Geopolitical volatility and macroeconomic uncertainty is causing “a bit of a shakeout” for corporate sustainability commitments, but organisations with an eye on the long term are doubling down on investments in infrastructure, data collection and aligning their organisations with deliberate climate-aligned outcomes.
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Speaking at the Unlocking capital for sustainability event in Hong Kong on Thursday, Dr Mark Konyn, group chief investment officer for AIA Group, said that the uncertain geopolitical climate triggered by the erratic policies of the United States administration under Donald Trump had inadvertently led to “greenhushing” – that is, companies keeping quiet about their sustainability efforts – but it has also differentiated companies with genuine pledges from those that talked up their green credentials merely to “sell more products”.
Under the surface, AIA’s business partners in the US “remain fully committed… We’re not entering a U-turn environment,” Konyn said, adding that businesses with long-term commitments had embedded sustainability from the board level through to operations, and now had an opportunity to gain a competitive advantage.
As a health insurance company that is driven by liabilities that it must pay out, it is AIA’s interests to invest in sustainability for the long term, said Konyn.
Sustainability has gone from “being sort of an ethos” to being now translated into financial risk, he observed. “All of us in the industry are trying to understand the financial implications of climate change and how that impacts what we do, and for me, how it impacts our investment programme.”
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Those who choose not to come along will be left behind.
Shouqing Zhu, China policy advisor, United Nations Environment Programme Finance Initiative
AIA has a 2050 net zero goal and had its near-term emissions targets validated by the global non profit Science Based Targets Initiative (SBTi), the leading global body for emissions reduction targets aligned with the latest climate science.
The Hong Kong–based insurance giant sold off its US$10 billion portfolio of coal investments in 2021 following pressure from environmental campaign groups, becoming the first major Asian insurer to do so.
“I think what we’re going through now with the increased volatility and change in the political climate globally means there’s a little bit of a shakeout,” he said.
Konyn’s comments come on the heels of major multinational firms rolling back sustainability commitments.
A slew of American banks pulled out of the United Nations-backed Net Zero Banking Alliance (NZBA), a group of finance companies committed to climate action, in January. Sumitomo Mitsui Financial Group was the first Asian bank to withdraw from NZBA earlier this month.
Noting that some of these alliances weakened as a result of “a lot of pressure changing the politics”, Konyn noted that some businesses realised “they were thinking about it [sustainability] more as a product rather than a principle”.
Despite this, AIA is witnessing “visible change,” especially among corporates in Asia that are new bond issuers that have reshaped their financing agreements with specific outcomes such as committing to net zero targets, ramping up disclosure, and as a result are able to participate in the growing array of sustainable finance facilities.
China’s climate “consistency”
The withdrawal of the United States from the Paris Agreement on climate change in January has led other countries such as Indonesia and, more recently, Argentina to signal a potential retreat from the landmark treaty that commits to greenhouse gas emissions cuts.
Shouqing Zhu, China policy advisor, United Nations Environment Programme Finance Initiative, who spoke at the same forum, called for the world to “double down” on climate action, noting that the world is on track for a 2.5 to 2.9°C warming rise at the current rate of emissions.
China has played a key role in driving sustainable finance and renewable energy investments, and countries that chose not to participate in the green transition would be “left behind”, he said.
Zhu’s comments came in the same week that Xia Yingxian, director general, climate change response for China’s Department of the Ministry of Ecology and Environment, spoke of China’s “consistency” in responding to climate change.
Although the country produces more than a quarter of the world’s climate pollution, China has cut the carbon intensity of its power sector – by 8 per cent in a year – as a result of massive renewable energy additions. Solar and wind installations overtook fossil fuels for the first time in 2024, Xia said separately at the Hong Kong Climate Forum on Monday.
He noted that China had established a regulatory system for carbon trading and completed the first batch of voluntary emission reduction registrations, effectively managing over 60 per cent of the country’s total carbon emissions.
“We are aware of the huge challenges the global community faces in the energy transition. But the Chinese government will stay course, you can be assured,” he said.
Meanwhile, Hong Kong has emerged as a regional hub for sustainable investmenting and a connector between China and the rest of the world, Christopher Hui Ching-yu, the territory’s Secretary for Financial Services and the Treasury, said at Unlocking capital for sustainability, hosted at Renaissance Hong Kong.
Since 2022, Hong Kong has produced 220 ESG funds with assets totaling HKD$1.2 trillion (US$1.5 billion) – a 136 per cent increase in funds and a 15 per cent rise in assets, he noted.
The territory has issued a total of US$84 billion in green and sustainable debt, with US$43 billion in green and sustainable bonds – the most of any Asian territory for seven consecutive years, Hui said.
Hong Kong has attracted more than 100 registered participants in its cross-border carbon market, Core Climate, since launching in 2022 as the territory aims to become a “trusted hub” for climate finance that “bridges capital with transformative carbon projects”, he said.
China is under pressure to fill the void left by the US as the world prepares for the next round of climate talks at COP30 in Brazil later this year. COP30 president-designate Andre Aranha Correa do Lago said in February that the world must “work harder with China” as the country has the solutions to fight climate change.
Explore our coverage on sustainable finance and business. Unlocking capital for sustainability is an annual flagship event on sustainable finance organised by Eco-Business in partnership with UN Environment Programme (UNEP).
