Transition finance plays a vital role in Southeast Asia's track to low-carbon growth, according to Asian Development Bank.
In an article, ADB emphasises the opportunity the region holds to accelerate towards decarbonisation goals through coordinated action on transition finance.
The lender stresses that a sustainable growth pathway is achievable through collaboration between countries on technology, policy, and financing, as Southeast Asia’s economies are among the world’s most dynamic and are poised for robust growth over the next decade.
ADB says scaling low-carbon solutions demands massive capital investment, often beyond the fiscal capacity of many governments and the risk appetite of conventional financiers.
This is where transition finance comes in, as it provides funding opportunities for entities, assets, and activities that are not yet fully green but are on a credible path to becoming more sustainable, focusing on ongoing improvement rather than a single point-in-time assessment.
ADB calls on intensifying efforts to scale up transition finance, highlighting seven bold actions by policymakers and financial market regulators:
- Introduce guidance and roadmaps that are tailoured to the region’s specific circumstances and diverse economies.
- Enhance data and sustainability disclosure standards tailored to local contexts to monitor and report decarbonisation progress.
- Promote innovative financing instruments.
- Create the fiscal and policy incentives for transition.
- Implement blended finance and de-risking strategies.
- Strengthen technical and human capacity.
- Further encourage regional collaboration and partnership.
Asian governments can also boost regional cooperation and partnership by leveraging platforms, such as the ASEAN Taxonomy Board, the Asia GX (Green Transformation) Consortium, and the Asia Transition Finance Study Group (ATF SG), to share resources, knowledge, and expertise.
Over time, ADB says these efforts could evolve into a regional platform for scaling clean industrial assets, integrating carbon markets, and advancing Southeast Asia’s broader transition finance ecosystem.
