Asian governments could attract the billions of dollars of private capital they need to finance adaptation and resilience where they have a clear roadmap, as covered in new research into National Adaptation Plans (NAPs) by the influential Asia Investor Group on Climate Change (AIGCC).
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The report, released today by AIGCC, is an assessment of the NAPs of nine Asian markets*, benchmarked against seven investor expectations, and further mapped against elements of the NAP process as set out by the UNFCCC.
Asian governments will need to massively supplement public funding, which cannot meet the scale of climate adaptation required in most Asian markets. As the exposure and vulnerability to physical risks – such as floods, heat stress, and water stress – vary across sectors and geographies, each market’s NAP thus forms the building blocks for policy certainty that is necessary to unlock private capital flows.
Generally, across the nine Asian markets, there are varying levels of climate adaptation planning and implementation. In many markets, the key priorities that will help governments stimulate private investment are:
- making granular climate risk information publicly available and accessible,
- setting up ministerial-level engagement with the private sector and financial institutions, and
- establishing clear and action-oriented strategies for adaptation financing.
Additional findings in the report include:
- There is still uncertainty regarding the role of investors to help with financing the development and implementation of the NAP process. Asian governments could increase their communication of investible project opportunity pipelines and roadmaps that clearly articulate the roles of investors.
- For example, even though there is growing recognition of the need for public-private partnerships to unlock financing for climate adaptation projects, only Indonesia and China have begun to outline action plans and pilot initiatives.
- Implementation of mandatory climate risk disclosure aligned with international standards remains inconsistent across the region.
- For example, while markets such as China, Japan and Korea have announced plans to align with the International Sustainability Standards Board (ISSB) standards, disclosures are expected to start after 2026. Meanwhile, Indonesia has mandated climate risk disclosures but without requiring alignment with international standards.
- Markets assessed have largely implemented an inter-ministerial or inter-agency coordinating body to lead on adaptation planning, but significant gaps persist around the availability and accessibility of climate risk data.
- For example, platforms such as VESTAP in Korea and A-PLAT in Japan have demonstrated the potential for governments to enhance transparency and accessibility of data on climate hazards and risk. However, most other markets have yet to develop similar platforms and communicate physical risk and vulnerability assessments effectively at sectoral or subnational levels.
AIGCC CEO Rebecca Mikula-Wright said: “Private capital will be more quickly and easily mobilised where governments provide clarity on adaptation measures and work with stakeholders in developing a visible and investable pipeline of adaptation projects.
“Physical risks take many forms, and there is an opportunity for governments (across departments and agencies) to work collaboratively with private sector participants to assess sector-specific risks and identify initiatives and financing mechanisms for adaptation across sectors.
“AIGCC provides the perspective of influential institutional investors, who have large assets under management, and the capacity to deploy capital in the millions and billions of dollars into climate adaptation planning projects.
“Through working groups and closed-door roundtables with policymakers, we ensure investor voices are channelled effectively to the right decision makers in the region. We invite Asian governments to engage more with AIGCC as a group to leverage these insights.”
Eric Nietsch, Head of Sustainable Investing, Asia at Manulife Investment Management and Co-Chair of AIGCC’s Physical Risk and Resilience Working Group, said: “To significantly boost adaptation finance in Asia, we need clear risk assessments, project opportunities, and defined roles for private capital. National Adaptation Plans are bridging these gaps, and we are committed to continuing to work on mobilising the necessary funds to support these measures.
“Investors are interested in investing in adaptation and resilience projects that will also bring long-term value to their beneficiaries, and sound adaptation strategies at the national level are crucial to progress this.”
*The nine Asian markets are: China, Hong Kong SAR, India, Indonesia, Japan, Malaysia, Singapore, South Korea, and Thailand. The report also includes ‘best practice examples’ on adaptation planning from these markets.