230 of the largest investors across Asia, including 182 Asia-HQ investors managing US$46 trillion, continue to step up in climate action

AIGCC’s report is the most comprehensive and reliable snapshot of how decision-makers in the region’s capital markets are managing climate and nature; perhaps the biggest factors influencing the region’s long-term economic development.

It draws on data from 230 of the region’s largest and most significant asset owners and managers, collectively managing more than US$100 trillion. All are active in Asia and 182 of them (approx. 80%) are headquartered in the region.

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Overall, investors active in Asia have improved across all 26 climate metrics, compared to last year, and they are quickly growing their expertise on climate finance. However, improvements are not happening at the speed and scale that is needed to limit global warming to levels that have the greatest net economic benefit for Asia.

The progress is particularly evident against five key priorities for investors that form part of investors’ fiduciary duties to integrate financially material climate risks:

• Strong interest in scaling climate solutions and transition finance: now 34% of investors
  • There is a clear trend as investors race to allocate capital and improve exposure to green and transitioning assets set to benefit from the global net zero transition.
  • 34% of 230 investors have now committed capital towards climate solutions, clean energy and transition finance. However, often these only relate to a small portion of the portfolio. Trillions of dollars of opportunities remain untapped as investors work through mechanisms to scale transition and Paris-aligned investments.

• Adopting of climate transition plans becoming mainstream: 7 percentage point (pp) increase
  • Climate transition plans are a strong indicator that an investor has thought through their strategy to effectively adapt and thrive under likely climate scenarios.
  • 35% of 230 investors have now published a climate transition plan. The rise could be attributed to current and future regulations requiring investors and companies to disclose their climate risks and their plans for addressing these risks.

• Growing focus on physical risk assessments: 12 pp increase
  • Comprehensive physical risk assessments can help investors assess resilience of their investment portfolios against extreme weather events and long-term climate impacts. 43% of 230 investors have now conducted a physical risk assessment across their portfolios, indicating a growing recognition amongst the investment community of the need to step up adaptation and resilience building actions.
• Adopting approaches to fossil fuels: 15 pp increase
  • Robust fossil fuel investment policies can support a fair and fast transition to renewable energy and transition technologies in investors best financial interests. Leading investors are becoming more active in climate policy advocacy to enhance the investment landscape for climate investments and renewables.
  • 43% of 230 investors have now adopted policies that contribute towards a transition away from fossil fuels, though on the ground realities indicate that highly effective fossil fuel approaches and strategies remain more nascent.

• Deforestation policies/strategies low but increasing: 9 pp increase
  • Deforestation is one of the main drivers of biodiversity loss and carbon emissions, and Asia is one of the hotspots for deforestation.
    21% of 230 investors have taken deforestation-related action, either by taking a general stance on deforestation or adopting a more detailed strategy.
  • Asset owners are generally slower in adopting strategies related to deforestation, compared to asset managers.

• This year’s report includes assessment across the region of 26 climate-related metrics, including 12 new metrics since last year, which investors should consider in building their transition plans, such as linking remuneration to climate performance, disclosures on portfolio emissions, disclosures on climate-related policy advocacy, and demonstrating meaningful stewardship practices through reporting and company case studies.

AIGCC CEO, Rebecca Mikula-Wright, said:

“With our most comprehensive analysis to date of Asia’s most influential investors, the direction of travel is crystal clear: USD100 trillion of investor capital in Asia is ratcheting up their climate action plans and are looking for opportunities to invest.

“However, with markets in Asia highly exposed to physical climate risks and nature-related risks, we need to see more investor ambition in accounting for these risks in their portfolios as well as allocating capital to address them.

“Asset owners, as stewards of capital, can take this opportunity to accelerate their own markets and the regions’ transition.

“The top policy priorities investors need to allocate more capital are: mandatory disclosures, sector pathway decarbonisation and plans, and climate resilience. AIGCC will continue to bring investors and policy makers together to help design enabling and investible policy for the transition.

“AIGCC advocates for mandatory investor climate-related disclosures that will increase accountability and oversight of investors’ risks to climate change. We have added more metrics in our assessment this year, especially those that have an increased emphasis on quality investor’s disclosures, to appropriately reflect the financial risks of climate change.”

Head of Sustainable Investment, AIA Group, Chi Zhang said:

“As long-term investors, we recognise the critical need to integrate climate considerations across our portfolio. AIGCC’s report highlights the growing momentum amongst institutional investors to integrate climate in Asia but also underscores the urgency for greater action. As asset owners, we are accelerating our efforts to mitigate climate risks and seeking to capitalise on the opportunities in the climate transition.”

Managing Director, Head of ESG Asia, Neuberger Berman, Charles Nguyen said:

“We are encouraged by the steady progress that institutional investors across Asia have made over the past year in considering financially material climate-related factors. However, in Asia, the tools and frameworks used to measure these climate-related factors are still evolving. I encourage investors considering financially material climate-related factors to leverage AIGCC’s resources to navigate the increasing complexity of the energy transition across Asia’s diverse markets.”

Head of APAC ESG & Climate, MSCI, Chitra Hepburn said:

“The progress Asian investors have made in advancing climate action is encouraging. However, Asia, with its vast potential in the global climate transition, is racing against time to drive meaningful changes towards a low-carbon economy. Our collaboration with AIGCC underscores the urgent need for reliable and consistent metrics and tools to help Asian investors transform awareness into purposeful initiatives. By leveraging MSCI’s suite of solutions, research insights and indexes, we are committed to supporting investors in integrating climate considerations into their portfolios and providing clarity on alignment with their unique sustainability objectives.”

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MSCI collaborated with AIGCC on the State of Investor Climate Transition in Asia report.

As Asia faces escalating climate risks, AIGCC remains committed to empowering investors and governments to accelerate the transition to a sustainable, resilient future.

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