Giving Compass' Take:

• Asia could be the epicenter for a seismic shift in the way capital markets create value, profitably and sustainably. This article writes on 3 ways sustainable finance is reshaping the market. 

• What are the most challenging aspects of implementing sustainability goals? How will Asia's markets impact the US?

• Learn about a new framework for sustainability in business.

Degraded natural resources and ecosystems, worsened water stresses, and increased levels of hazardous waste, comprise just some of the many unintended byproducts of Asia’s resource-intensive growth model–exposing the entire region to a domino effect of risks. Take water, for example, one recent study by MIT suggests that more than 100 million people in the region could endure severe shortages over the next decade, with devastating impacts on food security, economic growth, and political stability. Without meaningful action to address climate risks, GDP in the Asia-Pacific region could decrease by more than 3% by 2050–a significant erosion of the region’s economic gains in recent decades. Furthermore, Asia-Pacific economies still feature among the highest rates of income inequality in the world. In this region, one percentage point increase in the Gini coefficient, a generally accepted measure of inequality, reduces GDP per capita by $154.

Financial returns cannot outrun the costs of these social and environmental risks, especially at this scale. New sources of investment capital and greater investment, overall, are desperately needed to address society’s greatest challenges. It is imperative to bank on new financial instruments that can both tap the estimated $200 trillion currently invested in global capital markets and incentivize investment. Indeed “sustainable finance” is increasingly proving it can generate strong returns and address risks posed by issues like climate change as well as offer valuable portfolio diversification opportunities.

Read the full article about sustainable finance by Deepali Khanna and Lorenzo Bernasconi at The Rockefeller Foundation.