SCALINGCREDIBLE
TRANSITIONFINANCE –ASEAN

THE TRANSITION PLAN

Prepared by Climate Bonds Initiative

Supported by The Oak Foundation

1. Introduction
Key findings

Contents
1. Introduction

2

2. Company level transition plans
CementSiam Cement Group
Malayan Cement (YTL Cement)
PT Semen Indonesia

4
5
5
6
7

Steel
Gunung Raja Paksi
NS Bluescope/Bluescope889

Basic Chemicals
PTT Global Chemical
Petrochemical Corporationof Singapore (suggested plan)

10
10Electrical Utilities
PT Cikarang Listrindo TBK

12
12

Oil and Gas
PTT Public Company Limited

13
13

Agriculture
Olam Sinagpore

14
14

11

3. Guidance for SustainabilityLinked Bonds as transition financeinstruments

16

4. Recommendations

17

Appendix 1. Checklist to achieve Five
Hallmarks of a Credibly Transitioning
Company

18

Appendix 2. State of play of transition
finance in ASEAN

19

Endnotes

21

The transition to net zero
will be underpinned by thedevelopment of credible
transition plans. These
outline climate ambition and the business
transformation necessary to reach that ambition.
There is already good guidance available to guidethe content and scope of transition plans.1
1. Many companies are announcing net
zero commitments and efforts are being
made to develop transition plans (also calledsustainability strategies, climate policies, climate
action plans) with key performance indicatorsand performance targets.
2. There is scope for improvement as manyplans are fragmented with information containedin multiple locations using different indicators,
meaning that assessment of the ambition levels
and impacts of these plans is difficult.
3. Targets are not yet consistently
underpinned by the credible, comparable,
and costed decarbonisation strategies andchanges to business practices which are required.

Summary
To reach net-zero greenhouse gas (GHG)
emissions by 2050, entities operating in most
sectors must undergo a major transformation.
The key tool that will enable this transformationis the development of a transition plan thatis science‐based, coherent, comprehensive,transparent and covers all material scopes ofemissions and business activities. Transition
plans identify and plan how an entity will align its
business activities with net zero by 2050, outlining
the costs and implementation action needed in
the short and long term to transform operations.

Climate Bonds Initiative (Climate Bonds)
is an international organisation working tomobilise global capital for climate action.
Climate Bonds seeks to develop mechanisms
to better align the interests of investors,
industry, and government to catalyse
investments at a speed and scale sufficient
to avoid dangerous climate change.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

This report presents the results of an examinationof published sustainability and transition plansof several entities operating in the hard-to-abate
sectors in ASEAN to assess the current state oftransition planning and provide recommendations
for next steps. Recent economic growth in ASEAN
has been underpinned by fossil fuels which areplentiful and relatively cheap, meaning that for
many entities, current business models are highemission. Many companies in the region also
operate in the traditional hard-to-abate sectors,
those which must make the most dramaticchanges to their business models if they are to
survive. Credible, transparent, and ambitioustransition plans will be crucial to deliver on
net-zero commitments.
Transition plans are voluntarily emerging fromearly movers in the private and public sector who
are attempting to identify the necessary steps
to align with a net-zero future. The content ofthese plans at present is extremely varied in both
quality and scope. It is expected that transition
plans will become mandatory for private sector
actors in many jurisdictions as part of the global
effort to meet Paris commitments and reachnet-zero emissions.
To support stakeholders in this space Climate
Bonds identified five hallmarks of a crediblytransitioning company. These are the elements
required to drive transformative change acrossa whole business and align with efforts to limit
global warming to 1.5 degrees above preindustrial levels, as per the Paris Agreement.2 The
main body of this report summarises the resultsof the analysis of the transition plans of nine
ASEAN‐based entities operating in the hard-toabate sectors and suggests a transition plan for
one more. Where possible, the chosen entities
are active in the debt markets.

Cement: Siam
Cement Group,
Malayan Cement(YTL Cement), PT
Semen Indonesia

Electric
Utilities:
PT Cikarang
Listrindo TBK

Steel: Gunung
Raja Paksi, NS
Bluescope/Bluescope

Oil and Gas:
PTT PublicCompany
LimitedBasic Chemicals:
PTT Global
Chemical,Petrochemical
Corporationof Singapore(suggested)

Agriculture:
Olam Singapore

2The analysis was based on publicly available
information and assessed against Climate Bonds’
five hallmarks of a credibly transitioning company.
Best practice is highlighted, and areas of potential
improvement are suggested for each entity.
Linked to credible transition plans, instruments
such as sustainability‐linked bonds (SLBs) can
help issuers to raise relatively cheap financeto support their journey. It is crucial that these
instruments are based on a clear strategic
vision described in a transition plan, to allow
the market to grow sustainably. This report
includes guidance for designing credible,
ambitious SLBs. Page 16
The report concludes with recommendations in
the form of a checklist describing the necessary
steps in developing a credible and ambitioustransition strategy, so that more entities will
gain the confidence to define robust plans forreaching net zero. Page 17
Overall, the sustainability and transition plans
assessed fell short of meeting Climate Bonds’
guidance; however, efforts are clearly being madeto address climate change risks at entity level andconverge towards net zero. Entities should work
to define a pathway towards net-zero by 2050
based on the best currently available solutions,and clearly articulate how they expect to reachthat objective following the guidance includedin this paper.

Introduction

Climate Bonds Standard and Certification Scheme
Climate Bonds has
a market leadingStandard scheme inplace which offers
guidance to issuers
on elements ofgreen bond issuanceincluding frameworks,
reporting, disclosure, and verification (Climate
Bonds Standard V3.0). The Standard iscomplemented by individual Sector Criteriathat set climate change benchmarks for eachsector and are used to screen Use of Proceeds(UoP). This is being continually expanded,

and in 2022, Criteria were introduced to define
acceptable UoP for Cement, Basic Chemicals,
Steel, and Hydrogen Production. Issuers
can follow this guidance to ensure they aremeeting the highest levels of ambition, andClimate Bonds offers a Certification scheme
through which issuers can verify that their UoP
is in alignment.

Climate Bonds’ Transition Finance for Transforming
Companies (referenced above) identifies fivehallmarks of a credibly transitioning entity (FiveHallmarks), meaning an entity whose transition is
rapid and robust enough to align with the global
goal to nearly halve emissions by 2030 and reachnet zero by 2050.

These Five Hallmarks also underpin the new
Climate Bonds Standard V4.0 (launched in
January 2023) which expands the Climate Bonds
Certification scheme to entities and generalpurpose finance, including SLBs.6 To obtainentity and SLB certification, an issuer will needto satisfy each Hallmark.

The Five Hallmarks address the requisite
ambition of entity‐level targets and determine
the entity’s willingness and ability to deliver on
those forward-looking targets.

The expansion of the Standard has been driven inpart by the rapidly growing SLB market. Climate
Bonds has observed that the lack of guidanceon credible sector-specific sustainability
performance targets (SPTs) and key performanceindicators (KPIs) has led to a relatively low levelof ambition in many SLBs to date.7 Credible SLBspresent opportunities for investors to allocate
capital to meet their sustainable investment
targets. They accommodate entities operating ina broad range of sectors and can help issuers to
obtain cheaper financing.8 To grow the market
credibly, SLBs should always have ambitious KPIs
and SPTs calibrated in line with sector-specificpathways and captured within the entity’s long‐term public transition plan.

The Five Hallmarks are:

Entities are increasingly publishing net-zerocommitments, in line with national pledges tohalve GHG emissions by 2030 and limit global
warming to 1.5 degrees. However, these net-zerotargets are often set only for the long term,
without a clear pathway or strategy outlining thebusiness changes that will be needed or how
the changes will be financed and overseen.3 To
operationalise these commitments, it will benecessary to identify the sector decarbonisation
pathway, quantify the costs associated withrequired business changes, establish senior level
oversight to drive change, as well as put in place
regular internal and external progress reporting.

1. Paris-aligned
targets

As part of Climate Bonds’ Transition Programme,these needs were recognised early on andthe first iteration of Transition Finance forTransforming Companies was published in 2021.4
This guidance, updated in 2022, provides acomprehensive framework designed to support
entities in developing credible and ambitioustransition plans.5 This body of work is alignedwith and complements guidance from otherorganisations including ICMA, GFANZ, TPI, ACT
Initiative, and SBTi, among others.

4. Internalmonitoring

2. Robust plans

In January 2023, Climate Bonds published
its Standard V4.0 which added provisions toextend Climate Bonds Certification to entities
and SLBs.

3. Implementation
action

5. Externalreporting

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative3

2. Company‐level transition plans
Climate Bonds analysed
the transition plans ofnine ASEAN‐based entities
operating in the hard-toabate sectors of Cement,
Electric Utilities, Oil andGas, Steel, Chemicals, andAgriculture. Where possible, the selected entities
were active in the debt markets. The analysis
was based on publicly available information
and assessed against the Climate Bonds Five
Hallmarks (the assessment framework can befound in Appendix 1 on page 18). Best practice ishighlighted and areas of potential improvement
are suggested for each entity.

Individual company level transition plans were
evaluated against Climate Bonds’ Checklist
to achieve Five Hallmarks of a Credibly
Transitioning Company (Appendix 1).

A strong, cross‐cutting recommendationfor every entity is the creation of a single,
comprehensive, and named transition planthat is published prominently on its website,with links to regular progress reports andclear disclosures against the performancetargets. The corporate strategies assessed
were fragmented with information
contained in many different documents,
developed for different parts of the businessat different times. The information was also
contained within documents with various
names including annual reports, climate
action plans, sustainability strategies andsupply chain policies. Climate Bonds hasclassified any document or strategy aiming
to support better environmental practices aspart of a transition plan.

Hallmark scale

Ease of access scale

Weak: Little evidence could be found of data
pertaining to the relevant hallmark

Weak: Data was scattered acrossmultiple documents

Medium: Some evidence could be found but did
not meet all of the recommendations

Medium: Data was presented inseveral documents

Strong: Most or all of the required data wasreadily available

Strong: Data was presented in a single
document with information clearly labelled
and benchmarks referenced.

The table below provides a brief overview of
the transition plan content and coverage aswell as ease of access (whether the plan was
clear, comprehensive, and published as a single
document). This analysis is necessarily limitedby language. Only English language plans wereanalysed and there may well be more complete
information available in local languages.

Overview of transition plans

Hallmark 2
Robust plans

Hallmark 3
ImplementationplansHallmark 4Internal
reporting

Hallmark 5
External
reporting

Ease ofaccessCompany

Hallmark 1
Paris‐aligned
targets

Siam Cement Group

StrongMediumMediumStrongStrongMediumMalayan Cement(YTL Cement)

Weak

StrongMediumMediumMediumMediumPT Semen Indonesia

MediumMediumMediumMediumMediumMediumGunung Raja Paksi

Weak

MediumWeak

MediumMediumMediumNS Bluescope/Bluescope

MediumStrongMediumStrongStrongMedium

PTT Global Chemical

Weak

MediumMediumStrongStrongMediumPetrochemical
Corporation of Singapore(suggested plan)

N/A

N/A

N/A

N/A

N/A

N/A

PT Cikarang Listrindo TBK

Weak

Weak

Weak

MediumMediumMedium

PTT Public Company
Limited

Weak

Weak

Weak

MediumMediumMediumOlam Singapore

StrongWeak

MediumMediumMediumWeak

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative4

Cement
Climate Bonds’ Cement
Criteria was published in
October 2022.9 These
Criteria cover assets andactivities involved in the
production of cement, andcompanies that operate such assets or activities.

Climate Bonds’ 2022 Cement Background Paper
states that it is not currently possible to achievezero‐carbon cement due to the limitations oftoday’s technologies.10 However, the paper
notes that considerable abatement is possible
through the carbon intensity of binders,which, linked to improvement in concrete

technology and structural design, promises
abatement of emissions of perhaps 95%,
without requiring carbon capture and storage(CCS) or novel chemistries.

Siam Cement Group (SCG)
Sources: Sustainability Report 2021; Annual Report 2021; SCG’s
Sustainability Portal
SCG is the largest and oldest cement and building
material company in Thailand and in SouthEast Asia, recording revenues of THB530bn(USD14.9bn) in 2021. In the same year, it totalled
33,000 KtCO2e in scope 1 and 2 emissions, and12,100 Kt scope 3 emissions.
This case study focuses on SCG’s cement business (32% of entity
revenue). SCG also has a chemicals segment (45%) and a packaging
segment (23%). Its cement segment is responsible for 71% of its scope
1 and 2 emissions. SCG does not have a centralised transition plan;
this analysis was based on the disclosures made in its annual report,sustainability report, and sustainability portal.
Overall SCG has made good progress in its transition plan, withstrong targets and adequate internal and external reporting.
However, evidence around Hallmark 2 (robust plans) and Hallmark 3(implementation action) was incomplete as there was little information
regarding finance needs and sources to implement the plans.
Recommendations:
1. Keep actioning its plans to help it decarbonise 20% of directemissions by 2030
2. Increase GHG target ambition to include scope 3 emissions
3. Provide further disclosure on the actions and plans it expects to
help deliver on its targets

Hallmark 1: Paris-aligned targets
Targets should be aligned with a sector-specific, 1.5°C
pathway, cover the short-, mid-, and long-term, and include
scope 1, 2, and 3 emissions
Siam Cement Group (SCG) has initial, ambitious targets for net-zero by 2050,
and full carbon neutrality by 2065. SCG has short-, mid-, and long-termtargets from most of its emissions (scope 1 and 2 represents 65.5% of total
emissions). Its decarbonisation pathway is close to, but not in line with,
Climate Bonds’ science-based pathway for the cement sector: SCG targets-20% by 2030 (2020 baseline), while Climate Bonds pathway requires -24.8%
in the same period; SCG also targets full neutrality by 2065, while Climate
Bonds advocates for 2050 at the latest.
While SCG has not yet included scope 3 emissions (% of emissions) in
its GHG targets, it has completed its scope 3 accounting, disclosed its
subcategories, and has announced plans to work with its upstream anddownstream stakeholders to decarbonise and improve supplier practices.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

Hallmark 2: Robust plans
Plans need to be 1.5°C-aligned and include respective
financing and governance plans.
Transition plan: SCG decarbonisation plans focus on increasing the use of
biomass and renewables, increasing the use of energy efficiency measures,reforestation measures, and setting and using internal carbon prices. Its
2021 Sustainability Report details smart factory plans, increasing efficiencies
and reducing resource and energy consumption, and waste production.
SGC has developed an optimisation model (called CAPCOM) for cement
production efficiencies, which is one of the eligible UoP categories of the
Climate Bonds’ Cement Criteria.
SCG has not disclosed more detailed plans or what measures it will utilise
to achieve its 2030 target. Options could include precalciners, heat recovery
systems, electric kilns processes, or low-carbon hydrogen fuel sources.
Financing plan: SCG lacks disclosure of relevant financing plans for its
transition. As it details and develops its transition action plans, associatedliabilities could be financed via the debt markets: By November 2022, SCG
had eight vanilla bonds outstanding worth THB140bn (USD4.3bn).11 GreenUoP bonds could be used to finance assets and activities including but notlimited to its CAPCOM programme. SLBs could be used to obtain potentiallycheaper financing for general corporate purposes, using scope 1 and 2
emission reduction targets, and scope 3 targets once set, as KPIs.
Governance: SCG has powerful governance structures to plan, action, andmanage its transition through its environmental excellence and climatechange and energy committees. It has also implemented an internal carbon
price to help it transition.

Hallmark 3: Implementation action
Early action to demonstrate implementation
SCG has not disclosed what capital and operating expenditure
will be dedicated to its decarbonisation and transition. This action and its
disclosure will not only help drive capital to where it is needed most fortransition but will also help centralise and accelerate its decarbonisation.
Its interim performance targets for renewable energy use, water use, andrecycling helps it track and record its progress as it works towards its 20%
GHG reduction target.
SCG however has already made some progress in achieving its 2030 target: it
achieved a 2.7% reduction in 2021 against 2020, in line with its target baseline.

Hallmark 4: Internal reporting,
Hallmark 5: External reporting
Transition KPIs need to be recorded, updated,and verified against the existing strategy
SCG already reports its emissions and relevant breakdowns foremission sources across business segments and activities. It has also
verified its energy consumption, GHG scope 1 and 2 emissions, water withdrawal
and discharge, and waste production. Scope 3 emissions are not reported.

5

Malayan Cement (YTL Cement)
Sources: Sustainability Report 2022;
Annual Report 2022;
Note: Malayan Cement acquired YTL Cement in May
2021. However, all online documentation available
was either branded under YTL Cement, or cobranded under both names. For the sake of clarityand brevity, this case study will use Malayan Cement’s name.
Malayan Cement (MC) is the largest cement producer in Malaysia
with close to 40% of the market share, with its acquisition of YTL
Cement potentially bringing this to 60%. In 2021, it reported MYR1.4bn(USD310m) of revenue, and in the same year totalled 161 Kt CO2e inscope 1 emissions and 135 Kt in scope 2 emissions. The entity does notreport its scope 3 emissions yet.
This case study focuses on MC’s cement business, which represents
76% of the entity’s revenues and about 60% of its total emissions.
Overall MC has developed detailed plans and is measuring key
indicators, however the lack of short- and mid-term targets covering
all emission scopes means that it is impossible to assess the level ofambition or track progress over time.
Recommendations:
1. Keep actioning its detailed and ambitious plans to decarbonise
2. Increase GHG target ambition to include short- and mid-term targets
as well as full scopes, in line with a cement sector-specific 1.5°C pathway
3. Provide further disclosure on its scope 3 emissions

Hallmark 1: Paris-aligned targets
Targets should be aligned with a sector specific, 1.5°C
pathway, cover the short-, mid-, and long-term, and include
scope 1, 2, and 3 emissions
MC at present has a long-term target of carbon neutrality by 2050 but has
not set any short- or mid-term targets to achieve this. MC does however
disclose its emissions, emission sources, and actions to decarbonise
and transition. The company appears to have committed to setting
more detailed GHG emission targets and the delay appears to have been
influenced by the recent acquisition of YTL Cement.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

Hallmark 2: Robust plans
Plans need to be 1.5°C-aligned andinclude respective financing and governance plans.
Transition plan: While lacking in detailed targets, MC does have ambitious
detailed plans to achieve carbon neutrality in the short-, mid-, andlong-term. Short term plans include increasing production and resource
efficiencies, clinker substitution, fuel substitution, alternative raw materials,
and waste heat power/solar energy. Mid- and long-term plans include
decarbonated limestone alternatives, kiln electrification and low-carbonhydrogen fuel, and CCUS technologies. All these plans are eligible forfinancing under Climate Bonds’ Cement criteria.
Financing plan: MC reported about MYR67.5m (USD15m) of capital
expenditure in FY2022 but lacks a dedicated CapEx plan for its transition.
It has however a pipeline of CapEx projects for energy efficiency, andconducted scenario analysis for the CapEx levels required for its transition.
MC has a history of tapping debt markets: it issued MYR105m (USD22m),
including a MYR100m (USD20m) Sukuk in October 2022. It could issue UoPgreen bonds to finance specific activities and assets, or sustainability-linked
Sukuk upon the setting of its short- and mid-term targets.
Governance: MC has powerful governance mechanisms in place
to help track, report, and implement its transition: its Sustainability
Committee is responsible for setting and tracking entity-level targets,
while operational management will help to set related sub-targets andidentify operational changes.

Hallmark 3: Implementation action
Early action to demonstrate implementation
While MC lacks GHG emission targets, it has already disclosed
its current emissions. Its current emission intensity of 699kg CO2/t
cementitious product places it significantly above Climate Bonds’ Cement
Criteria pathway for this year of 597kg CO2/t cementitious product. This
underscores the urgent need for MC not only to set short- and midterm targets, but also to implement the plans it has developed. MC
currently also lacks disclosure on the proportion of capital and operating
expenditures dedicated to its transition.

Hallmark 4: Internal reporting,
Hallmark 5: External reporting
Transition KPIs need to be recorded, updated,and verified against the existing strategy.
MC currently discloses its GHG emissions, clinker substitution
rate, fuel substitution rate, amongst other important metrics.
However, it lacks further detail on the sources of emissions anda breakdown by scope.

6

PT Semen Indonesia Tbk
Sources: Sustainability Report 2021,
Sustainability-Linked Financing Framework 2022

Transition plan: The SR 2021 outlines a five-point action plan for scope 1
and 2 emission reduction along with the year-on-year change:

PT Semen Indonesia Tbk (SIG), is an Indonesianmajority state-owned cement company establishedin 1957. The company manufactures cement
including Portland cement, oil well cement, andmixed cement. SIG has subsidiaries through which it develops andoperates an industrial estate, mines limestone and clay, and packages
and distributes cement. In 2021, SIG reported revenues of IDR34.9tn(USD2.2bn) and GHG emissions of 26,634 Kt CO2, a decline on theprevious year. This analysis focuses on the cement manufacturingbusiness. SIG does not currently publish a document describing
its transition plan. Climate Bonds obtained information from theSustainability Report 2021 (SR 2021) and the Sustainability-Linked
Financing Framework 2022 (SLFF 2022).

1. Clinker factor reduction
2. Thermal energy efficiency
3. Electrical energy efficiency

Overall SIG has designed a five-point plan to reduce scope 1 and2 emissions, but there is no timeline describing a robust transition
pathway to net-zero. Medium term scope 1 and 2 emission reduction
targets are mentioned in the SR 2021 and SLFF 2022, but SIG has been
unable to establish scope 3 emission reduction targets which Climate
Bonds regards as a weak point in the strategy.

Recommendations:
1. Commit to short-, mid-, and long- term scope 1, 2 and 3 targets
2. Articulate renewable energy targets
3. Design a timeline for a complete transition to net-zeroHallmark 1: Paris-aligned targets
Targets should be aligned with a sector specific, 1.5°C
pathway, cover the short-, mid-, and long-term, and include
scope 1, 2, and 3 emissions.
SIG references its objective to reduce greenhouse gas emissions in its SR
2021.12 SIG’s SLFF 2022 references a GHG emission reduction target of-21.5% of scope 1 emissions by 2032.
Scope 1 emissions comprise 70-90% of SIG’s GHG emissions. For 2021, thecalculation of GHG emissions included scope 1 from kiln combustion andcalcination and scope 2 from external power usage. The total volume of
GHG emissions in 2021 was 26,634 Kt CO2, 3.6% lower than in 2020.
SIG has not calculated its scope 3 emissions, stating that the ability tomeasure emissions for transportation fuel outside the organisation
remains limited. While SIG regularly screens its suppliers for controversies,
engagement with the supply chain on emission reductions is not mentioned.
The SLFF 2022 outlines a target for scope 1 emission reduction of between
17.4% and 21.5% by 2032 from a 2019 baseline.13 This is aligned with theBelow 2°C scenario prescribed by the Transition Pathway Initiatives’ Cement
Industry pathway.14 Climate Bonds encourages SIG to extend its ambition
and to disclose explicit timelines with short-, mid- and long-term targets for
scope 1, 2, and 3 emissions.

Hallmark 2: Robust plans
Plans need to be 1.5°C-aligned and include respective
financing and governance plans.
An action plan is explained in the SR 2021, but details of financing
could not be found. A Sustainability Committee is in place to supervise
the implementation of the Sustainability Roadmap.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

4. Alternative fuel5. Waste heat recovery power
generation (WHRPG)CCS also forms part of SIG’s current strategy, with the SR 2021 describing it
as necessary for the continued use of fossil fuels. Climate Bonds’ Cement
Criteria acknowledges that CCS can form part of a cement company transition
strategy, but we encourage SIG to prioritise the allocation of capital to theabove five-point plan, with CCS being an option for residual emissions.15
Since 2021, SIG has incorporated treated household waste (biomass) into
the energy mix of all its cement plants, thus eliminating 40 tonnes of coal
per day. This enables the substitution of coal for fuel at a rate of up to 3%
Thermal Substitution Rate (TSR). In its SR 2021, SIG stated its commitment
to increase the contribution of alternative fuels to the Group’s energy mix,
using solar, wind, and thermal power. Climate Bonds encourages thedisclosure of renewable energy targets with interim milestones towards the
proposed phase out of fossil fuels, as these are not yet disclosed.
Financing plan: At the end of November 2022, SIG had four IDR‐denominatedvanilla bonds outstanding with a combined volume of IDR4.4bn (USD299m).
SIG could consider using UoP green bonds to finance part of its transition,
particularly if borrowing to fund renewable energy. The company’s SLFF
2022 includes scope 1 and 2 emission reduction targets as KPIs. Climate
Bonds encourages SIG to issue SLBs against this framework, given that it
represents its strongest publicly available transition plan.
Governance: The company has a Sustainability Committee in place,established by the Board of Directors in 2021. The objective of thisCommittee is to supervise and evaluate the implementation of the SIG
Sustainability Roadmap. This document could not be found publicly.

Hallmark 3: Implementation action
Early action to demonstrate implementation
SIG is substituting coal for biomass and documents a decrease in fossil
fuel consumption which Climate Bonds applauds.16 However, this information is
not complemented by an easily accessible plan to phase out fossil fuel use.
The company has installed solar panels at three plants (Indarung, Tuban andTonasa). In 2022, the solar panels are expected to meet the electricity consumption
needs of the three sites with an installed capacity of 10 Kw each. This is a start but
represents a small fraction of the total energy consumption of 108 million GJ.
An explanation of how the company will convert its energy supply by 2050 is
not readily available. Climate Bonds encourages SIG to estimate and publish
this together with a plan to finance its decarbonisation.

Hallmark 4: Internal reporting,
Hallmark 5: External reporting
Transition KPIs need to be recorded, updated, and verified
against the existing strategy
The SR 2021 reports on year-on-year changes in energy
consumption, emissions, and emission intensity changes overall,and for each point in its five-point action plan.
In its SLFF 2022 SIG committed to monitoring and reporting on its annual
scope 1 emission reduction KPIs and obtaining external verification.
As of the end of 2021, SIG had not centralised the collection of information
to report energy consumption outside of the entity (scope 3). Currently,
SIG is developing its internal reporting. Third parties are assessed for theircontribution to environmental damage but there was no reference to anassessment of emission reduction plans.

7

SteelClimate Bonds’ or The
Climate Bonds Steel Criteria
was published in November
2022.17 These Criteria
include assets and activities
involved in the productionof steel and companies that operate such
assets or activities. The scope boundaries

begin at the raw material preparation stage andend with the final steel product coming out of
the rolling and coating stage. The document also
includes Criteria for entity and SLB Certification.
Note: The original scope of this report was to focus
on ASEAN companies’ transition plans. However,
Climate Bonds could not source English language

documentation on environmental or transition
plans for the following ASEAN steel producers:
Krakatau Steel, Hoa Phat Group, Hoa Sen
Group. Climate Bonds encourages and calls onthem to develop transition plans. This analysis
focuses on foreign-headquartered ASEANoperational steel companies.

Gunung Raja Paksi (GRP)
Sources: Sustainability Report 2021; ESG Strategy
Handbook; Annual Report 2021
Note: GRP has only recently started developing its
transition strategy, as part of the third pilar of its new
ESG Strategy launched in October 2022.
GRP is the largest steel producer in Indonesia, reporting USD721.8m
of revenue in 2021. In the same year, it reported 117 million tCO2e ofscope 1 emissions and 417 KtCO2e of scope 2 emissions. GRP does not
yet report its scope 3 emissions.
GRP has only two business segments: steel sheet and steel bar
production (and derivatives). This case study thus focuses on its entire
business and entity transition strategy.
Overall we expect GRP to make significant progress on its transition
plans in the near future, as it appears to have been increasing its
disclosure and commitments in this area over the course of 2022.
Climate Bonds encourages GRP to set specific short-, mid- and longterm targets, with detailed action, financing, and governance plans to
support their achievement.

Recommendations:
1. Keep actioning its detailed and ambitious plans to help it
decarbonise and achieve industry certification
2. Develop GHG targets in line with a steel sector-specific
1.5°C pathway
3. Implement governance mechanisms to help drive its
transition forward

Hallmark 1: Paris-aligned targets
Targets should be aligned with a sector specific, 1.5°C
pathway, cover the short-, mid-, and long-term, and include
scope 1, 2, and 3 emissions
GRP currently lacks specific short-, mid-, or long-term GHG reduction
targets, but in October 2022 announced its commitment to achieve wellbelow 2°C and to increase efforts to limit the global temperature increase to
1.5°C. It has earmarked 2022-23 for the development and commitment to its
sustainability roadmap and setting detailed targets. It does however alreadydisclose its annual scope 1 and 2 GHG emissions in its annual Sustainability
Report. Climate Bonds encourages GRP to develop these targets in line witha 1.5°C, sector-specific pathway.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

Hallmark 2: Robust plans
Plans need to be 1.5°C-aligned and include respective
financing and governance plans.
Transition plan: While GRP’s transition plans are still in early stages, it has
identified initial key steps to accelerate its decarbonisation: this includes
a corporate-wide GHG data management system with site-specific tools,
investing in electric-arc furnaces, increasing the utilisation of renewables,
and working towards ResponsibleSteel certification at site and company
levels within the next three to five years. GRP also announced plans in
November 2022 to investigate the use of green hydrogen and ammonia aspart of its transition plans. While these initial steps are promising, Climate
Bonds encourages GRP to do so in line with a 1.5°C pathway and avoid thelock-in of fossil fuel assets.
Financing plan: GRP has yet to disclose any financial plans, however
it reported USD41.2m of CapEx in 2021. Climate Bonds expects andencourages this to increase for GRP to meet its ambition in aligning with abelow-2°C pathway by 2030. GRP did not have any public debt outstanding
as of November 2022.
Governance: GRP currently lacks many commonly used governancemechanisms to drive forward its transition. Climate Bonds would encourage
GRP to develop these mechanisms based on its own needs, but somecommon examples include a Climate/Sustainability/ESG committee thatreports to the board, departmental climate/transition working groups, andclimate performance-linked renumeration. It’s also vitally important that theboard has oversight and responsibility for the company’s transition targets,
plan, and reporting.

Hallmark 3: Implementation action
Early action to demonstrate implementation
GRP presently lacks relevant reporting regarding the alignmentof its operating and capital expenditure for its decarbonisation versus its
general corporate needs. Climate Bonds encourages GRP to provide thisdisclosure, as well as commit to realigning its transition targets and plan inline with any changes to corporate structure it might undertake in future.

Hallmark 4: Internal reporting,
Hallmark 5: External reporting
Transition KPIs need to be recorded, updated, and verified
against the existing strategy
GRP currently reports its scope 1 and 2 GHG emissions
alongside a variety of waste, water, and energy consumption
figures. Climate Bonds encourages GRP to get these figures externallyverified, and provide further disclosure in future, to demonstrate its
commitment to its transition plans.

8

NS Bluescope/Bluescope
Sources: Climate Action Report 2021; FY2021
Results Presentation;
NS Bluescope (NSB) is a joint venture between
the Australian steel producer Bluescope andJapanese steelmaker Nippon Steel, focusing on the
ASEAN region.
Note: NSB has yet to produce its own transition plans. This case study isbased on Bluescope’s transition plans.
Bluescope is one of the largest steel producers in Australia, reporting
USD12.9bn of revenue in 2021. In the same year, it reported scope 1
and 2 emissions of 10.5 million tCO2e, and scope 3 emissions of 12.7
million tCO2e.
Overall, Bluescope has targets and ambitious plans to help it achieve its
transition. However, Climate Bonds encourages Bluescope not to reston its laurels, but aim to overachieve on its targets and recalibrate themwhere possible, with the long-term goal of alignment with a 1.5°C pathway.

Overall
Key recommendations:
1. Keep actioning its detailed and ambitious plans to help it
decarbonise and achieve industry certification
2. Increase its GHG targets ambition in line with a steel sector-specific
1.5°C pathway
3. Expand its capital allocation programme for decarbonisation, todemonstrate and action its commitment to short- and mid-term targets

Hallmark 2: Robust plans
Plans need to be 1.5°C-aligned and include respective
financing and governance plans.
Transition plan: Bluescope has ambitious and detailed plans andobjectives to help reduce its emissions across its supply chain. These plans
are divided into pre-2030 plans and emerging/breakthrough technologies.
The former focuses on energy and process efficiency improvements, scrap
melting technology, low carbon energy sources, and increasing scrap
use. These processes however only represent a small part of the emission
reduction plan Bluescope is counting on, which includes deploying
technologies like electric arc furnaces (EAF), hydrogen direct reducediron (DRI), electrolytic reduction, and CCUS. These planned actions arepotentially aligned with Climate Bonds’ Steel criteria, pending othermitigation criteria.
Financing plan: Bluescope outlines financing plans for its transition
through its capital allocation framework, committing AUD150m (USD100m)
until 2025, and a cumulative AUD300-400m (USD200-270m) up until its
mid-term targets in 2030. This represents a portion of Bluescope’s AUD1.5bn(USD1.0bn) capital expenditure planned up to 2027, mainly slated for
expansion and maintenance.
Governance: Bluescope has a suite of governance mechanisms toprioritise and accelerate its transition: the board oversees the Climate
Change Council, which is responsible for the development andimplementation of the company’s climate strategy. Bluescope alsoutilises climate performance-linked executive renumeration, a risk andsustainability committee, and is a vocal advocate through its industry
association memberships.

Hallmark 3: Implementation action
Hallmark 1: Paris-aligned targets
Targets should be aligned with a sector specific, 1.5°C
pathway, cover the short-, mid-, and long-term, and include
scope 1, 2, and 3 emissions
Bluescope has set mid- and long-term GHG emission targets for 2030 and
Net Zero 2050, targeting a 12% reduction in Scope 1 and Scope 2 emissions
by 2030 (against 2018 baseline), equalling a 1.8% average annual reduction.
This means that Bluescope is looking to achieve an emission intensity of
1.43 t CO2e/t of steel, just above TPI’s 1.5°C steel sector pathway figure of
1.129. Alongside this target, the company also has a -30% GHG emission
target by 2030 for its non-steelmaking business streams. Bluescope
discloses and breaks down the specific site, business activity, andproportion of its Scope 1, 2 and 3 emissions.
Bluescope has yet to set a target for its scope 3 emissions reduction
pathway, which currently represents about 54.6% of its total emissions. Mostof these emissions stem from the upstream purchasing of steel and iron.
However, Climate Bonds’ Steel Criteria defines the boundary of emissions
from the pellet plant/sinter plant/limekiln/coke oven up until and including
the coating process. Climate Bonds encourages Bluescope to develop scope
3 targets inclusive of these material emission sources.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

Early action to demonstrate implementation
Some progress has been made against the 2030 target: a 1.8%
reduction has been achieved since the base year of 2018. Climate Bonds
applauds this progress but encourages Bluescope to accelerate its transition
to meet its 2030 steelmaking intensity targets.

Hallmark 4: Internal reporting,
Hallmark 5: External reporting
Transition KPIs need to be recorded, updated,and verified against the existing strategy
Bluescope tracks a variety of performance targets alongside its
GHG emissions: these include water, waste, energy consumption,
amongst others. It also actively updates its emission reporting
based on changing asset sale and purchases: most recently seen with its‘North Star Expansion’.

9Basic Chemicals
Climate Bonds’ Basic Chemicals
Criteria was published in October
2022.18 The Basic Chemicals

Criteria apply to eligible assets and projects andcompanies relating to the production of multiple
eligible organic and inorganic basic chemicals.

PTT Global Chemical (GC)PTT Global Chemical (GC) is a subsidiary company of PTT Oil and Gas(addressed page 13). They each have their own financial and non-financial
reporting, as well as separate sustainability strategies. GC was formed in2011, when PTT Chemical merged with PTT Aromatics and Refining.
Sources: Sustainability Report 2021;
Sustainability Performance Data 2021;
Sustainability Portal; Annual Report 2021
PTT Global Chemical (GC) is Thailand’s largest
integrated petrochemical and refining business,reporting THB469bn (USD13.1bn) of revenue in FY 2021. In the same
year, it reported scope 1 emissions of 6.74m tCO2e, scope 2 of 2.24m
tCO2e, and scope 3 of 36.9m tCO2e.
GC’s revenue split includes: 38% from refinery and shared activities,
9% from aromatics, 34% from olefins and derivatives, 4% from green
chemicals, and 15% from performance materials and chemicals. Climate
Bonds chemicals criteria covers GC’s aromatics, olefins, and performancematerials/chemicals divisions, amounting to 58% of GC’s revenue streams.

Overall
Key recommendations:
1. Keep actioning its detailed and ambitious plans to decarbonise
2. Increase the ambition of its GHG targets in line with a basicchemical sector-specific 1.5°C pathway, and set short- and mid-termtargets for scope 3
3. Detail financial plans and portfolio adjustments it expects torequire to meet transition targets

Hallmark 1: Paris-aligned targets
Targets should be aligned with a sector specific, 1.5°C
pathway, cover the short-, mid-, and long-term, and include
scope 1, 2, and 3 emissions
GC has mid- and long-term targets to reduce its scope 1 and 2 emissions
20% by 2030 (against a 2020 baseline) and completely by 2050, alongside
a commitment to cut scope 3 emissions in half by 2050. While ambitious,
GC’s mid-term targets are not in line with Climate Bonds’ Basic Chemicals
criteria, which calls for a 44.7% reduction by 2030 (on average, for thechemicals in GC’s scope). GC’s decarbonisation pathway also commits to2025 being a ‘peak year’ of absolute scope 1 and 2 emissions: reaching 9.7m
t CO2e, before falling rapidly to meet its 2030 target.
GC’s scope 3 emissions account for 80.4% of its total annual emissions, with by
far the largest portion coming from ‘Category 11 – use of sold product’, likely fromits oil and gas refinery business.19 There are multiple levers which can be used toaddress Category 11 emissions, from product and design to investment in low
carbon companies and projects; and the sooner GC gets started the better.

Hallmark 2: Robust plans
Plans need to be 1.5°C-aligned and include respective
financing and governance plans.
Transition plan: GC has identified three pillars for its transition to net

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

zero: efficiency and breakthrough technologies, portfolio adjustments andcircular economy, and carbon capture and offset. The first pillar assumes
that the first 10% reduction will come from efficiency improvements, onsiteintegration of renewable/low-carbon energy, and digitalisation. The second
10% reduction by 2030 is expected to come from further renewables/lowcarbon power usage, increased use of biomass/biogas as a fuel, low-carbon
processes like electric-arc furnaces, and upstream and downstream valuechain GHG reductions. While the first two pillars are expected to contributeabout 20% of its GHG reductions each, GC is betting big on CCUS and
expects it to eliminate over 50% of its emissions.
While almost all these activities meet Climate Bonds’ Basic Chemicals
criteria for decarbonisation measures, Climate Bonds encourages GC toincrease the scale and speed of its transition: to keep help temperature rises
to 1.5°C, GC needs to at least double its GHG reduction ambition for 2030.
Financing plan: GC has yet to disclose any financial plans for its transition,
however it estimates USD608m of CapEx for the 2022-26 period and has
estimated a total of USD5bn of investment to decarbonise by 2050. Climate
Bonds expects and encourages this CapEx to increase for GC to meet its
ambition in aligning with a below-2°C pathway by 2030.
GC could tap debt markets to support its transition. At the end of November
2022, GC had 19 vanilla bonds outstanding, with a cumulative value of
THB89.2bn (USD5.2bn).20 Green UoP instruments could be deployed tofinance relevant assets and activities likes GC’s CAPCOM programme,
amongst others. SLBs could be issued to support this, with KPIs referencing
relevant targets such as its scope 1 and 2 emission targets, as well as its midterm scope 3 targets once they’re set.
Governance: GC has strong governance mechanisms in place to help it
drive its transition plans: the Corporate Governance and Sustainability
Board, reporting directly to the board of directors, oversees the transition
plans, KPIs, and actions led by the Sustainability Development Committee.
This committee in turn is led by three champions, one for each of GC’s threepillars for transition.

Hallmark 3: Implementation action
Early action to demonstrate implementation
GC at present lacks relevant reporting regarding the alignmentof its operating and capital expenditure for decarbonisation versus general
corporate needs. Climate Bonds encourages GC to provide this disclosure,
as well as commit to realigning its transition targets and plan in line with any
changes to corporate structure it might undertake in future.
Both GC’s absolute and intensity emission figures rose from 2020 to 2021: afurther acceleration of its transition is needed if it is serious about meetingits 2030 targets.

Hallmark 4: Internal reporting,
Hallmark 5: External reporting
Transition KPIs need to be recorded, updated,and verified against the existing strategy
GC currently reports and verifies its scope 1, 2, and 3 GHG emissions
alongside a variety of waste, water, and energy consumption
figures. It actively updates and recalculates its emissions baseline based on
operational changes: most recently presented in its 2021 GHG report.
10

Suggested transition plans:Petrochemical Corporation of Singapore (PCS)At present PCS has no publicly available
transition plan. The following is a proposal
for a credible transition strategy for PCS. PCS
was chosen because of the high overlap of its
product range with the eligible assets outlined
in Climate Bonds’ Basic Chemicals Criteria. These
overlapping assets include Ethylene, Propylene, Butadiene, Benzene,
Toluene, and Xylene, which combined represent 92.8% of PCS’s
production capacity.
Sources: Company website
PCS is one of the Big Three chemicals companies in Singapore,
alongside Shell and ExxonMobil. Its current ownership is evenly split
between Japan-Singapore Petrochemicals Company Limited and QPI& Shell Petrochemicals (Singapore) Pte. Ltd. At present it does notreport its annual revenues or emissions.
Hallmark 1: Paris-aligned targets
Targets should be aligned with a sector specific, 1.5°C
pathway, cover the short-, mid-, and long-term, and include
scope 1, 2, and 3 emissions
PCS currently has no GHG targets or emission reporting. However, it isestimated that PCS represents 21% of Singapore’s petrochemical industry
emissions (which itself represents 46% of Singapore’s emissions), producing
between 3.15-4.2m tCO2e.
Climate Bonds’ Basic Chemicals Criteria calls for an emissions intensity
reduction between 2022 and 2030 of 45.1% for high value chemicals(ethylene, propylene, and butadiene) as well as a 44.4% reduction foraromatics BTX (benzene, toluene, and xylene). Credible and ambitious
targets for PCS would target an equivalent emission reduction by 2030,
reaching an emissions intensity of 0.28 and 0.004 tCO2e/t production forhigh value chemicals and aromatics BTX respectively.
Hallmark 2: Robust plans
Plans need to be 1.5°C-aligned and include respective
financing and governance plans.
Transition plan: While PCS currently lacks a transition plan or equivalent, it
does list four decarbonisation categories under its sustainability commitment,
including energy efficiency improvements, CCUS technologies, circular
economy-based production, and increasing its use of renewables.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

Climate Bonds’ Basic Chemicals Criteria includes all these areas as eligible(pending further mitigation criteria), but other actions that can facilitate thetransition required include using hydrogen, biomass, or CO2 (from direct
on-site emissions) as a feedstock, electrification of processes, heat exchangeequipment, as well as alternative low-carbon energy sources.
Financing plan: PCS lacks relevant financing plans for its transition.
PCS had no public debt outstanding at the end of November 2022.21 As it
details and develops its transition action plans, it could tap debt markets
to attract financial support. Green UoP bonds could finance relevant assets
and activities like its CAPCOM programme, amongst others. SLBs could
be deployed to support this, with KPIs linked to scope 1, 2, and 3 emission
targets. The Climate Bonds Standard v4.0 supports the Certification of bothfinancial instruments, and as shown above, PCS’s product portfolio could be
Certified against Climate Bonds’ Basic Chemicals criteria.
Governance: PCS has some governance mechanisms for its transition: it
established a Sustainability Team in February 2022 to spearhead initiatives
for decarbonisation.
Other common governance mechanisms to accelerate climate transition
could include a climate committee that reports to the board of directors,
departmental climate transition working groups, and climate performancelinked renumeration.
Hallmark 3: Implementation action
Early action to demonstrate implementation
While PCS at present lacks the relevant reporting on its overall
capital and operating expenditures (let alone for its climate transition),
Climate Bonds encourages it to identify and estimate its decarbonisationfocused investment needs, as well as the relevant operational expenditures,to action its would-be transition plan.
Hallmark 4: Internal reporting,
Hallmark 5: External reporting
Transition KPIs need to be recorded, updated,and verified against the existing strategy
PCS currently does not report on any transition‐related KPIs.
Climate Bonds encourages it to calculate, track, and disclose
its annual scope 1, 2, and 3 emissions and emissions intensity. Disclosureof relevant secondary performance indicators, such as water and energy
consumption, and waste production, will also help it to track its climatetransition progress.

11

Electric Utilities
Climate Bonds does not
currently have Sector
Criteria for Electric
Utilities against whichto Certify. However,individual projects suchas energy efficiency measures or electricgrids and storage could be Certified against
the relevant criteria for green UoP bonds.

Indonesia’senergy sector is
key to the energy
transition
As the largest contributor to
the GHG emissions of the ASEAN power sector,
Indonesia is key to the energy transition. The
country has the highest energy consumption
among ASEAN member states, and thisis set to rise considerably in the period to2050 because of its growing population andeconomy.22 While fossil fuels still dominate its
energy mix, Indonesia has abundant untapped
potential to develop a sustainable energy

system based on renewable energy sources
including wind, solar, and hydropower.23
As part of its nationally determined
contributions (NDCs) under the Paris
Agreement, Indonesia has committed toreduce its carbon emissions between 29%(unconditional) and 41% (conditional) by 2030,
relative to a business as usual (BAU) baseline.24
The country has also committed to reachnet zero emissions by 2060, and as early as
2050 with international support. Indonesia’s
renewable energy potential plays a key role inmeeting its decarbonisation targets and risingenergy demand.

PT Cikarang Listrindo Tbk
Source Sustainability Report 2021
PT Cikarang Listrindo Tbk (Listrindo) is an
Indonesia-based integrated electric utility
company that owns and operates gas and coalfired power plants, providing energy to industrial
and residential customers. In 2021, it generated
USD514.9m in revenue, and total emissions of 2,887 Kt GHGe.
Overall, Listrindo has made progress on a transition strategy including
short- and mid-term scope 1 and 2 GHG emission reduction targets.
Climate Bonds encourages Listrindo to maintain the momentum andadd plans for scope 3 emissions reduction.
Recommendations:
1. Adopt 1.5°C aligned targets for Scope 1, 2, 3 emissions andrenewable energy targets
2. Focus on developing capacity from solar and other renewableenergies, and ensuring the sustainability of biomass
3. Enhance corporate reporting by monitoring short-term transitionrelated KPIs
Hallmark 1: Paris-aligned targets
Targets should be aligned with a sector specific, 1.5°C
pathway, cover the short-, mid-, and long-term, and include
scope 1, 2, and 3 emissions
Listrindo has committed to GHG emissions reduction targets in the shortand mid-term of 10% reduction by 2025 and 20% by 2030, in line withIndonesia’s NDC for the energy sector.25 While it is common practice among
ASEAN companies to align their transition targets with NDCs, Climate Bonds
cautions against the use of NDCs since they do not equate to a 2°C world.
While Listrindo currently reports on its GHG emissions inventory, covering
scope 1, 2 and 3 emissions, these are not clearly articulated as part of thecompany’s short- and mid-term targets. More ambition is encouraged in the
adoption of credible transition pathways, such as alignment with TPI’s 1.5°C
pathway for electric utilities, and the inclusion of scopes 1, 2, and 3 in thecompany’s climate mitigation strategy.
Hallmark 2: Robust plans
Plans need to be 1.5°C-aligned and include respective
financing and governance plans.
Transition plan: Listrindo has made a commitment to develop power generation
sourced from renewable energy, but these renewable targets have not been publicly
disclosed which undermines the credibility of its efforts. Listrindo is encouraged
to increase the level of ambition, transparency, and materiality of its targets.
Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

Financing plan: The level of detail on the financing plan in publicly available
documentation is limited. The company invested in rooftop solar power,machinery and equipment, and assets under construction for a total of
USD1.4m. The total capital investment in 2021 amounted to USD12.7m.
As of November 2022, Listrindo had one bond outstanding, a USD550m
10-year vanilla bond priced in 2016. Listrindo could issue green bonds toattract financing for green projects including renewable energy, which could
be Climate Bonds Certified under the relevant Sector Criteria. It could also
explore SLBs with KPIs linked to elements of its transition strategy.
Governance: There is evidence at board level of the company’s environmental
sustainability and corporate social responsibility ambition, each represented byits own team. The two teams report directly to the board of directors on aspectsof energy, emissions, water, waste, and biodiversity in accordance with prevailingregulations and best practices. Listrindo could increase the board’s accountability
by tying executive remuneration to transition performance targets.
Hallmark 3: Implementation action
Early action to demonstrate implementation
Listrindo operates three conventional power plants, with a total
installed capacity of 1,144 MW. Most of the energy sources used by the company
to generate electricity come from fossil fuels, i.e., natural gas and coal which
will need to be replaced for the company to reach net-zero. Listrindo’s target
is to reduce GHG emissions by replacing some portion of coal with biomass,
though it must be noted that burning biomass does generate emissions aswell as having impacts on biodiversity and ecosystem services, such that only
under strict conditions can biomass be considered sustainable. In addition toconventional power generation, the company operates 3.2 MWp of rooftop solar
power and 8.1 MWp is under construction. Listrindo should concentrateon developing capacity from solar and other sources of clean, renewableenergy to give itself the best chance of reaching net-zero in a timely way.
Hallmark 4: Internal reporting andHallmark 5: External reporting
Transition KPIs need to be recorded, updated,and verified against the existing strategy
As part of its broader company disclosure, Listrindo has committed toreporting on its annual scope 1, 2 and 3 emissions, including breakdownsof the categories of emissions. GHG inventories for 2020 and 2021 comply with ISO
14064-1:2018 and have been verified and certified by an international certification
body. The company also reports annually against risks and opportunities to its
business due to climate change, and identified stakeholder pressures as a key driverof the company’s transition to renewable energy sources. Listrindo could enhance
its reporting by monitoring short-term transition‐related KPIs in its annual corporate
disclosure to determine whether the climate mitigation strategy is on track.

12

Oil and Gas
Climate Bonds does not
currently have sector
Criteria for Oil and Gas
against which to certify.
However, individual
projects such as energy

efficiency measures or electric grids andstorage could be Certified against the relevant
Criteria for green UoP bonds.

PTT Public Company Limited (PTT)PTT Public Company Limited (PTT) is the parent company of multiple
other entities including PTT Global Chemical (GC) addressed above. PTT
and GC each have their own financial and non-financial reporting, as well as
separate sustainability strategies.

Sources: Company website; Annual Report 2021
PTT Public Company Limited (PTT) is theleading oil and energy company in terms of market
capitalisation on the Stock Exchange of Thailand. It
is a state-owned enterprise, the Ministry of Financeholding direct majority shareholding. PTT’s total
revenue in 2021 was THB2.3tn (USD66.5bn). PTT
generated 33.15 million tonnes of CO2e in Scope 1 and 2 emissions, yetthose from the combustion of fuels products sold (Scope 3) amounted
to 113.48 million tonnes of CO2e.
Overall PTT must act on its coal phase‐out commitments and moveaway from fossil gas to enable decarbonisation. Climate Bonds
encourages more ambition in the company’s transition strategy,
including plans for scope 3 emissions reduction, which represent thebulk of its emissions.
Recommendations:
1. Act on plans to phase out and exit coal
2. Adopt more ambitious GHG targets that are in line with 1.5°C
pathways and set short- and mid-term targets for scope 3
3. Design a plan to move away from fossil gas to enabledecarbonisation by 2030

Hallmark 1: Paris-aligned targets
Targets should be aligned with a sector specific, 1.5°C
pathway, cover the short-, mid-, and long-term, and include
scope 1, 2, and 3 emissions
PTT’s climate mitigation strategy focuses on reducing the group’s GHG
emissions by 15% by 2030 compared to 2020 levels. These targets include
scope 1 and 2 emissions covering domestic and international operations,but do not consider scope 3 emissions. The company’s strategy is alignedwith Thailand’s NDC.
PTT intends to support its decarbonisation targets through carbon captureand storage projects (including natural solutions via forestry restoration andconservation – this is considered offsetting and not encouraged by Climate
Bonds), carbon utilisation projects (CCUS), hydrogen energy projects,
energy conservation projects, and carbon offsetting with carbon credits.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

Climate Bonds encourages more ambition in the selection of credibletargets. While the company’s carbon budget structure is commendable, it
is not sufficient as it ignores scope 3 emissions. PTT could adjust its targets
to align with TPI’s sector-specific pathways or SBTi’s absolute contraction
approach (non-sector-specific). Moreover, Climate Bonds cautions against
offsetting, as it reduces transparency and diverts attention away fromreducing inherent activity emissions.
Hallmark 2 (Robust plans) andHallmark 3 (Implementation action)
Plans need to be 1.5°C-aligned and include respective
financing and governance plans.
Transition Plan: PTT’s transition plan relies on a pivot in thebusiness model towards growth industries through investment inrenewable energy, energy storage systems, and EVs. In addition,
the petrochemical businesses will expand to high-value products withadvanced technology (artificial intelligence, robotics) as well as logistics
and infrastructure. The oil business will be transformed into a mobility andlifestyle model (retail, food, and logistics), while phasing out and exiting
the coal business.
Financing plan: The company has committed to portfolio transformation.
It intends to invest in and generate growth from future energy businesses,with 32% of PTT Group’s 2021-2030 investment budget earmarked for thisobjective. The company’s provisional capital expenditure for expansion into
new businesses (including renewable energy, EVs and other) in the next five
years amounts to THB238bn (USD6.9bn).
As of November 2022, PTT had USD6.4bn spread over 24 USD and THB
denominated bonds. Among these was a THB2bn (USD69m) three-year
green bond priced in 2020. The UoP were earmarked for reforestation andCertified against the Climate Bonds Forestry Criteria. As existing debt rolls
off, PTT could issue more green bonds to finance or refinance assets or
projects pertaining to its transition. It could also explore SLBs, with KPIs
linked to GHG emission reduction targets of its scope 1, 2, and 3 emissions
or other environmental ambitions.
Governance: Climate governance is integrated at PTT’s board andmanagement levels. Climate governance is overseen at the management levelby the company’s governance risk and compliance management committee,
which reports directly to the board’s corporate governance committee.
Relevant climate strategy and performance are managed by various
departmental sub-committees, including a dedicated net-zero taskforce.
Hallmark 4: Internal reporting,
Hallmark 5: External reporting
Transition KPIs need to be recorded, updated,and verified against the existing strategy
The company is reporting annually on its GHG emissions
inventory, including scope 1, 2 and 3. Information disclosure isreviewed by independent external agencies on an annual basis.

13

Agriculture
Climate Bonds has
Agriculture Sector
Criteria for livestockand crop productionin addition to Forestry,
Land Conservation, andRestoration Criteria, against which certain

assets could be Certified for inclusion ingreen UoP bonds.26,27 Climate Bonds is currently
developing transition pathways for agriculture
and supply chain Certification Criteria tosupport actors in identifying and aligning
their activities and business models with a
1.5-degree future.

Scope 1, 2 and 3 emissions are reported to
GRI, SASB index and CDP frameworks. Scope 3
supply chain emissions make up 97% of total
GHG emissions.

Olam (Singapore)
Sources: Annual Report 2021

Hallmark 1: Paris-aligned targets

Olam Group (Olam) is an agribusiness supply
company domiciled in Singapore, providing food,feed, and fibre worldwide. It operates as three
entities: Olam food Ingredients, Olam Agri andOlam Group. With a group revenue of USD47bn, its
supply chain spans 60 countries and includes farming, origination,
processing, and distribution operations. The group operates acrossthe supply chain in sourcing, processing, transporting, and distributing
agricultural products including grains, edible oils, wheat, animal feed
and protein, rice, and specialty grains, and operates the largest RSPO‐
certified plantation in Africa.

Targets should be aligned with a sector specific, 1.5°C
pathway, cover the short-, mid-, and long-term, and include
scope 1, 2, and 3 emissions
Olam is one of 12 global agricultural trading firms with a publicly accessible
roadmap of enhanced supply chains in line with a 1.5°C pathway, as
announced at COP26. Olam states its commitments to no deforestationof High Conservation Value/High Carbon Stock (HCV/HCS) and Peatlands within its palm sustainability report; however, it is unclear what thetime frames are for this. The SBTi Forest, Land, and Agriculture (FLAG),
specifies zero deforestation must be no later than 2025 and Climate Bonds
encourages Olam to align with this ambition, making these timeframes clear
in its documentation.

Olam justified a significant increase in scope 3 (from 72.3 to 87.5
MT CO2e/MT) because of greater accuracy in reporting against grain
emissions. The next step would be for Olam to reduce these throughstringent third-party supply and downstream emissions tracking, andyear-on-year reporting. Climate Bonds encourages Olam to provide
more clarity on its sustainable agricultural practices including its
stance on fertiliser use, precision agriculture, protected agriculture andagroecology as a measure of protecting biodiversity.
Overall Olam is a leader in the space with good strategies and policies
in place for many commodities. For example, Olam provides detail on
its palm oil policy, outlining key commitments to protection of High
Conservation Value (HCV) lands, as well as reporting to CDP, Cocoa
Forest Initiative, and the UN Global Compact. Olam is a signatory to
the Business Ambition for 1.5°C, coordinated by the SBTi. The 2021
annual account provides a goal dashboard where commitments are
given a clear timeframe. Olam is making positive and progressive steps
to its climate action, with clear actions proving more than just pledges.
Recommendations:
1. Continue the focus on supply chain transparency
and enhancement
2. Set and review consistent-, short-, mid-, and long-term
performance targets with quantifiable reporting
3. Aim to comply with the SBTi FLAG of zero deforestation nolater than 2025
The policies referenced in this analysis pertain to Olam Group as aparent company. Any policies specifically relating to subsidiaries were
not included. Olam would be encouraged to ensure all these policies
are united under the Group’s Annual Transition Reporting.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

Olam has achieved the Roundtable on Sustainable Palm Oil (RSPO)
certification with GHGs monitored using the RSPO Palm GHG calculator.28
Olam could build on this to set broader performance targets (PTs) acrossall supply chains that indicate how it will align with a 1.5-degree sectoraltransition pathway. To complete its transition plan, Olam could outline
its plans for transitioning interim, and stranded activities. Olam states
the timeframes for its goals within its Annual Reports, however, does notconsistently clarify the timeframes in other documentation. To add rigor, we
would encourage Olam to continue to quantify its commitments,.
Hallmark 2: Robust plans
Plans need to be 1.5°C-aligned and include respective
financing and governance plans.
Transition plan: Climate Bonds encourages Olam to implementcompany-wide consistency in the use of short-, mid-, and long-term goals which
are currently fragmented. Olam could also publish more robust plans on an
activity level, including identifying which activities will be interim/stranded, andwhich other activities will be funded as part of its transition agenda.
In its Annual Report, Olam has set short- and mid-term goals (up to 2040).
Climate Bonds applauds its commitment to achieving many of the short-termgoals stated, including 95% of direct suppliers covered by the supplier code.
However, we would encourage Olam to produce more mid- and long-termgoals, to highlight its long-term ambition, and ensure that achievement of any
goal is recorded in a consistent and easily identifiable manner. Whilst Olamdoes state its climate goals within its report, Climate Bonds would encourage
Olam to see the value of combining this information into a single transition
plan and including all its commodity specific targets.
Financing plan: Current sustainability and annual reporting does notindicate in detail the amount of funding that will be mobilised to ensure PTs
are met. Climate Bonds encourages Olam to estimate and disclose this.

14

As of November 2022, Olam had USD1.0bn of debt outstanding spreadover six instruments denominated in USD, SGD, and JPY, which included
a pair of SLBs.29 Olam’s business model lends itself well to SLBs. Having
borrowed in the sustainability-linked loan market, Olam priced its first SLB
in 2020, a JPY7.0bn (USD67m) private placement with a step‐down linked
to SPTs supporting food systems, communities, and regenerating the living
world (biodiversity and reforestation). A second JPY5.5bn (USD50.0m) deal
was priced in 2021, with similar characteristics. Olam has yet to publicly
disclose its SLB Framework. Climate Bonds calls on Olam to publish it todemonstrate its commitment to transition.
Climate Bonds also encourages the company to stretch the ambition of its
KPIs, linking them to its supply chain or GHG targets, and to cement its PTs
in the strategy by linking them to its finance mechanisms.
Governance: Olam was included in the FSTE4Good index, following areview of its governance activities. Olam sits on the board of the RSPO
and the Biodiversity and High Conservation Value Working Group. Its
dedicated Corporate Responsibility and Sustainability Board oversees theembedding of sustainability into the business, and many senior directors
sit on this committee.
Hallmark 3: Implementation action
Early action to demonstrate implementation
Olam achieved a 26% reduction of its absolute scope 1 and 2
emissions through the use of renewable energy and biomass (up 3.7% from2020), and improvements in scope 1 and 2 caused by processing efficiencies
in cocoa, grains, and spices.30
Working with consultancy South Pole on its Fast Track Climate Assessment,
Olam has implemented its plans by reviewing 27 of its supply chains, withconclusive evidence to support on‐farm GHG reductions are on average
31%. Climate Bonds encourages Olam to expand these efforts to cover
100% of its supply chain.
Hallmark 4: Internal reporting,
Hallmark 5: External reporting
Transition KPIs need to be recorded, updated,and verified against the existing strategy
Olam has implemented a robust internal and external reporting
practice, including using Traceability, a tool to monitor and reporton palm oil purchases. Olam has partnered with Vivid Economics to model
physical climate risk, acute weather events, and transition risks.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative15

3.Guidance for sustainability-linked bonds
as transition finance instruments
Note: Data used in this analysis references Climate
Bond’s Sustainability-Linked Bond Database(SLBDB) as of 09 November 2022. The Database andassociated methodology will be released in 2023.
Entities operating in sectors
with well-established transition
pathways such as real estate,transportation, and utilities caneasily identify projects, assets,
and expenditures suitable forgreen UoP bond financing. For those operatingin the hard-to-abate sectors including cement,
steel, and basic chemicals, some of which havebeen examined above, the pathways are only
beginning to be established and the journey tonet-zero can still, at least partially, rely on untested
technologies. For these entities, the SLB structure,(and occasionally transition UoP bonds) can be
more suitable financing vehicles. The activity
of issuing a sustainable debt instrument, be it agreen bond or an SLB, signals to investors thatthe issuing entity is identifying and addressing
climate‐related business risks.
As of November 2022, Climate Bonds had recorded
USD201.7bn of SLBs and transition bonds. However,issuers have been criticised for a lack of ambitionand credibility, mainly because chosen targets are
set against business baselines rather than sciencebased pathways and are difficult to benchmark andcompare to peers and sectoral pathways.
In recognition of the need for market guidance,
Climate Bonds published the white paper Transition
Finance for Transforming Companies and expanded
the Climate Bonds Certification programme toinclude entity-level and SLB certification.31 Climate
Bonds is also building a Sustainability-Linked
Bond Database, recording SLBs that demonstratealignment and credibility with a sector-specific
1.5°C pathway, in line with its Five Hallmarks.
To reinforce the credibility of SLBs, Climate Bonds
encourages issuers to follow the below guidance:

1. SLBs are only as powerfulas the entity’s underlying
transition plans
The SLB market has seen strong growth in thepast two years as it allows for general purpose
finance to be raised and because entities canestablish their own KPIs and performance targets.
SLBs can be powerful, forward-looking financial
instruments when they include KPIs with
ambitious performance targets material to themain sources of emissions. The transition impactof the SLB is intrinsically linked to the credibilityof the transition plan and ambition of associatedperformance targets. Climate Bonds assesses theambition and credibility of entity transition plans
against the framework of its Five Hallmarks which

Credible transition plans

Credible sustainabilitylinked bonds

Paris-aligned targets

Key performance Indicators
Sustainability Performance Targets

Robust Plans

Strategies to achieve the SPTs

Implementation Action

Achieving the SPTs

Internal monitoring

Internal monitoring

External Reporting

SLB Reporting

examine the entity’s targets, the feasibility andcoverage of underlying plans, transparency, andreporting procedures. Climate Bonds encourages
issuers to address all Five Hallmarks and theirsubpoints in their transition plans to emphasise
commitment to net zero (Appendix 1).

2. SLB targets should include
all material scopes of emissions
Hallmark One: Paris‐aligned targets call for GHG
targets in the short-, mid-, and long-term, to be
inclusive of scope 1, 2, and 3, and to be aligned witha science-based sector specific pathway which will
limit global warming to no more than 1.5°C.
However, by November 2022, SLBs with targets
designed to address all three emission scopes
represented just 14.4% of SLBs captured in the Climate
Bonds SLBDB (USD29.1bn of the USD201.7bn).
Occasionally, scope 3 is not materially relevant,but this would be exceptional. In Climate Bonds’
Cement Criteria (referenced above), for example,
the boundary of scope is defined as up until the
point of grinding/blending cement: this would
be considered as scope 1 for some companies,
but upstream scope 3 for others. To ensure
consistency and materiality, Climate Bonds’
Cement, Basic Chemicals, and Steel criteria defineboundaries by activity, not simply by scope.
For the avoidance of doubt, any SLB from an agrifood company or oil and gas issuer must include
scope 3 emissions. Scope 3 emissions can represent
85-100% of the emissions of such entities. However,just three out of 22 oil and gas SLB deals had
included scope 3 targets by November 2022.

3. GHG economic intensity
targets are less robust
The strongest SLBs utilise absolute GHG emission
targets, science-based sector decarbonisation
pathways, or GHG emission intensity targets witha unit of production as the denominator.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

Economic intensity targets can be used but
are considered less robust and ambitious thanabsolute or physical intensity methods. Credible
economic intensity targets require a greater annual
percentage reduction (7% per year, compounded)and should be calculated using the GHG
emission per value added (GEVA) method.
SLBs with GHG economic intensity targets
represent USD10.5bn of SLB debt, or about 5.2%of the total SLB volume to date. None of thosecurrently use the GEVA method, but instead use
revenue or units sold as denominators.

4. The strongest SLB structures
boost investor confidence inissuers and their deals
The strongest SLBs are clear and consistentin their structure. Investors tend to prioritise
stronger structures. Issuers should avoid setting
call dates prior to KPI observation dates, step-ups
that only kick in at the end of the bond’s term,and performance target observation dates being
set after the maturity of the bond. Yet, all thesethings have been observed in SLB structures.
Currently, 8.5% of SLB debt (USD17.2bn) has afirst call date before the KPI observation date,with an average of 1.8 years between the firstcall date and KPI observation date. Thus far,
Climate Bonds has witnessed one bond called
before its KPI observation date. While callable
bonds should be welcomed into the SLB market,
Climate Bonds encourages issuers to placefirst call dates after the KPI observation date or
include provisions in legal documentation that
apply the coupon step-up if the bond is called
before the KPI observation.
SLBs where the step-up may only apply to one or
two coupon payments represent 15.1% of total
SLB issuance. Encouragingly, step-up structuresthat apply to five or more payments represent
45.7% of SLB debt.

16

4. Recommendations
Climate change poses significant physical,
financial, and regulatory risks to the global
economy and unprepared entities. However,there are also major benefits for early moverentities in terms of identifying emerging processes,
technologies and market opportunities that will
drive transition to a 1.5 degree aligned futureand embed resilient business practices. The
development of a well-structured, credible,
and ambitious transition plan underpins thisopportunity. Currently the creation of transition
plans is voluntary, however governments areworking to set regulations that will lay out therequirements for mandatory transition plans.32
In analysing available transition plans forinclusion in this report, Climate Bonds was
encouraged to note that climate change was
acknowledged as a business risk by every entity,and efforts had been made to describe at least
some of the steps required to enable a transition
towards net-zero. However, no single entity had
published a holistic, robust, transition plan.
As such, following this brief analysis oftransition plans in the ASEAN market, Climate
Bonds’ primary recommendation is for entities
to develop a coherent, comprehensive,and credible transition plan that meetsthe Hallmarks outlined in this paper and ispublished prominently on their website.33

Most entities will need to transition their activities
towards net-zero and should start planning forthis as soon as possible. Entities operating insome sectors may not yet have complete clarity
on precisely what needs to be done further down
the line but should nevertheless begin with what
is currently practicable. Climate Bonds makes thefollowing recommendations:
1. A transition plan should be contained in asingle, clearly labelled, easily accessible document(although some or all of it can also be included inother documents, such as annual reports)
2. The plan should be dated and include anindication of how frequently it will be evaluated
to incorporate ongoing developments
3. Labelling and terminology should be appliedconsistently across the transition plan andrelated documents
4. Transition plans should address all Five
Hallmarks, and where there are gaps, theseshould be explained, and a clear plan set out toaddress these gaps (Appendix 1)
5. Any organisation planning to issue an SLB
should follow the guidance given in Section 4 ofthis document, to ensure maximum credibility
and impact (page 16)

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative17

Appendix 1. Checklist to achieve Five Hallmarksof a Credibly Transitioning Company
Hallmark 1:
Paris-aligned targets

Hallmark 2:
Robust Plans

1. Articulate GHG reduction targets
for the short-, mid-, and long-term
Note: short-term means <2025, mid-term <2030,
long term <2050
2. Targets should cover scopes 1, 2, and 3
2.1 If not, exclusions should be explained (i.e.,they are not material, <10% of emissions)
Note: There are circumstances in which certain
emissions may not be material to a company,or downstream emissions may not be under its
control. All scope 3 emissions are required from
Oil and Gas companies.
2.2 Specify whether emissions are intensity/
absolute reductions, and indicate reduction
against baseline
3. Align above targets with a sector-specific,
Paris-aligned (at least 1.5°C wherever available,
otherwise below 2°C) pathway
Note: These pathways could be provided by
SBTi, TPI, RMI, IEA, ACT Initiative, UTS.
Note: Climate Bonds does not recommend
benchmarking against National Plans or
Nationally Determined Contributions (NDCs),
which are often not aligned with a 1.5°C pathway.
Note 2: Some sectors may not have pathways
available; in lieu of this, their plans should bealigned with SBTi’s cross-sectoral approach(CSA) or best-in-class.

1. Detailed strategy and plans should
be provided for the transition
1.1 The plan should include all business areas
1.2 Changes required to deliver on the targets
should be identified– including but not limited to:
1.2.1 Diversifying activities
1.2.2 Decarbonising existing activities(efficiency/tech changes etc)
1.2.3 Engaging with suppliers and clients
1.3 Plans should demonstrate an ability todeliver against the GHG reduction targets

Other considerations
1. If performance targets (PTs) are set, theyshould be in line with the 1.5°C, sectorspecific pathway
2. GHG targets should not rely on
Carbon Capture and Storage or
Sequestration where alternatives areavailable (sector‐specific).
3. GHG targets should not rely on carbon
credits/offsets.
4. Plans should demonstrate ambition
against recent emission trends

Other considerations
1. Plans should exclude the use of fossil
fuels and lock-in of fossil fuel infrastructure.
2. Address technologies that release other,
non-carbon dioxide GHGs. Clarify theapplication of any technologies.
2. Provide a financing plan for the entity’stransition plans
2.1 The plan should cover the needs andcommitments of any capital expenditures(CapEx), operating expenditures (OpEx),
research and development (R&D), or mergers
and acquisitions (M&A)
2.2 The plan should describe how thisfinancing will be used based on business area
2.3 The plan should compare fundingfor ‘transition-away’ vs. ‘transition-to’
business activities
Other considerations
1. The plan should highlight any company
history of accessing sustainable finance(GSS/SL bonds, loans, etc.).
3. The entity must develop and implement therelevant governance mechanisms to deliver the plan
3.1 The board should have clear oversight ofclimate risks and opportunities
3.2 The board should publicly commit to thetransition plan/net-zero targets
3.3 The board should include an individual
responsible for climate change-related issues
3.4 Executive committees should include
individuals responsible for climate changerelated issues
3.5 The board and/or executive committee
should have oversight on the setting,performance, and reporting of the PTs
Note: Governance mechanisms can vary between
entities, but common examples can include
but are not limited to:a Climate/Sustainability/
ESG committee that reports to the board,
departmental climate/transition working groups,
climate performance-linked renumeration

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

Hallmark 3:
Implementation
Action1. The entity should identify shortand mid-term CapEx required for its transition
1.1 The amount should be proportional to its
total CapEx in the same period
1.2 The entity should commit to decarbonising
this CapEx, in line with its GHG targets and PTs
Other considerations
1. CapEx should be proportional to theoverall transition investment plan
2. The company should commit todivesting/decommissioning its non-aligned
assets and activities (e.g. coal plants, fossil
fuel-based activities)
2. The entity should identify short term OpEx
required for its transition
2.1 The entity should commit to decarbonising
this OpEx, in line with its GHG targets
3. The company should monitor and report
performance against its PTs/overall transition

Hallmark 4:
Internal Reporting
1. The transition plan should
clearly outline a regular internal
review of KPIs and PTs in order to recalibrate, or
revaluate its PTs in light of unexpected changes(new technology, going off track, etc.)
Note: Selected Performance Targets should be
regularly reviewed and recalibrated to reflectchanging operating conditions and market
developments such as new technologies coming
online sooner than expected. Processes should
be in place for such recalibration to tighten
stringency where possible and overall to ensure
continuous improvement.

Hallmark 5:
External Reporting
1. The entity should reportannually, publicly and clearly on its
GHG emissions and PTs
1.1 The entity should disclose its methodology
for calculating its PTs
2. The entity should explain its performanceagainst these PTs
3. The results of GHG targets and PTs should beexternally verified

18

Appendix 2. State of play of transition
finance in ASEAN
The transition to net zeromust be private sector led, butpublic sector enabled. The
Intergovernmental Panel on
Climate Change (IPCC) Sixth
Assessment Report (AR6)emphasised how coordinated climate policies,
integrated into the wider development context,
can increase the pace, depth, and breadth ofemissions reductions. The scope of supportive
policies is broad as it covers finance, industry,
agriculture, trade and energy amongst otherelements. Climate Bonds’ 101 Sustainable
Finance Policies for 1.5°C, as the name suggests,
is a useful resource as it gives an overview ofpolicies that can contribute to reaching thegoals of the Paris Agreement.34 Many of thesepolicies, if implemented, would support entities
in designing their transition strategies.
A selection of supportive financial policies fromASEAN are described briefly below.

Malaysia – SRI Sukuk and Bond Grant
Scheme and Low Carbon Transition
Facility
In August 2022, the Securities
Commission Malaysia (SC)announced the expansionof the Sustainable andResponsible Investment(SRI) Sukuk and Bond Grant
Scheme to facilitate companies raising sukuk tomeet their sustainable finance needs.35 The grantscheme covers up to 90% of the costs incurredby issuers on external reviews of sustainable
instruments under the SC’s SRI Sukuk Framework
andthe ASEAN Green, Social and Sustainability
Bond Standards, and has since extended this to
SRI-linked Sukuk issued under the SC’s SRI-linked
Sukuk Framework, which was introduced inJune 2022.36 This announcement was made in
conjunction with the 2022 release of SC’s SRIlinked Sukuk Framework, which aims to facilitatecompanies raising funds using SLBs.37

Separately, the country’s central bank – Bank
Negara Malaysia (BNM) – launched a Low
Carbon Transition Facility (LCTF) worth MYR2bn(USD480m) in January 2022, as part of a joint
effort with participating financial institutions to
support and encourage small and medium-sizedenterprises (SMEs) to adopt sustainable practices
for business resilience.38 Under this scheme,
eligible SMEs will be able to obtain financing up
to MYR10m (USD2.3m) per SME and financing
tenure to 10 years, which can be utilised tofund capital expenditure or working capital toinitiate or facilitate the transition to low carbon
and sustainable operations. This initiative wasannounced in the Budget 2022 by the Ministry of
Finance and is consistent with Malaysia’s nationaltarget to achieve net-zero emissions by 2050.39

Singapore – Sustainable Bond Grant
Scheme and Green and SustainabilityLinked Loan Grant Scheme
The Monetary Authority ofSingapore (MAS) launcheda Sustainable Bond Grant
Scheme (SBGS) in 2017,encouraging the issuance ofgreen, social and sustainability
bonds in Singapore by helping issuers to coveradditional costs associated with external
reviews.40 Valid until 31 May 2023, the scheme
defrays up to SGD100k (USD75.1k) of additional
expenses for external reviews of eligible green,social, sustainability and sustainability-linked
bonds, in addition to advocating for the adoptionof internationally accepted standards.
MAS also acknowledges the role of the banking
sector in accelerating local adoption ofsustainable practices in Singapore. Thus, prior to
the release of SBGS, MAS introduced the Greenand Sustainability-Linked Loan Grant Scheme(GSLS).41 Reported to be a global first, the GSLS
offsets the costs of independent verificationof the green and sustainability credentials of
relevant instruments.

Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative

Thailand – Waiver of approval and filingfees for sustainability-linked bonds
In May 2021, the Securities
and Exchange Commission ofThailand (SEC) expanded its
waiver of approval and filingfees to include SLBs.42 The
waiver was introduced in 2019
to cover green, social and sustainability (GSS)
bonds extended until 31 May 2025.43 Restrictions
on the UoP of GSS bonds were also removed.
Meanwhile, the Thai Bond Market Association(ThaiBMA) announced it would waive theapplication fee on GSS bonds in compliance with
SEC regulations, and annual fees would be reduced
by THB10k (USD290) from March 2019 until June
2020.44 This incentive was extended to June 2022,
and SLBs were added to the eligible assets.

ASEAN Sustainability-Linked
Bond Standards
In November 2022, theASEAN Capital Market Forum(ACMF) published the ASEAN
Sustainability-Linked Bond
Standards (ASEAN SLBS).45
The ASEAN SLBS are intended
to contribute to the development of the SLB
market in the region by facilitating enhanced
transparency, consistency, and uniformity of
the instruments, reducing due diligence costs,
and helping investors to make informed
investment decisions.
The ASEAN Taxonomy for Sustainable Finance– Version 1 provides a framework for definitionsof acceptable economic activities.46 These two
initiatives will support issuers, including thosein high emitting sectors, to implement therequired transition activities.
There is huge potential for other ASEAN member
states to introduce further incentives.

19

Endnotes
1. Including from Climate Bonds Initiative, GFANZ, TPI, CDP, TPT,IIGCC. All guidance is well aligned calling for ambitious short-,
mid- and long-term science-based targets underpinned by acomprehensive, costed and transparent business plan.
2. United Nations Framework Agreement on Climate Change
https://unfccc.int/process-and-meetings/the-paris-agreement/
the-paris-agreement#:~:text=The%20Paris%20Agreement%20is%20
a,compared%20to%20pre%2Dindustrial%20levels.
3. Climate Action 100+ https://www.climateaction100.org/news/
climate-action-100-net-zero-company-benchmark-showscontinued-progress-on-net-zero-commitments-is-not-matched-bydevelopment-and-implementation-of-credible-decarbonisationstrategies/
4. Climate Bonds Initiative, Transition Finance for Transforming
Companies, 2021 Transition-Finance-for-TransformingCompanies-6092022(1).pdf (climatebonds.net)
5. https://www.climatebonds.net/files/files/Transition%20Finance/
Transition-Finance-for-Transforming-Companies-6-Sept-2022.pdf
6. Climate Bonds Initiative, Climate Bonds Standard V4.0, 2022,
https://www.climatebonds.net/climate-bonds-standard-v4
7. Climate Bonds Initiative Sustainable Debt Market Summary Q32022 https://www.climatebonds.net/files/reports/cbi_susdebtsum_
highlq32022_final.pdf
8. Climate Bonds Initiative, Green Bond Pricing in the Primary Market
H1 2022, September 2022, https://www.climatebonds.net/resources/
reports/green-bond-pricing-primary-market-h1-2022
9. Climate Bonds Cement Criteria, October 2022, https://www.
climatebonds.net/files/files/Cement-Criteria-Document-Final-241022.pdf
10. Climate Bonds Initiative, Cement Criteria, Development of Eligibility
Criteria under the Climate Bonds Standard and Certification Scheme
Cement Background Paper (climatebonds.net)
11. 30 November 2022, Bloomberg
12. PT Semen Indonesia (Persero) Tbk, 2021 Sustainability Report
SR-SIG-2021-r2.pdf
13. PT Semen Indonesia (Persero) Tbk, Sustainability-Linked Finance
Framework October 2022 https://sig.id/wp-content/uploads/2022/10/
Project-Gaia-SLF-Framework_REV_2022.10.21.pdf
14. Transition Pathway Initiative, TPI Sectoral Decarbonisation
Pathways, February 2022, https://www.transitionpathwayinitiative.
org/publications/100.pdf?type=Publication
15. Climate Bonds Initiative, Cement Criteria, The Cement Eligibility
Criteria of the Climate Bonds Standard and Certification Scheme
Cement Criteria (climatebonds.net)

16. Biomass is not automatically sustainable and must be used only
under strict conditions, as outlined by Climate Bonds criteria, to avoid
increasing emissions and negatively affecting ecosystem health
17. Climate Bonds Initiative, Steel Criteria, December 2022, https://www.climatebonds.net/standard/Steel
18. Climate Bonds Initiative, Basic Chemicals Criteria, October 2022,
https://www.climatebonds.net/files/files/criteria-document-basicchemicals-final-oct-2022-06102022.pdf
19. The GHG Protocol, Category 11, Use of Sold Products, https://
ghgprotocol.org/sites/default/files/standards_supporting/Chapter11.pdf
20. 30 November 2022, Bloomberg, Ticker = PTTGC
21. 30 November 2022, Bloomberg
22. IRENA. 2022. Indonesia energy transition outlook, International
Renewable Energy Agency, Abu Dhabi: https://www.irena.org/
publications/2022/Oct/Indonesia-Energy-Transition-Outlook
23. https://www.sciencedirect.com/science/article/pii/
S0306261922000617
24. Enhanced Nationally Determined Contribution, Republicof Indonesia: https://unfccc.int/sites/default/files/NDC/202209/23.09.2022_Enhanced%20NDC%20Indonesia.pdf
25. https://www.listrindo.com/uploads/sustainability/SR2021.pdf
26. Climate Bonds Initiative, Agriculture Criteria, 2021, https://www.
climatebonds.net/standard/agriculture
27. Climate Bonds Initiative, Forestry, Land Conservation, andRestoration Criteria, November 2018, https://www.climatebonds.net/
standard/forestry
28. Olam Annual Sustainability Report 2020 (olamgroup.com)
29. 30 November 2022, Bloomberg.
30. Biomass is not automatically sustainable and its use must follow
strict criteria
31. Climate Bonds Initiative, Climate Bonds Standard Version 4.0,
2023, https://www.climatebonds.net/climate-bonds-standard-v4
32. In the UK the movement to become a Net Zero Aligned Finance hub
will lead to mandatory transition plans and has seen the establishmentof the Transition plan Taskforce to define content and disclosure
requirements https://www.gov.uk/government/publications/fact-sheetnet-zero-aligned-financial-centre/fact-sheet-net-zero-aligned-financialcentre. In the EU emerging regulations on corporate disclosure and due
diligence both have requirements for transition plans. The EU Green
Bond Standard is also considering the requirement.
33. These Hallmarks align well with other leading transition plan
guidance as published by GFANZ, the Transition Plan Taskforce, IIGCC,
TPI, and ICMA

34. Climate Bonds Initiative, 101 Sustainable Finance Policies for 1.5˚C,
October 2022, https://www.climatebonds.net/resources/reports/101sustainable-finance-policies-15%C2%B0c
35. Securities Commission Malaysia, 2022, Expansion of SRI Sukuk
and Bond Grant Scheme to Facilitate Sustainable Finance
36. Securities Commission Malaysia, 2022, Expansion of SRI Sukuk
and Bond Grant Scheme to Facilitate Sustainable Finance
37. Securities Commission Malaysia, 2022, SC Releases New Sukuk
Framework to Facilitate Companies’ Transition to Net Zero
38. Bank Negara Malaysia, 2022, Establishment of New Financing
Facilities by Bank Negara Malaysia
39. Bank Negara Malaysia, 2021, Additional assistance for SMEs andindividuals under Budget 2022
40. Monetary Authority of Singapore, 2022, Sustainable Bond
Grant Scheme
41. Monetary Authority of Singapore, 2022, Green and SustainabilityLinked Loan Grant Scheme
42 .Asian Development Bank, 2022, Green Bond Market
Survey for Thailand
43. Asian Development Bank, 2022, Green Bond Market
Survey for Thailand
44. Asian Development Bank, 2021, Bond Market Costs and Taxation
45. ASEAN Capital Market Forum, 2022, ASEAN Sustainability-Linked
Bond Standards.
46. The ASEAN Taxonomy Board, ASEAN Taxonomy for Sustainable
Finance, Version 1, November 2021, https://asean.org/wp-content/
uploads/2021/11/ASEAN-Taxonomy.pdf

Prepared by Climate Bonds Initiative

Supported by The Oak Foundation

Lead Authors: Rachel Hemingway and Matthew MacGeoch© Published by Climate Bonds Initiative, December 2022

Contributing Authors: Caroline Harrison, Carlotta Michetti,
Izzy Widdowson, and Chi Xiang Wongwww.climatebonds.net

Design: Godfrey Design, Joel Milstead
Suggested citation: Hemingway et al., Scaling Credible
Transition Finance, ASEAN, The Transition Plan,
Climate Bonds Initiative, December 2022
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference
to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative
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Scaling Credible Transition Finance - ASEAN Climate Bonds Initiative20