asean

SCOPINGSTUDY

MobilisingPrivateSector

InvolvementinASEAN

Climate-RelatedInvestments

TheASEANSecretariat

Jakarta

TheAssociationofSoutheastAsianNations(ASEAN)wasestablishedon8August1967.TheMemberStatesoftheAssociationareBruneiDarussalam,Cambodia,Indonesia,LaoPDR,Malaysia,Myanmar,Philippines,Singapore,ThailandandVietNam.TheASEANSecretariatisbasedinJakarta,Indonesia.

Forinquiries,contact:TheASEANSecretariat

CommunityRelationsDivision(CRD)70AJalanSisingamangaraja

Jakarta12110

Indonesia

Phone:(+6221)724-3372,726-2991

Fax:(+6221)739-8234,724-3504

E-mail:public@

MissionoftheEuropeanUniontoASEAN

MenaraAstra,38thFloorJl.JendSudirmanKav5-6

Jakarta10220Indonesia

Phone:(+6221)2554-6200

Fax:(+6221)2554-6201

Email:mission-asean@eeas.europa.eu

Website:

http://eeas.europa.eu/asean

Catalogue-in-PublicationData

ClimateFinanceScopingStudy:MobilizingPrivateSectorInvolvementinASEANClimate-RelatedInvestmentsJakarta,ASEANSecretariat,July2025

xxx.xxx

1.xxxx

2.xxxxx-xxxxx

ISBNCode

Withthesupportof:

EnhancedRegionalEU-ASEANDialogueInstrument

E-READI

EUROPEANUNION

ThispublicationwaspreparedwiththesupportoftheEuropeanUnion(EU)throughtheEnhancedRegionalEU-ASEANDialogueInstrument(E-READI).AsworkondevelopingaClimateFinanceStrategyintheASEANregionisongoing,itscontentsshouldbetreatedwithcare.TheyarethesoleresponsibilityoftheauthorsanddonotnecessarilyreflecttheviewsoftheEuropeanUnion,theASEANMemberStates,theASEANSecretariat,anyrelatedworkinggroups,institutionsandbodies,noranypersonactingontheirbehalf.NeithertheEuropeanUnion,northeASEANMemberStates,theASEANSecretariat,anyrelatedworkinggroups,institutionsandbodies,oranypersonactingontheirbehalfmaybeheldresponsiblefortheusethatmaybemadeoftheinformationcontainedtherein.Responsibilityfortheinformationandviewsexpressedliesentirelywiththeauthors.

ASEAN:ACommunityofOpportunitiesforAll

Thetextofthispublicationmaybefreelyquotedorreprinted,providedproperacknowledgementisgivenandacopycontainingthereprintedmaterialissenttotheCommunityRelationsDivision(CRD(oftheASEANSecretariat,Jakarta.

GeneralinformationonASEANappearsonlineattheASEANWebsite:

CopyrightAssociationofSoutheastAsianNations

(ASEAN(2025.

Allrightsreserved.

asean

neVnneen

neCn

SCOPINGSTUDY

MobilisingPrivateSector

InvolvementinASEAN

Climate-RelatedInvestments

TheASEANSecretariat

Jakarta

ACKNOWLEDGEMENTS

Thestudy“MobilisingprivatesectorinvolvementinASEANclimate-relatedinvestments”wasinitiatedduringtheConsultativeWorkingMeetingbetweentheEUandtheASEANWorkingGrouponClimateChangeon29April2019inJakarta,Indonesia,inlinewitheffortsbyleadcountriesBruneiDarussalamandthePhilippinesinfacilitatingandadvancingsustainablefinanceintheregion.ThestudywasconductedwiththesupportoftheASEANSecretariatandtheEnhancedRegionalEU-ASEANDialogueInstrument(E-READI),adevelopmentcooperationprogrammefundedbytheEuropeanUnion.E-READIfacilitatesdialoguebetweentheEUandASEANinprioritypolicyareasofjointinterest.

Thestudy’sauthorswouldliketoacknowledgethevaluableinputandcommentsfromtheASEANSecretariat,theASEANMemberStates,theEUMissiontoASEANandE-READI.Furthermore,theywouldliketoacknowledgethevaluableinterviewinsightsprovidedbytheAsianDevelopmentBank(AnoujMehta,CountryDirectoroftheThailandResidentMissionandUnitHeadoftheASEANCatalyticGreenFinanceFacility(ACGF);MartinUnzueta,InfrastructureSpecialist(InnovationandGreenFinance);andMarinaLópezAndrich,ACGFConsultant),theEuropeanInvestmentBank,theEuropeanCommission,theEU-ASEANBusinessCouncilandtheEuropeanChambersofCommerceinASEANMemberStatesaswellastheirmemberinstitutionsthatparticipatedintheinterviews.Anyomissionsareexclusivelytheresponsibilityoftheauthors.

Furtheracknowledgementandsincereappreciationgotothefollowingindividualsfortheirtechnicalsupporttothisstudy:

·TotheASEANWorkingGroupforClimateChange(AWGCC)andtheASEANSeniorOfficialsfortheEnvironment(ASOEN)focalpointsintheASEANMemberStates,allofwhomcannotbeacknowledgedindividuallyhere;

·TotheASEANSecretariatundertheleadershipofSecretaryGeneralofASEANH.E.Dr.KaoKimHourn,theformerDeputySecretary-GeneralfortheASEANSocio-CulturalCommunity,EkkaphabPhanthavong;theASEANSecretariatEnvironmentDivisionledbyDr.VongSok(HeadofEnvironmentDivisionandAssistantDirectoroftheSustainableDevelopmentDirectorate)andhisteammembers,inparticularNataliaDerodofaandTriSulistyoSaputro,fortheirprofessionalcoordination,facilitationofconsultationsandstakeholderparticipationaswellasfeedbacktothedraftstudy;

·TotheEUDelegationtoASEAN,theEUCommission’sDirectorate-GeneralforClimateActionandtheE-READIteamfortheunwaveringsupportthroughoutthestudy;and

·Tothestudy’sleadauthors,JuliaGro?,DennisTaenzler,SimonSchiehle,MikaelHenzler,andregionalconsultantsDadaBacudoandReubenJessop.Thisstudywouldnothavebeenpossiblewithouttheirexpertiseandsupport.

MobilisingPrivateSectorInvolvementinASEANClimate-RelatedInvestments3

4

TABLEOFCONTENTS

Disclaimer 2

Authors 2

Acknowledgements 3

Tableofcontents 4

Listoftables 5

Listoffigures 5

Listofabbreviations 6

EXECUTIVESUMMARY 8

1.INTRODUCTION 11

1.1Background 11

1.2Relevance 11

1.3Objective 12

1.4Structure 12

1.5Approachandmethodology 12

2.CURRENTAPPROACHESTOPROMOTEPRIVATESECTORCLIMATEFINANCEINEUANDASEAN 13

2.1FrameworksforsustainablefinanceintheEUandASEAN 13

2.2PolicyenablinginstrumentsforsustainablefinanceinEUandASEAN 15

2.3Climate-relatedfinancialdisclosures 18

2.4Internationalinitiatives 19

2.5Instrumentsofferedbyfinancialinstitutions 19

3.TRENDS,CHALLENGESANDGOODPRACTICEEXAMPLESOFPRIVATESECTORENGAGEMENTIN

ASEANCLIMATEINVESTMENTS 22

3.1CurrenttrendsinprivatesectorclimatefinanceinASEAN 22

3.2ChallengesforsustainableinvestmentsinASEAN 26

3.3GoodpracticefromAMS 29

4.FUTUREPROSPECTSANDOPPORTUNITIESFORMOBILISINGPRIVATESECTORCLIMATEFINANCE

INASEAN 36

5.CONCLUSIONS-SUGGESTIONSFORGUIDINGSTRONGERPRIVATESECTORENGAGEMENTIN

ASEAN 43

REFERENCES 46

MobilisingPrivateSectorInvolvementinASEANClimate-RelatedInvestments5

LISTOFTABLES

Table1:ExamplesoffundsandfacilitiessupportedbyEUdevelopmentbanks 20

Table2:ChallengesforsustainableinvestmentsinASEAN 26

Table3:OpportunitiesformobilisingprivatesectorclimatefinanceinASEAN 40

LISTOFFIGURES

Figure1:Interrelationbetweenclimate,greenandsustainablefinance 13

Figure2:ASEANgreen,socialandsustainabilityissuance 17

Figure3:InnovativeFinanceInstruments 20

Figure4:ASEANgreenfinanceopportunities2016-2030-sectoralbreakdown(US$billion) 23

Figure5:Exemplarycompositionofanationalcatalyticfinancefacility 38

6

LISTOFABBREVIATIONS

ACCCASEANCenterforClimateChange

ACGF

ASEANCatalyticGreenFinanceFacility

ACMF

ASEANCapitalMarketsForum

ADB

AsianDevelopmentBank

AFD

AgenceFran?aisedeDéveloppement

AIF

ASEANInfrastructureFund

AMS

ASEANMemberStates

AFOLU

Agriculture,ForestryandOtherLandUse

ASEAN

AssociationofSoutheastAsianNations

ASEAN+3

AMSandChina,Japan,andtheRepublicofKorea

ASEANGBS

ASEANGreenBondStandards

ASEANSBS

ASEANSocialBondStandards

ASEANSLBS

ASEANSustainability-linkedBondStandards

ASEANSRFS

ASEANSustainableandResponsibleFundsStandards

ASEANSUS

ASEANSustainabilityBondStandards

ASEANTaxonomy

ASEANTaxonomyforSustainableFinance

ASEANTFG

ASEANTransitionFinanceGuidance

ASEC

ASEANSecretariat

ASOEN

ASEANSeniorOfficialsfortheEnvironment

ATB

ASEANTaxonomyBoard

AWGCC

ASEANWorkingGrouponClimateChange

BNCCP

BruneiDarussalamNationalClimateChangePolicy

BNM

BankNegaraMalaysia

CAPEX

CapitalExpenditure

CBI

ClimateBondsInitiative

CERF

TheCleanEnergyRevolvingFund

CGIAR

ConsultativeGroupforInternationalAgriculturalResearch

CMM

CapitalMarketsMalaysia

COP

ConferenceoftheParties

COVID-19

CoronavirusDisease2019

DGCLIMA

Directorate-GeneralforClimateAction

EDC

ElectriciteduCambodge

EDCF

EconomicDevelopmentCo-operationFund

EFRAG

EuropeanFinancialReportingAdvisoryGroup

EIB

EuropeanInvestmentBank

E-READI

EnhancedRegionalEU-ASEANDialogueInstrument

ESG

Environmental,SocialandGovernance

ETM

EnergyTransitionMechanism

EU

EuropeanUnion

EUGBS

EuropeanGreenBondStandard

EUTSA

FELICITY

EUTaxonomyforSustainableActivities

FinancingEnergyforLow-CarbonInvestment-CitiesAdvisoryFacility

MobilisingPrivateSectorInvolvementinASEANClimate-RelatedInvestments7

FI

FinancialInstitution

FiNZ

FinanceforNetZero

G20

GroupofTwenty

G20SFWG

G20SustainableFinanceWorkingGroup

GCD

GreenClaimsDirective

GCF

GreenClimateFund

GDP

GrossDomesticProduct

GFANZ

GlasgowFinancialAllianceforNetZero

GHG

GreenhouseGas

GIZ

GermanInternationalCooperation(DeutscheGesellschaftfürInternationaleZusammenarbeit)

GSS

Green,SocialandSustainability

IFI

InternationalFinanceInstitution

IPSF

InternationalPlatformonSustainableFinance

JC3

JointCommitteeonClimateChange

JETP

JustEnergyTransitionPartnership

KfW

KreditanstaltfürWiederaufbau

KJWA

KoroniviaJointWorkonAgriculture

MAS

MonetaryAuthorityofSingapore

MDB

MultilateralDevelopmentBank

MoU

MemorandumofUnderstanding

MRV

Monitoring,reportingandverification

MW

Megawatt

NBF

Needs-basedFinance

NDC

NationallyDeterminedContribution

O&M

OperationsandMaintenance

OECD

OrganizationforEconomicCo-operationandDevelopment

OJK

OtoritasJasaKeuangan

PDR

People’sDemocraticRepublic

PIC

Private,CommercialandInstitutional

PTSMI

PTSaranaMultiInfrastruktur

RCC

RegionalCollaborationCentres

SCM

SecuritiesCommissionMalaysia

SDGs

SustainableDevelopmentGoals

SIO

SDGsIndonesiaOne

SME

SmallandMedium-sizedEnterprise

SPV

SpecialPurposeVehicle

SRI

SustainableandResponsibleInvestment

TCFD

TaskForceonClimate-relatedFinancialDisclosures

TFG

(ASEAN)TransitionFinanceGuidance

TSC

TechnicalScreeningCriteria

UN

UnitedNations

UNEP

UnitedNationsEnvironmentProgramme

UNFCCC

UnitedNationsFrameworkConventiononClimateChange

8

Executivesummary

AchievingthegoalsoftheParisAgreementrequiresprivatefinancetobemobilisedonanunprecedentedscale.1ThedemandforadditionalgreeninvestmentintheAssociationofSoutheastAsianNations(ASEAN)regionbetween2016and2030hasbeenestimatedatUS$3trillion.WhereasthecurrentannualflowofgreenfinancetotheregionstandsatUS$40billion,averagedemandwillneedtorisetoroughlyUS$200billionperyearbetween2016and2030.2Approximately75%ofcurrentflowscomefrompublicfinanceand25%fromprivatefinance,mainlyintheformofcommercialloans,meaningthatprivategreenfinanceflowswillneedtoscaleupbyafactorofmorethanten.3Moreover,inresponsetothecombinedchallengesoftheCoronavirusDisease2019(COVID-19)pandemicandclimatecrisis,financialflowswillneedtosupportagreenandresilientrecoveryaswellasajusttransition–financewillbethekeytoachievingarecoverycompatiblewiththeParisAgreementgoals.4Inthefaceofhighupfrontinvestmentcostsforgreentechnologies,additionalincentivesforprivateactorsarenecessary.5RecentstudieshaveindicatedthatprivatesectoractorsinASEANMemberStates(AMS)stillfacesignificantbarriers,suchasaninsufficientlyenablingpolicyenvironment,restrictedavailabilityoftechnologiesandlimitedaccesstofunding.6

Atthesametime,theEuropeanUnion(EU)anditsMemberStates,aswellasASEANanditsMemberStates(AMS),havetakenprogressivestepstowardscreatingregionalandnationalpolicyframeworksforpromotingsustainablefinance.ParticularhighlightsincludetheadoptionoftheEUTaxonomyforSustainableActivities(EUTSA)andthedevelopmentoftheASEANTaxonomyforSustainableFinance(ASEANTaxonomy),bothofwhichwillserveasoverarchingguidesandcommonlanguagetoidentifyandclassifysustainableprojectsandeconomicactivitiesintherespectiveregions.ThedevelopmentoftheEuropeanGreenBondStandard(EUGBS),aswellastheadoptionoftheASEANGreenBondStandards(ASEANGBS),theASEANSocialBondStandards(ASEANSBS),theASEANSustainabilityBondStandards(ASEANSUS),theASEANSustainability-linkedBondStandards(ASEANSLBS),theASEANSustainableandResponsibleFundStandards(ASEANSRFS),andtheASEANTransitionFinanceGuidance(ASEANTFG)arefurtherimportantframeworks.Theseeffortsrepresentsignificantprogresstowardscreatinganeffectiveframeworkforclimate-relatedfinancialdisclosuresandcollaboratingwithdevelopmentfinanceinstitutionstoleverageprivatesectorfinance.

Inthiscontext,thestudydescribesandanalysesthestatusquoandoutlinesfutureprospectsformobilisingprivatesectorinvolvementinASEANclimate-relatedinvestments,bothwithinAMSandattheASEANregionallevel.ItaimstoincreasetheprivatesectorengagementinASEANclimate-relatedfinancetoimplementmitigationandadaptationactioninlinewiththegoalsoftheParisAgreement.

ThestudypointstowardstwomajordrivingforcesforsustainablefinanceinAMSsofar,namelylarge,primarilyinternationalcompaniesandthebankingsector.Smallandmedium-sizedenterprises(SMEs)arelessprominentactorsintherealmofsustainablefinancedespitetheirrelevanceforASEANeconomies.SMEscomprise69%ofemploymentand41%ofASEAN’sgrossdomesticproduct(GDP).7Oneofthemainchallengesisthustobringthesustainabilityinitiativesdowntosmallerenterprises.Inthiscontext,thestudyidentifiesthreemainclustersofchallenges:

1.Thestudyfindsthatbankabilityandtheneedforeconomicallyattractiveprojectswithattractiverisk-returnprofilesarethebiggestchallengesforprivateinvestorsinscalingupclimatefinanceflowsinASEAN.8Sustainableprojectsoftenhavehigherup-frontcoststhanconventionalalternativesandarebasedonrelativelynewtechnologies.Moreover,revenuestreamsareofteninfluencedbybroaderquestionsofaffordabilityandaredependentonpublicpoliciesandregulations,whichcanincreasetheriskprofilesofsuchprojects,especiallyifcoupledwithmoreexpensivetechnologiesorfinancingcosts.

1-Anbumozhietal.,2020.

2-DBSandUNEnvironmentInquiry,2017.

3-Ibid.

4-ASEANSecretariat,2021.

5-Ibid.

6-Anbumozhietal.,2020.

7-ASEANTaxonomyBoard,2021.

8-QuestionnairereceivedfromtheAsianDevelopmentBank.

MobilisingPrivateSectorInvolvementinASEANClimate-RelatedInvestments9

Inaddition,developersoftenlackaccesstolong-termcapital,andexchangeratevolatilityhindersoverseasinvestment.9

2.Anotherchallengeidentifiedbythestudyis“greenwashing”andthedifficultyinassessinghow“green”projectsandproductsareinpractice,particularlybecauseofthelackofcommonsustainabilitydefinitionsandthelimitedtransparencyonwhereexactlythemoneyflows.10ThischallengeisalreadybeingaddressedbythedevelopmentoftheASEANTaxonomyforSustainableFinance,theASEANTFGanddisclosurerequirementsbynationalauthorities;buttheactualadoptionandcompliancewiththetaxonomyonthegroundwillbecrucialtoitssuccess.

3.ThethirdlargercomplexofchallengesidentifiedisrelatedtothecapacitiesofsmallerprivatecompaniesandlocalfinancialinstitutionsinAMS:SMEsoftenlacktheadditionalresourcesandpersonnelwithrelevantexpertisetomanagesustainability-orientedprojects.11Assessingthereliabilityofthesustainabilityperformanceratingsissuedtoprojectsbylocalfinancialinstitutionsisalsochallenging,giventhatreviewproceduresareoftennottransparentandthebanksdonothavesufficientresourcesandexpertisetodothesustainabilityreviewsproperly.12

Furthermore,thestudyprovidesinsightsintosectoraldevelopmentsinprivate-sectorclimatefinanceflows.Concerningclimatechangemitigation,manysustainability-relatedprojectsarealreadyunderwayintheareaofenergygeneration,whereasitremainsmorechallengingtostructureprojectsintheareasofenergytransmissionanddistribution.Further,thereremainsalackofprojectsandastrongneedforinvestmentininfrastructure,agriculture,forestryandotherlanduse(AFOLU),greenmobilityandbuildingsandwastemanagementandadaptation.TheAsianDevelopmentBank(ADB)estimatesthatSoutheastAsiawillrequireUS$210billionperyearbetween2016and2030tosupportinvestmentinclimate-compatibleinfrastructure.13

Basedontheresearchandtheinterviewsconducted,thestudymakestenrecommendationstoASEANandAMSgovernmentstofurthermobiliseprivatesectorclimatefinanceinAMSandtheregionfortheimplementationofmitigationandadaptationactioninlinewiththegoalsoftheParisAgreement:

1.Thechallengeoftheavailabilityandbankabilityofclimateprojectscanbeaddressed,forexample,byestablishingandimplementingcatalysingblendedfinancefacilities14(andreplicatingexistingfacilitiessuchastheASEANCatalyticGreenFinanceFacilityorACGF15)thatprovidetechnicalassistanceandprojectpreparationsupport.Suchfacilitiesblendvariousfundingsources,offerarangeoffinancialinstruments(publiclending,commerciallending,guarantees,equities,grants)andensureprojectmonitoringandsupervisiononthegroundandreplicabilityafterthedonorsphaseout.Theycansuccessfullyshowcaseprojectsacrossvarioussectors,showingtheyarebankableandattractivefortheprivatesectorandprovideadditionalmotivationforcurrencyswapsthroughimprovedcounterpartycreditriskratings.16

2.Similartoblendedfinancefacilities,establishandimplementmorede-riskingfunds(anexamplethatcouldbereplicatedistheShandongGreenDevelopmentFundinChina17)thatprovidefinanceforthedevelopmentofnumerousprojectssimultaneouslyandlowertheinitialriskprofileofclimate-friendlyprojectstoleverageadditionalfinancingfromprivate,institutionalandcommercialsources.18ThereisaneedforAMSgovernmentstobetterunderstandhowtomanageandimplementsuchfunds.19

9-QuestionnairereceivedfromtheAsianDevelopmentBank.

10-InterviewswithEUROCHAMrepresentativesinMalaysiaandIndonesia.

11-InterviewswithEUROCHAMrepresentativesinMalaysiaandwithSustainableFinanceInstituteAsia.

12-InterviewwithEUROCHAMrepresentativesinMalaysia.

13-QuestionnairereceivedfromtheAsianDevelopmentBank.

14-InterviewwithEuropeanInvestmentBankandAsianDevelopmentBankrepresentatives.

15-AsianDevelopmentBank,2023(1).

16-InterviewwithEuropeanInvestmentBankrepresentatives.

17-AsianDevelopmentBank,2020(3).

18-AsianDevelopmentBank,2020(3).

19-InterviewwithAsianDevelopmentBankrepresentatives.

10

3.Revolvingfundsestablishedbythepublicorprivatesectorsarepromisinginstrumentsastheyprovideinitialcapitaltofundprojectsandcanbereplenishedwithrevenues.

4.Developingone’scapacitiesanddomesticcapitalmarketsiscrucialtoreducingrelianceoninternationaldonorsandconcessionalfundinginthelongterm.20Domesticdevelopmentfinanceinstitutions(government-owned,suchassuchasPTSaranaMultiInfrastrukturinIndonesia)canserveastargetedfinancialintermediatestofundgreenprojectsandcanprovideanexcellentplatformforshowcasingprojectswithgoodreturnsandcreatingportfolioinvestmentvehicles.21

5.Enablingrenewableenergydeveloperstohavea“buyeroflastresort”(forexample,agovernmentalorinter-governmentalfund)thatwouldguaranteethepurchaseofelectricityproducedfromrenewablesourcesoveramoreextendedperiodatcostplusminimalinvestorreturntariffswouldbeaneffectivestimulusforprivateinvestment.22

6.Initiatinganddevelopinglarge-scalerenewableenergyprojectssupportedbyinitialfundingfrommultilateraldevelopmentbanksandotherdonors,andbasedonlong-termpowerpurchaseagreements,canbeabankableandattractiveopportunityfortheprivatesector.

7.Robustlong-termpolicyframeworkssupportinggreen/sustainablefinancegrowth(suchasroadmaps,actionplans,greenbondandloansupportschemesandframeworks,etc.)raiseawarenesswithintheprivatesectorandmotivateprivatesectoractorstoinvestinsustainableprojects,productsandservices.

8.Adoptingandimplementingtaxonomies,disclosureregimesandtransitionframeworksforsustainablefinancecaneffectivelycountergreenwashingbyprovidingacommonframeworkandsingleguidanceforinvestors,companiesandfinancialinstitutions.23Atthesametime,thetaxonomyneedstobeproportionatetoenableajustandaffordabletransitionandnotoverburdensmallercompanies.24

9.Targetedcapacitydevelopmentprojectsandprogrammes(likeSMARTTextile&GarmentswasinMyanmarandtheimSMEplatforminMalaysiarunbythecountry’screditguaranteecorporation)thatofferworkshopsandtrainingstohelplocalfinancialinstitutionsdevelop,benefitfromandmarketgreenfinancialproducts,whileadditionallysupportlocalSMEsinapplyingforgreenfinance,proveusefulforscalingupsustainablepractices.

10.Profitableclimateinvestmentopportunitiesforbusinessesneedtobebettermarketed.Thiscanbedonebyenablingenhancedsocialnetworking,raisingawarenessonsustainablefinancetopics,educatingthemarketandactivelyshowcasingtheprofitabilityofsustainabletechnologiesandpractices.25Emphasizingtherisksofcompaniesbeingpushedoutofglobalsupplychains,iftheydonotadoptsustainablepractices,canalsobeamajordriverforactionbytheprivatesector.26

20-InterviewwithEuropeanInvestmentBankrepresentatives.

21-InterviewwithAsianDevelopmentBankrepresentatives.

22-InterviewwithEUROCHAMrepresentativesinIndonesia.

23-InterviewwithSustainableFinanceInstituteAsia.

24-Ibid.

25-InterviewwithEUROCHAMrepresentativesinCambodia;InterviewwithEUROCHAMrepresentativesinThailand.

26-InterviewwithSustainableFinanceInstituteAsia.

MobilisingPrivateSectorInvolvementinASEANClimate-RelatedInvestments11

1.Introduction

1.1.Background

E-READIisacooperationprogrammefacilitatingdialoguesbetweentheEUandASEANonpolicyareasacrossallthreeASEANCommunitypillars.ItrespondstotheneedsandprioritiesofASEANandalignswiththemutuallyidentifiedEU-ASEANpriorities.On8July2019,ASEANandtheEUlaunchedtheHigh-LevelDialogueonEnvironmentandClimateChangetofacilitateandfurtherenhancetheEuropeanCommissionandASEANdialogue.ActionlinesofmutualinteresttobeaddressedundertheClimateActionDialogue(asagreedintheConsultativeWorkingMeetingbetweentheEUandASEANWorkingGroupforClimateChange(AWGCC)on29April2019inJakarta,Indonesia)include,interalia,ActionLineII”Bestpracticesonclimatechangefinancemanagementintheregion”(BruneiDarussalam)complementedbytheongoingprojectoftheASEANClimateFinanceStrategyundertheUnitedNations(UN)FrameworkConventiononClimateChange(UNFCCC)Needs-basedFinance(NBF)Project.ThisstudyisapartoftheimplementationoftheactivitiesunderthisActionLineandalsoreflectstheEuropeanCommission’sprioritiesfocusingonconcreteEUandASEANsustainablefinanceinitiativesthatalreadyexistorareinthepipeline.Thisstudy,alongsidethepublishedTechnicalAssessmentofClimateFinanceFlowsandNeedsinSoutheastAsia(publishedinJanuary2022)27andtheClimateFinanceGuidebookforASEAN(publishedinFebruary2023)28undertheNBFproject,complimentsCoreTheme6oftheRevisedAWGCCActionPlan(2019-2025)infacilitatingandenhancingclimatefinanceintheregion.

1.2.Relevance

TheachievementofthegoalsoftheParisAgreementrequiresanunprecedentedmobilisationofprivatefinance.29ThedemandforadditionalASEANgreeninvestmentbetween2016and2030isestimatedatUS$3trillion,whereasthecurrentannualASEANflowofgreenfinancesupplywasestimatedatUS$40billionagainstanaverageannualdemandofroughlyUS$200billionbetween2016and2030.30Approximately75%ofcurrentflowscomefrompublicfinanceand25%fromprivatefinance,mainlyintheformofcommercialloans,meaningthatprivategreenfinanceflowswillneedtoscaleupbyafactorofoverten.31Moreover,inresponsetotheCOVID-19pandemicandclimatecrisis,financialflowswillneedtosupportagreenandresilientrecoveryaswellasjusttransition;financewillbethekeytoachievingarecoverycompatiblewiththeParisAgreementgoalsforadaptationandmitigation,byenablingtechnologydevelopmentanddiffusionaswellashumancapacitybuildingfordevelopmentandclimatechangeinterventions.32Inthefaceofhighupfrontinvestmentcostsforgreentechnologies,additionalincentivesforprivateactorsarenecessary.Therearevariousinstrumentsforalternativefundingopportunitiestosupportashiftinparadigm,suchastheissuanceofgreenbonds,theproceedsfromwhichcanbeusedforfundingnewprojectsinprioritysectors.33Currently,privatesectoractorsstillfacesignificantbarrierssuchasinsufficientenablingpolicyenvironment,restrictedavailabilityoftechnologiesandaccesstofunding.34

27-

/documents/424106

28-

/sites/g/files/zskgke326/files/2023-03/J0008_UNFCCC_NBF_ASEAN_Guidebook_

FINAL_AW_digital.pdf

29-Anbumozhietal.,20