The Asia-Pacific region is rapidly emerging as a strategic growth market for sustainable finance and clean technology. China’s Greater Bay Area (GBA) and Southeast Asia (SEA) are at the forefront of this shift, which is being driven by a mix of policy, investment and innovation in low-carbon solutions.[1]
The shift is underscored by new analysis from the MSCI Sustainability Institute, the Bank of China’s Hong Kong Financial Research Institute and the Jockey Club Enterprise Sustainability Global Research Institute at Hong Kong University finding that nearly three-quarters (74%) of organizations in the region have increased their sustainability-related investments in the past year, with 85% planning to do so in the next five years.[2]
The result is a region increasingly at the forefront of green finance and attuned to opportunity that can come with clean technologies and solutions that reinforce resilience to heat. This analysis examines the shift through the lenses of policy, corporate climate ambition, the growth of sustainable finance, innovation and adaptation.
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The policy landscape
Governments across the GBA and SEA are in varying stages of implementing a range of policies to drive low-carbon investment, national climate targets, carbon pricing initiatives and disclosure rules. The development of such frameworks is establishing a more structured environment for green investments. The continued evolution of these policies is expected to play a significant role in facilitating the growth of sustainable finance in the region.
The sustainable-finance policy landscape across the GBA and SEA (click on circle to see jurisdiction's policy)
Source: MSCI ESG Research, data as of Aug. 31, 2025.
Corporate climate ambition
Corporate climate ambition is gaining traction across the GBA and SEA. As of July 2025, 15% of listed companies in the GBA and 8% of SEA companies had a climate target approved by the Science Based Targets initiative (SBTi), a corporate standard setter, up five and three percentage points from a year earlier. In SEA, the figure was 8%, up three points over the same period. Both regions however trail the global average, where 18.5% of listed companies had an SBTi-approved target, as of the same date.
Companies with SBTi-approved climate targets (%)
A plurality companies in both the GBA and SEA align with a warming trajectory of 1.5°C to 2.5°C, based on their aggregate emissions, sector-specific carbon budgets and climate targets. About 5% of companies across both regions are on a path to limit warming to 1.5°C, the critical threshold to avoid the most catastrophic impacts. Conversely, roughly 12% of companies remain on a pathway exceeding 5°C, highlighting a need for finance to support decarbonization in emissions-intensive sectors such as energy and utilities.
Projected temperature alignment of listed companies (ITR in °C)
Growth in sustainable finance
Growing attention from global investors
Global institutional investors are also increasingly targeting the Asia-Pacific region for climate investments. The Asia-Pacific region’s share of investment in climate-themed funds rose by about 12 percentage points over the past seven years, highlighting both diversification of green investments and the region’s role in the transition to a cleaner, more resilient global economy.
Geographic exposure in climate-themed funds
(seven years ended Aug. 31, 2025)
Source: MSCI ESG Research, data as of Aug. 31, 2025.
Growing interest from local investors
The pool of capital within the region that is managed with a sustainability focus has also grown steadily, with assets in climate- and sustainability-themed funds reaching more than USD 220 billion as of the first half of this year. The GBA dominates, accounting for roughly 85% or nearly USD 185 billion, with most (92%) of those assets domiciled in Hong Kong, reflecting its status as the region’s green-finance hub. While smaller, SEA has expanded consistently, contributing close to USD 40 billion by mid-2025, highlighting the increasing diversification of Asia’s sustainable finance market.
Sustainable Fund Assets (USD billion)
Source: MSCI ESG Research, data as of Aug. 31st, 2025. Based on sustainability, focused ETFs and mutual funds domiciled in these regions.
Growing sustainable bond issuance
The issuance of labeled bonds has surged across the GBA and SEA over the past decade, with total issuance surpassing USD 350 billion between 2015 and June 30, 2025.[3] The market remains dominated by green bonds, a segment led by the GBA due to its early start and supportive regulatory environment. Transition and sustainability-linked bonds represent a small but growing niche, aligned with advancing corporate decarbonization goals.
Labeled bond issuance (USD billion)
SEA has emerged as a hub for more targeted sustainable finance, with a more diverse array of instruments than the GBA. As of June 30, 2025, 17% of proceeds from green bonds in SEA went to renewable energy, 12% to green buildings and 5% for solar energy. SEA also has a higher share of unspecified proceeds (14%), pointing to scope for stronger classification standards and disclosure.
Use of green bond proceeds (%)
The 10 largest listed companies in the GBA
| Company | Industry | Main operations |
|---|---|---|
| Tencent | Interactive Media & Services | Shenzhen |
| Alibaba | Broadline Retail | Hong Kong |
| China Merchant Bank | Banks | Shenzhen |
| Ping An Insurance | Insurance | Shenzhen |
| Foxconn* | Electronic Equipment, Instruments & Components | Shenzhen |
| BYD | Automobiles | Shenzhen, Guangzhou |
| AIA Group | Insurance | Hong Kong |
| Luxshare | Electronic Equipment, Instruments & Components | Dongguan |
| Shenzhen Mindray | Health Care Equipment & Supplies | Shenzhen |
| Gree Electric Appliances | Household Durables | Zhuhai |
The 10 largest companies in SEA
| Company | Industry | Country |
|---|---|---|
| DBS Group | Diversified Banks | Singapore |
| SEA Ltd | Interactive Home Entertainment | Singapore |
| Delta Electronics | Electronic Components | Thailand |
| Singapore Telecoms | Integrated Telecommunication Services | Singapore |
| PTT Ltd | Integrated Oil & Gas | Thailand |
| Advanced Info Service | Wireless Telecommunication Services | Thailand |
| Grab | Passenger Ground Transportation | Singapore |
| Singapore Technologies Engineering | Aerospace & Defense | Singapore |
| Tenaga Nasional Berhad | Electric Utilities | Malaysia |
| International Container Terminal Services | Marine Ports & Services | Philippines |
Innovation economies
The flow of investment to the GBA and SEA comes amid the region’s emergence as a hub for clean technologies and green finance. Listed providers of low-carbon solutions domiciled in the region outpaced their global counterparts over the five years ended Dec. 31, 2024, with revenue rising 74% for providers of electric vehicles and transportation infrastructure, 66% for providers of energy storage and 26% for providers of low-carbon power, our data shows.
That compares with average annual revenue growth of 42%, 22% and 18%, respectively, for low-carbon solutions providers based in the U.S., and 14%, 39%, and 5% for those in Europe.
Pure-play providers, year-over-year revenue growth (2019-2024, revenue-weighted)
Source: MSCI ESG Research, FactSet. Pure-play solutions providers are defined as those that earn more than 50% of their revenues from the identified low-carbon business lines based on the MSCI Sustainable Impact Metrics methodology, as of the latest assessed financial report. Low-carbon solutions providers (excluding pure players) are identified using a low threshold of 5% to include companies that are potentially transitioning and positioning for growth from the identified low-carbon business lines. Energy storage includes fuel cells and other energy storage solutions, such as battery energy storage. Green mobility includes zero emissions and hybrid vehicles and clean transport infrastructure (e.g., railway infrastructure). Low-carbon power includes renewable energy (solar, wind, wave tidal, small hydropower, geothermal, waste-to-energy and biomass) and nuclear power. Revenue growth is calculated in USD. Weights are derived using the average revenue of companies between 2019 and 2024. Winsorization of the average year-over-year growth rates was done at the 5th and 95th percentile to reduce the influence of extreme values.
Asia’s high exposure to climate hazards, particularly extreme heat, makes it a critical market for resilience-focused solutions. That’s especially true in SEA, where extreme heat and humidity threaten populations and agricultural economies that employ up to 40% of the workforce.
Companies across the GBA and SEA are in the early stage of building climate resilience. While a majority (60%) now conduct physical climate risk assessments, far fewer are addressing this into core operations and contingency planning.[4]
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How is your organization approaching resilience in the face of sustainability-related and climate-related risks? (% of respondents)
References
[1] The GBA comprises the two Special Administrative Regions of Hong Kong and Macao, and the nine municipalities of Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing in Guangdong Province. SEA comprises Brunei, Cambodia, Indonesia, Laos, Malysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
[2] The survey of 77 organizations across the GBA and SEA regions was conducted between July and August 2025. See the report for detail on the survey methodology.
[3] Labeled bonds include green, social, transition and sustainability-linked bonds.
[4] The Asian Way: Sustainable Finance Market Outlook in Southeast Asia and the Role of Hong Kong, Sept 2025, joint study by the MSCI Sustainability Institute, Bank of China (Hong Kong), and Hong Kong University.
