Association of Southeast Asian Nations (Asean) corporates are increasingly looking to sustainable finance to fund their energy transition plans, with 67 per cent of companies in the region expecting to use green or sustainability-linked bonds or loans in future, a recent report shows.
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More than half, or 53 per cent, also expect to use blended finance, a mix of public, development bank, or philanthropic money with private investment to fund projects that are useful but initially considered too risky or unprofitable for commercial investors alone, according to the bank’s survey of 15 corporate clients across the bloc, mainly in the energy, utilities and materials sectors, according to the report by Standard Chartered.
All respondents said they had already raised sustainable finance and expected to do so again. Most said doing so had expanded their investor base and delivered lower costs than traditional sources of finance, such as bank loans and conventional corporate bonds or notes. About 40 per cent said raising sustainable finance had also helped them establish new relationships with banks.
“To help scale sustainable finance in the region, the finance sector can use experiences like these when discussing opportunities with companies that have yet to access the sustainable finance market,” said the analysis.
The survey comes as Asean faces an estimated US$400 billion in annual investment needs to shift to a low carbon economy, the bank said. Low carbon energy investment in the region stood at US$32 billion in 2023, showing the scale of capital required for the transition.
Despite the cost challenge, 74 per cent of respondents said a transition to a low carbon economy would improve their company’s outlook, suggesting businesses see potential commercial gains alongside climate and energy security benefits.
Asean region solar and wind power made up 4 per cent of total electricity generated in 2024. This compares to 11 per cent and 18 per cent for India and China respectively and to almost 30 per cent for mature markets such as the European Union and Australia, suggesting that Asean countries have yet to fully utilise solar and wind potential. Image: Standard Chartered
The financing need is closely tied to Asean’s renewables gap. Solar and wind generated only 4 per cent of the region’s electricity in 2024, compared with nearly 30 per cent in mature markets such as the European Union and Australia, according to the report.
Nearly nine in 10 companies surveyed said they were already engaging with solar power, making it the most widely adopted transition technology. But engagement with deeper decarbonisation options, including carbon capture and storage and hydrogen, remained limited, particularly among industrial and commercial-real-estate companies, the report said.
The findings point to a transition in which companies are prioritising more mature, near-term technologies such as solar, energy efficiency and circular-economy measures, while higher-cost or less-developed solutions may require more targeted policy support and concessional or blended finance to scale.
High upfront costs and limited economies of scale remain the principal barriers to investment, while inadequate grid capacity, battery storage and electric vehicle-charging infrastructure constrain wider electrification, respondents said.
Standard Chartered said sustainable bonds and loans could support mature technologies such as renewable energy, while blended finance could help de-risk early-stage or capital-intensive projects, including grid upgrades and storage.
Around 70 per cent of respondents said long term emissions targets were “somewhat likely” to be met, but only 13 per cent considered them “extremely likely” to be achieved.
The findings suggest that policymakers, companies and consumers will need to step up efforts to translate growing interest in sustainable finance and low-carbon technologies into progress towards Asean’s climate goals, the bank added.
