New Partnership to Address Climate Adaptation Financing in ASEAN
The United Nations Environment Programme Finance Initiative (UNEP FI), the ASEAN Capital Markets Forum (ACMF), and the Sustainable Finance Institute Asia (SFIA) have launched a collaborative effort aimed at catalyzing climate adaptation finance throughout the ASEAN region. This initiative comes in response to the pressing need for increased funding to help nations adapt to the mounting effects of climate change.
According to the UNEP’s 2024 Adaptation Gap Report, developing countries will require between USD 215 billion and USD 387 billion annually by 2030 to adequately address climate adaptation needs. However, current funding levels fall far short, with just USD 21.3 billion available each year. This substantial gap underscores the urgency of mobilizing both public and private sector capital to enhance climate resilience across the region.
The Role of the ASEAN Taxonomy and the mARs Guide
To support this effort, the partnership will develop a regional adaptation guide that complements the ASEAN Taxonomy—the region’s first transition-specific taxonomy. The guide, titled Mitigation Co-benefit and Adaptation for Resilience (mARs), will help identify and classify activities crucial for climate adaptation and resilience, while also considering mitigation co-benefits.
The mARs Guide will be integrated into the work of the ASEAN Taxonomy Board (ATB), of which the ACMF is a key member. This guide aims to improve the usability and effectiveness of the ASEAN Taxonomy for Sustainable Finance by providing clearer definitions and pathways for channeling finance into adaptation measures.
Statements from Key Stakeholders
Dato’ Mohammad Faiz Azmi, Chairman of the Securities Commission Malaysia and current chair of the ACMF, emphasized the timeliness of the mARs Guide project. “Countries across ASEAN are increasingly grappling with the physical impacts of climate change. The mARs Guide will offer much-needed clarity on adaptation measures, facilitating both public and private funding flows to vulnerable areas,” he noted.
Laura Canas da Costa, Global Policy Co-Lead at UNEP FI, highlighted the finance sector’s growing role in resilience building. “Since 2018, UNEP FI has explored how financial institutions can support societal and economic adaptation to climate change. Sustainable finance taxonomies are essential tools in this mission. The regional adaptation-focused guide can significantly enhance the ASEAN Taxonomy’s impact,” she said.
Eugene Wong, Chief Executive Officer of SFIA, added, “Mitigation efforts alone are not sufficient. As climate impacts intensify, adaptation becomes critical. The mARs Guide will help stakeholders identify the technologies and approaches worth financing to drive transformative change.”
About the Collaborating Organizations
ASEAN Capital Markets Forum (ACMF) is a high-level group comprising capital market regulators from all ten ASEAN countries: Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. Its main objective is to create a deep, liquid, and integrated regional capital market.
ASEAN Taxonomy Board (ATB) was established in 2021 under the ASEAN Finance Ministers and Central Bank Governors’ Meeting (AFMGM). It is driven by multiple bodies including the ACMF, ASEAN Insurance Regulators Meeting (AIRM), Senior Level Committee on Financial Integration (SLC), and the Working Committee on Capital Market Development (WC-CMD). The ATB coordinates sustainable finance efforts across banking, capital markets, and insurance sectors.
Securities Commission Malaysia (SC) is a statutory body formed in 1993 to regulate and develop Malaysia’s capital markets. It promotes fair, efficient, and secure securities and derivatives markets and supports the market’s orderly development and innovation.
Sustainable Finance Institute Asia (SFIA) is an independent institute that fosters policy-level discussions and action on sustainable finance in Asia, especially in ASEAN. It collaborates with governments, regulators, central banks, and other stakeholders to advance the region’s sustainability agenda.
UNEP Finance Initiative (UNEP FI) is a global partnership involving more than 500 banks, insurers, and investors with over USD 170 trillion in assets. It promotes sustainable economic practices through the implementation of the Principles for Responsible Banking and Sustainable Insurance, as well as through climate-focused alliances and frameworks.
Looking Ahead
The collaboration among UNEP FI, ACMF, and SFIA represents a significant step in aligning the financial sector with climate adaptation goals. As ASEAN nations face growing climate threats, the mARs Guide and enhanced ASEAN Taxonomy will serve as vital tools to direct investments toward building resilience and adaptive capacity.
By providing a unified framework and clear guidance, this initiative aims to unlock much-needed financing for projects that protect communities, infrastructure, and ecosystems from climate-related and natural hazards. As the region continues to develop, integrating sustainability and resilience into financial decision-making will be crucial to long-term prosperity.
This article is inspired by content from United Nations Environment – Finance Initiative. It has been rephrased for originality. Images are credited to the original source.