Climate adaptation needs its own investment language if private capital is to flow into resilience projects at the scale required across Asia, the Monetary Authority of Singapore (MAS) has said.
Speaking at the Unlocking capital for sustainability 2026 forum in Singapore last week, Abigail Ng, Chief Sustainability Officer at MAS, said investors are increasingly recognising financing adaptation and resilience as an issue, but need greater clarity on what makes a credible adaptation and resilience investment.
“Investors want to see where this is going, and a lot of thinking is around avoided losses. But somehow, it’s not enough to move that money at the scale that we need,” she said.
Ng said climate resilience and adaptation are harder for investors to assess than transition and mitigation because they lack a common unit of measurement.
For transition and mitigation, the common unit of measurement is one tonne of carbon whether it’s a removals project or a nature-based carbon credit project, which both project developers and financiers understand.
The lack of a similar unit of measurement for adaptation and resilience makes it harder for investors to understand what their capital is achieving, compare opportunities and assess the value of resilience against the risks involved.
Ng said a common language and framework for valuing resilience could help address this gap and the MAS is working on this at the level of Association of Southeast Asian Nations (Asean) via the Mitigation Co-Benefit and Adaptation and Resilience Guide, or MARS Guide.
The guide is intended to expand the framework around resilience, one of the objectives of the Asean Taxomony, by helping corporates and governments identify the climate hazards they face in different sectors and the technological and nature-based solutions available to address them.
It also aims to give companies, governments and financiers a more consistent way to communicate about adaptation and resilience and assess potential investments.
Having this common language for adaptation and resilience is increasingly important as physical climate risks intensify across Asia, Ng said.
She noted that climate-related events in Southeast Asia over the past three decades have already caused almost US$235 billion (S$300 billion) in economic losses.
At the same time, the United Nations Development Programme (UNDP) estimates that Asean economies spend around US$3.2 billion annually on climate adaptation but will need US$422 billion cumulatively by 2030 to prepare for climate impacts and extreme weather events.
It also said that only 17 per cent of global climate finance currently goes towards adaptation, underscoring the gap between the scale of the problem and the capital currently reaching resilience projects.
Ng added while private capital is certainly available one of the core issues facing investors is identifying projects that are bankable, sufficiently developed, appropriately structured.
Because adaptation projects are often unique and geographically centered, they can become too localised, fragmented or small to attract large pools of capital.
Therefore, Ng said, stronger project preparation and capacity building are needed to help companies better plan and communicate their projects, while financiers and project developers also need to develop a common understanding of adaptation opportunities.
Who takes the risk?
The financing challenge also extends beyond identifying and preparing projects to determining how the risks associated with adaptation should be shared.
Jackie Surtani, Regional Director of Singapore at the Asian Development Bank (ADB), said governments still have a central role in adaptation and resilience because many projects do not generate obvious or predictable cash flows.
ADB works on various adaptation and resilience projects with governments across countries including Cambodia, Vietnam, Indonesia, Timor-Leste, the Philippines and Thailand.
While governments cannot finance the entire adaptation requirement, he said, the private sector investors face additional commercial risks when investing directly in adaptation projects, particularly where revenue depends on market conditions or regulatory changes.
Surtani cited an ADB-supported plastic recycling project in Indonesia, where changes in European regulations affected the market for recycled bottles, illustrating how projects with environmental objectives can still be exposed to market and regulatory risks.
This creates a role for multilateral development banks (MDB) and other public institutions to absorb or share risks that commercial financiers are unable to take on alone.
“MDBs should be focusing more and more on the challenging stuff of finding ways to maybe take a first loss and guarantees to try and bring in more commercial banks because they can’t do this from a risk perspective on their own,” he said.
Surtani added that ADB has also committed around US$1 billion over 10 years across roughly 20 agriculture projects focused on adaptation but acknowledged that this remains small relative to the region’s overall needs.
He said that innovative structures, including blended finance, guarantees and catastrophe bonds, could also help bring different pools of capital into adaptation for the region.
Making the economics visible
For commercial banks, the challenge becomes more nuanced when adaptation financing moves beyond large-scale public infrastructure and into the real economy.
Melissa Moi, Head of Sustainable Business at UOB’s Group Corporate Sustainability Office, said projects such as water treatment plants, water-management systems and large seawalls are relatively familiar investment profiles, with established expertise among bankers, engineers and other specialists.
However, translating this understanding into the financing needs of individual businesses and assets can be challenging.
Moi identified unclear economics and visibility as two major issues affecting how commercial banks approach adaptation financing.
At an aggregate level, she said, research may show that investing a dollar in adaptation can prevent a dollar of losses. But companies need to understand what this means for their particular sector, assets and operations.
“How do you translate this to the way a businessman on the street needs to understand why he is in a challenging economic environment, now putting financing and investing towards adaptation?” she said, noting that unclear boundaries around public and private responsibility for adaptation make it harder to establish where businesses should invest in their own resilience and what role private capital should play.
She highlighted that while there is substantial information on climate-related losses and impacts, financial institutions need more forward-looking, detailed and consistent data on the likelihood and severity of physical risks affecting particular assets and projects to allow financial decisions to be made.
“All of these reasons are why we aren’t seeing that huge deep dive into adaptation financing,” said Moi, adding that adaptation may already be taking place across the economy without being explicitly classified as such, like in agriculture where companies have adapted their operations to changing weather conditions for years.
But the challenge is to make these investments more visible within the financial system, so that businesses and financiers can better identify what constitutes adaptation and understand the economic case for financing it, she noted.
