Incorporating gas-powered generation as a sustainable investment into Asian taxonomies could have unintended consequences, finds a new report by the Institute for Energy Economics and Financial Analysis (IEEFA). Doing so could lock Asia into a high-emitting future while also posing a credibility and greenwashing problem that Asian policymakers and ESG debt investors would be wise to avoid.
The report notes that financial institutions could also be entangled in greenwashing risk as many of them are lenders to gas-related power projects and are green/sustainable bond issuers themselves. If a taxonomy recognises gas-powered assets as sustainable investments the proceeds from their green or sustainable bonds could be used to finance those assets. Under this scenario any such financial institution would fail the ESG market test.
Download the report here