14 May Practices of Financial Institutions Towards Green Financing in ASEAN Region
As the climate crisis intensifies, green financing practices are no longer an option for ASEAN economies. They are essential tools to fund low-carbon development, manage risks, and unlock opportunities for growth. Among ASEAN members, Malaysia, Singapore, and the Philippines are pioneering sustainable finance solutions. These countries are shaping the region’s green financial landscape through targeted policies, strategic frameworks, and partnerships with key institutions.
What Is Green Financing?
Green financing refers to financial investments directed toward sustainable development projects and initiatives. This includes funding for renewable energy, green buildings, sustainable transport, and nature-based solutions. The goal is to align financial flows with climate goals, reduce emissions, and support a just transition. In ASEAN, green financing is gaining traction as governments and businesses move toward net-zero targets.
Malaysia’s Efforts in Green Finance
Malaysia has established itself as a leader in green financing in the ASEAN region, particularly through pioneering green sukuk issuance. Since issuing the world’s first green sukuk in 2017, Malaysia has grown its green bond and sukuk market significantly, with over 317 ASEAN Green Bonds listed on the BIX Malaysia platform by 2024. The government supports green financing through initiatives like the Green Technology Financing Scheme (GTFS) and Bank Negara Malaysia’s climate taxonomy, which guides banks in evaluating environmental risks. Malaysia’s green finance focus includes renewable energy, green buildings, and sustainable infrastructure development.
Singapore as a Green Finance Leader
Singapore is a recognized hub for green finance in Asia. The Monetary Authority of Singapore (MAS) has launched several initiatives to promote sustainable finance. These include the Green and Sustainability-Linked Loan Grant Scheme and the Singapore Green Bond Framework. The country emphasizes transition finance, helping industries reduce carbon emissions and retire coal-fired power plants. Singapore’s green finance market is the largest in ASEAN, with a strong focus on sustainable infrastructure and green buildings.
The Philippines' Green Finance Agenda
The Philippines was the first ASEAN country to issue green corporate bonds in 2016, marking an early commitment to green financing in the region. Although its green finance market is still developing, the government has increased efforts by issuing sustainability bonds and encouraging financial institutions to expand green loan offerings. The Philippines prioritizes renewable energy and sustainable infrastructure projects, aiming to attract more green investments and support climate resilience.
Green Financing Solutions by Leading Banks in ASEAN
HSBC’s Innovative Green Financing Solutions
HSBC is a key player in advancing green financing in the ASEAN region, offering a wide range of products including green loans, green trade finance, and transition finance. The bank supports renewable energy and sustainable infrastructure projects through blended finance platforms like Pentagreen, which combines commercial capital with official development aid to fund marginally bankable projects.
HSBC also focuses on managing credit risk alongside nature-related risks, ensuring that investments contribute positively to environmental outcomes.HSBC Malaysia has played a key role in financing green projects. It supports renewable energy firms and sustainable infrastructure, helping businesses transition toward lower emissions. Through its partnerships, HSBC enables Malaysian SMEs to access green loans and advisory services.
RHB Bank’s Commitment to Green Finance
RHB Bank in Malaysia actively promotes green financing by providing green loans and financing solutions aligned with national climate policies. The bank uses Bank Negara Malaysia’s climate taxonomy to assess environmental risks and opportunities, supporting projects in renewable energy, green buildings, and eco-friendly infrastructure.
RHB Bank has also elevated its sustainable financing ambitions by setting a target of RM90 billion by 2027. To achieve this, RHB introduced several initiatives, including Malaysia’s first Low Carbon Transition Facility (LCTF) Portfolio Guarantee to enhance access to green financing for businesses. Additionally, the bank launched an RM1 billion Sustainable Trade Finance Programme to support renewable energy and energy efficiency projects.
Maybank’s Support for Green Projects
Maybank offers a variety of green financing products, such as green loans and sustainability-linked financing, to promote renewable energy in Malaysia and the broader ASEAN region. Maybank myimpact SME is a comprehensive, one-stop sustainability ecosystem designed to support small and medium-sized enterprises (SMEs) across every stage of their growth journey in Malaysia and the wider ASEAN region. This initiative reflects Maybank’s commitment to “Humanising Financial Services” by offering tailored financial and non-financial solutions.
Green Financing Efforts in Other ASEAN Countries
Beyond Malaysia, Singapore, and the Philippines, other ASEAN countries are also advancing green finance:
- Indonesia relies heavily on government-issued green sukuk to finance energy, green buildings, and eco-friendly transportation projects.
- Thailand has a private sector-led green finance market, with significant funds allocated to energy and sustainability bonds.
- Vietnam is increasingly focusing on energy projects with growing green finance instruments.
- Brunei is integrating FinTech and digitalization in banking, establishing a sustainable finance task force, and leading the ASEAN Taxonomy Board for Sustainable Finance.
- Cambodia has adopted the ASEAN Taxonomy for Sustainable Finance, issued its first green bond in 2023, and promotes green finance through policy and civil society advocacy.
- Laos is developing a sustainable finance framework, issued its first green bond in 2023, and is building regulatory capacity with international support.
- Myanmar is aligning with ASEAN Green Bond Standards and focusing on renewable energy and energy efficiency, with early-stage development of its green bond market.
These countries are also exploring Just Energy Transition Partnerships (JETPs) and multilateral financial agreements to retire coal plants early and scale up renewable energy investments. Collectively, ASEAN has issued around USD 58 billion in green debt instruments since 2016, with green loans comprising the largest share of financing.
Sources:
Sustainability & ESG Investing in Singapore – HSBC SG
HSBC Philippines supports the development of ACEN’s 160 MW Wind Farm
Nature-Related Risk Assessment Approaches for the Financial Sector
ASEAN Sustainable Finance State of the Market 2022 | Insights | HSBC
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