Asia’s institutional investors managing some US$123 trillion are bumping up their investments in climate solutions or transition finance, with a tripling in direct egnagements with policymakers for clearer and more investable frameworks, a new report shows.
The latest State of Investor Climate Transition in Asia report — now in its seventh edition — by the Asia Investor Group on Climate Change (AIGCC) found 30 per cent of 240 investors bumped up investments in climate solutions in 2025, up 11 points from the year before.
“We need to see policy change in order to actually create movement at the corporate level, but also to invest successfully on behalf of our members,” said Stephen Dunne, director and investment committee chair of the Construction and Building Unions Superannuation (Cbus) Super Fund, one of Australia’s largest industry funds to manage retirement savings.
Speaking on a panel at the organisation’s inaugural summit on climate investment in Asia today, he said if the world continues on its current trajectory of global temperature rise, Cbus’ returns for its one million plus members would be 40 per cent worse off than a 1.5°C-aligned portfolio.
Dunne, who is also chair of AIGCC parent organisation the Investor Group on Climate Change (IGCC), added that the most effective way to engage with governments for policy change is to do it in a “collaborative collective way” through organisations like AIGCC.
The organisation’s latest report also found that these engagements have broadened in scope, from setting emissions targets to covering transition planning, technological innovation, physical climate risks and nature-related disclosures.
“The findings from this year’s analysis suggest the market is now entering a third phase — an implementation phase — along with creating credible transition plans,” AIGCC said. This follows a first phase marked by a focus on climate-related measurements and disclosures, then a second phase of public scrutiny and accountability.
Still, there is room for improvement. Less than a third of investors in Asia have established a policy or strategy related to high-emitting sectors, including fossil fuels, and there has been no increase in the 22 per cent of investors publishing more granular climate transition plans.
The report found that most investors in Asia show limited details on the implementation of transition plans, which are a strong indicator of whether investors have thought through a strategy to manage climate-related risks and opportunities.
“With Asia being one of the most vulnerable regions to oil supply shocks and fluctuating prices, investors can do more to derisk their portfolios by investing in an orderly and energy-secure transition,” AIGCC said.
Another recent, separate study found that an increasing proportion of investors are unlikely to decrease their fossil fuel investments due to a fear of missing out on high returns over the next three years.
Even more nascent to the investors that AIGCC reviewed the idea of a just transition, which the investor group assessed for the first time in their report this year.
Although 29 per cent of AIGCC members report having a just transition strategy, the percentage is much lower for non-members — only 11 per cent of all investors say they have outlined an approach to a just transition.
AIGCC noted that there is still no single, universally usable definition of what constitutes a just transition. The United Nations Development Programme says that it refers to “integrating social justice and equity principles, processes and practices in climate action.”
“In practice, many Asian decarbonisation and development plans address a just transition indirectly through reskilling, affordability, and access to social protection measures,” AIGCC said. “For investors, company engagement is the clearest near-term entry point, with integration into investment research and decision-making as the next step.”
