and Indonesia are the only two nations globally to have progressed their sustainable financial systems to a maturing stage.

The report also captures the progress made by 14 countries globally to actively grow their green bond markets; and data shows increasing innovation by financial institutions to green their lending portfolios. Across Asia-Pacific, seven SBN member nations have issued green bonds.

“SBN members have demonstrated that transforming financial markets toward sustainability is possible,” said Georgina Baker, vice president of IFC, World Bank Group. “Emerging markets are on the forefront of this shift — and SBN’s tools and guidance have laid the groundwork for more countries to follow suit.”

In addition to providing practical resources for countries undertaking sustainable finance reforms, the report also highlights the peer-to-peer knowledge sharing of SBN members — a hallmark approach of the network.

“The report captures the real-world experience of SBN members to develop sustainable finance,” said Imansyah, Deputy Commissioner of International and Research, Indonesia Financial Services Authority and a co-chair of the SBN Measurement Working Group.

“Sharing lessons and knowledge among members has been an important catalyst to drive finance reforms, particularly as countries embark on these efforts.”