ASEAN Needs $400 Billion Annually for Net Zero, but Holds Just 3% of Global Sustainable Debt

Standard Chartered's ASEAN Transition Survey found that every corporate surveyed views climate risk as material to its business, with more than 90 percent flagging flood risk specifically, and 74 percent believing a shift to a low-carbon economy will strengthen their company's outlook. The region needs an estimated $400 billion annually to reach net zero, amounting to more than $10 trillion between 2025 and 2050, yet ASEAN holds just 3 percent of the world's outstanding sustainable debt, and low-carbon energy investment reached only about $32 billion in 2023.

 

Why the Gap Between Conviction and Bankability Is the Real Story

 

The survey's most striking finding may be the disconnect between corporate belief and corporate financing behaviour: 74 percent of corporates say they are convinced a low-carbon economy will strengthen their business, yet engagement with deeper decarbonisation solutions like carbon capture and hydrogen remains limited, concentrated instead around solar, energy efficiency and circular economy measures, the most scalable and near-term-deployable options. That pattern suggests corporates are not held back by scepticism about the transition's underlying economics, but by the practical cost and infrastructure constraints that determine which specific solutions are currently deployable at reasonable cost.

Ben Daly, Standard Chartered's Global Head of Transition Finance and Advisory, said "what stands out from this research is that the business case for transition is increasingly clear to corporates across ASEAN. The constraint is no longer conviction, it's capital." That framing reorients the transition challenge specifically: rather than needing to convince corporates that transitioning makes commercial sense, the more pressing task becomes structuring financing that can make already-desired projects genuinely investable.

 

Why Affordability and Infrastructure, Not Willingness, Set the Actual Pace

 

Corporates identified high upfront costs and a lack of economies of scale as the primary reasons transition spending lags their own stated ambitions. That cost constraint compounds with a genuine physical infrastructure limitation: more than 70 percent of corporates expect their local transport sector to electrify, yet cite a shortage of charging infrastructure as the key obstacle, while more than 90 percent want to use batteries, an appetite the survey says is held back by supply and cost rather than demand.

That combination points to a specific sequencing problem: even where corporates have both the conviction and the stated intent to adopt a given technology, the physical infrastructure and cost curve for that technology may not yet have matured enough domestically to support widespread deployment, meaning engagement is likely to expand only as these underlying constraints ease rather than through any additional persuasion of corporate decision-makers.

 

Why the Divergent Fuel Expectations Reveal a Genuinely Hybrid Transition Pathway

 

Corporate expectations for how coal, oil and gas usage will change by 2050 diverge meaningfully by fuel type. Roughly half of respondents expect coal to be phased out by or after 2050, though about 20 percent foresee only limited reduction or even higher use, while just over half expect a significant decline or phase-out of oil, closely tied to transport electrification. Gas is expected to decline more slowly than either coal or oil, widely viewed by respondents as a lower-emission bridge fuel until renewables and storage capacity scale sufficiently.

That divergence matters because it suggests corporates across the region anticipate a genuinely gradual, multi-decade transition rather than a rapid, uniform shift away from fossil fuels entirely, with gas specifically retained longer as a transitional technology bridging the gap while renewable generation and storage infrastructure catches up to growing electricity demand, a framing consistent with the "bridge fuel" debate examined elsewhere in recent coverage of LNG and gas infrastructure investment.

 

Why Adaptation Spending Lagging Mitigation Investment Is a Distinct Concern

 

The survey specifically flags that adaptation spending, investment in adjusting infrastructure and practices to cope with climate-related hazards already occurring, is not keeping pace with investment directed at reducing emissions. Only 7 percent of corporates see no water-related risk at all, while 40 percent describe water scarcity as a significant and growing challenge, a pressure the survey notes will only intensify as data centre development expands regional water demand.

That imbalance between mitigation and adaptation investment reflects a pattern visible in climate finance more broadly, where emissions reduction projects often attract more capital and policy attention than resilience-focused infrastructure, even though both flood risk, the most commonly cited concern among respondents, and water scarcity represent immediate operational threats that adaptation investment specifically addresses, distinct from the longer-term benefit emissions reduction delivers.

 

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Why Utilities' Low Sustainable Finance Usage Represents a Concrete Market Opportunity

 

The report specifically identifies utilities as "a particular opportunity," noting they "engage strongly with the transition but make comparatively little use of sustainable finance," a mismatch the bank frames as representing "real headroom as the region electrifies." That gap is notable given utilities sit at the centre of electrification, renewable generation and grid distribution, precisely the infrastructure category the survey identifies as one of the region's most binding constraints.

The disconnect suggests utilities may be pursuing transition-related capital expenditure through more conventional financing channels rather than fully utilising sustainable finance instruments like green bonds, sustainability-linked loans, or blended finance structures specifically designed to fund exactly this kind of infrastructure, an underutilisation the bank appears to view as an addressable gap rather than a reflection of genuine unsuitability.

 

What the Sustainable Finance Track Record Signals About Future Demand

 

Every corporate surveyed has already raised sustainable finance and expects to do so again, citing cheaper funding, a broader investor base, and new banking relationships, the latter cited by 40 percent of respondents, as concrete benefits already realised. Corporates most expect to use green or sustainability-linked bonds and loans, cited by 67 percent, and blended finance, cited by 53 percent, while interest in carbon markets is also growing, with every corporate that has an established carbon strategy expecting to buy or sell credits in future, even though more than 40 percent are not yet active in carbon markets.

That combination of universal prior sustainable finance usage and near-universal intent to continue suggests the region's sustainable finance market, while currently small relative to overall transition financing needs, has already demonstrated a track record capable of supporting continued and expanded use, rather than representing an unproven financing category corporates remain hesitant to adopt.

 

What Comes Next

 

Private capital currently makes up 55 percent of climate finance flows across South and East Asia and the Pacific, against 65 percent in Europe and as much as 93 percent in the US and Canada, a gap the report frames as highlighting both ASEAN's financing shortfall and the opportunity to mobilise considerably more private and sustainable capital going forward. Whether the financing tools corporates say they intend to use, particularly green and sustainability-linked bonds and blended finance structures, prove sufficient to close the gap between the region's roughly $32 billion in current annual low-carbon investment and its estimated $400 billion annual need, and whether utilities specifically begin utilising sustainable finance instruments at a pace matching their stated transition engagement, will determine how quickly ASEAN's corporate conviction on the transition's business case translates into the infrastructure delivery the region's electricity demand growth requires.

 

Source: Standard Chartered