Embedding sustainability into the COVID recovery

The document argues that the innovative policy responses used to combat the COVID-19 pandemic can be repurposed to mitigate systemic climate-related risks. It details how prudential regulations, such as stress testing and capital buffers, and monetary instruments, including collateral frameworks and corporate financing facilities, can be 'greened' to support a sustainable recovery in the ASEAN region. The brief emphasizes the need for clear roadmaps and mandatory climate disclosures to manage both physical and transition risks.

• ASEAN member states are highly vulnerable to physical climate risks, with average annual GDP losses estimated at 8.7% for Lao PDR, 8.0% for Cambodia, 6.7% for the Philippines, and 6.2% for Viet Nam.
• Transition risks in ASEAN are significant for SMEs, which provide 42% of Gross Value Added (GVA) and 66% of employment but lack the resources for climate mitigation and adaptation.
• Central banks can use microprudential regulation to direct liquidity toward sustainable activities by varying capital requirements based on an institution's climate risk exposure, such as the preferential capital requirement for energy-efficient housing loans implemented by Hungary's Magyar Nemzeti Bank in 2019.
• Macroprudential tools like the Countercyclical Capital Buffer (CCyB) can be adapted to climate risks by excluding sectors with high transition risks from released credit or implementing a 'countercyclical carbon capital buffer'.
• Indirect monetary policy instruments, specifically collateral frameworks, can be 'greened' by expanding eligibility to include green assets or applying higher 'haircuts' to assets with high climate risks.
• Direct monetary instruments, such as reserve requirements and corporate financing facilities, can be targeted toward sustainable sectors, as seen with the Reserve Bank of Fiji's support for renewable energy businesses.
• Quantitative Easing (QE) and asset purchase programmes can incorporate sustainability by including green bonds or making purchases conditional on sustainability standards, a practice adopted by Swedens Riksbank.
• The most immediate priority for ASEAN central banks is the introduction of mandatory climate-related disclosure requirements for financial institutions, following examples set by Bank Negara Malaysia, the Monetary Authority of Singapore, and Bangko Sentral ng Pilipinas.

APA

Burge, L., Mok, L., & Vaze, P. (2021). Embedding sustainability into the COVID recovery. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/Embedding-Sustainability-into-the-COVID-recovery-A-Primer-for-ASEAN-Central-Banks.pdf

Chicago

Burge, Lily, Lionel Mok, and Prashant Vaze. Embedding sustainability into the COVID recovery. Climate Bonds Initiative, 2021. https://www.climatebonds.net/files/documents/publications/Embedding-Sustainability-into-the-COVID-recovery-A-Primer-for-ASEAN-Central-Banks.pdf.

Wikipedia

{{cite report |last1=Burge |first1=Lily |last2=Mok |first2=Lionel |last3=Vaze |first3=Prashant |title=Embedding sustainability into the COVID recovery |publisher=Climate Bonds Initiative |date=May 2021 |url=https://www.climatebonds.net/files/documents/publications/Embedding-Sustainability-into-the-COVID-recovery-A-Primer-for-ASEAN-Central-Banks.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{burge2021embedding, author = {Burge, Lily and Mok, Lionel and Vaze, Prashant}, title = {{Embedding sustainability into the COVID recovery}}, institution = {Climate Bonds Initiative}, year = {2021}, month = may, url = {https://www.climatebonds.net/files/documents/publications/Embedding-Sustainability-into-the-COVID-recovery-A-Primer-for-ASEAN-Central-Banks.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }