Green financing has gained momentum in Asian markets over recent years with a more diversified issuance and range of products. But despite this momentum, issues still exist regarding a common language in green and risk management.

Speaking at the 13th Asian Bond Markets Summit, which commenced in Singapore today, Sajal Kishore, head of APAC infrastructure ratings team at Fitch Ratings, says that green finance has been growing quite a bit in recent years and is driven mostly by financial institutions and sovereigns.

"During the past few months, many more instruments have become available," says James Cameron, head of infrastructure and real estate group of Asia Pacific at HSBC, who believes the diversification of green financing issuance is a positive step.

"There are a lot of green finance plans and one of the complexities is that there are a lot of standards and you are dealing with multiple countries. You have multiple standards among different institutions regarding being green or not green," says Kishore.

"If you look at green bonds and green loans in the purest form, there is not a differentiator right now. So if you are talking to a sponsor client and try to lead him down the path and tell him to follow the right theme by issuing green bonds or green loans, other than requesting for benefits, why would they do that?" says Siong Ooi, managing director, co-head of debt capital markets - loans & bonds of Asian investment banking division at MUFG Bank.

Discussion around the standards and definitions has been a constant issue in green financing. "It is hard to at this point to have a definition regarding being green or not green," says Cameron.

In addition, it is necessary to find a balance when setting up standards. "You don't want to set a standard that frustrates the issuers from accessing the green financing market," says Ooi.

But as the concern over setting up a universal standard or definition regarding green financing grows, the market is seeing efforts from the governments and regulatory bodies in creating a common language regarding green, says Jeanne Stampe, head Asia sustainable finance at World Wide Fund for Nature. She mentions the EU Action Plan for financing sustainable growth as an example.

Launched this year in March, the Action Plan is part of the Capital Markets Union's (CMU) efforts to connect finance with the specific needs of the European economy to the benefit of the planet and our society.

"Over the long run, we will see a differentiator for the green bonds and green loans, which will attract more dedicated green funds," says Ooi.

Other issues in green finance include transparency and information disclosure which is related to risk management. "In terms of risk management, having the proper due diligence to eliminate the risk of the asset itself is often highlighted by our clients," says Yuri Kuroki, Asia funding representative at International Finance Corporation.