Malaysia’s largest pension fund, Kumpulan Wang Persaraan (KWAP), has taken a decisive step toward aligning institutional capital with climate action through the launch of Dana Iklim+, a 2 billion ringgit (USD $475 million) fund aimed at financing low-carbon infrastructure, nature-based projects, and sustainable real estate across Malaysia. Announced at the Kuala Lumpur Sustainability Summit 2025, Dana Iklim+ marks the nation’s first dedicated climate investment vehicle, designed to accelerate Malaysia’s shift toward a net-zero, climate-resilient economy. The initiative aligns closely with Malaysia’s National Energy Transition Roadmap and its pledge to achieve net-zero emissions by 2050, positioning the country as an emerging hub for green finance in Southeast Asia.

Mobilising Institutional Capital for Climate Transition

Officiated by Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani, who is also acting Minister of Natural Resources and Environmental Sustainability, the launch highlighted how Malaysia’s capital markets can serve as a catalyst for sustainable development.

“This fund demonstrates how Malaysia’s financial institutions can lead in building climate resilience and inclusive growth,” Johari said. “Mobilising public and private capital together is key to achieving our long-term sustainability goals.”

The fund’s initial allocation will target multi-asset climate solutions across infrastructure, private equity, real estate, and nature-based investments, creating measurable environmental and social outcomes. KWAP projects that Dana Iklim+ could avoid or offset up to one million metric tons of CO₂ equivalent through its investments over time.

Integrating Climate Impact with Financial Performance

According to Hazman Hilmi Sallahuddin, KWAP’s Chief Investment Officer, the new fund is a cornerstone of the institution’s strategy to integrate sustainability and long-term value creation.

“Dana Iklim+ is a vital part of our low-carbon transition strategy,” said Sallahuddin. “We’re mobilising institutional capital to deliver both environmental impact and competitive returns, with transparency and accountability at every stage.”

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The fund’s framework is built on six measurable impact dimensions, including climate resilience, national policy alignment, and contribution to the UN Sustainable Development Goals (SDGs). By embedding performance-linked metrics, KWAP aims to ensure accountability, attract co-investment, and demonstrate that climate-aligned assets can deliver consistent returns alongside social and environmental value.

Beyond Decarbonisation: A Broader Development Vision

The “+” in Dana Iklim+ signals a holistic approach to sustainability extending beyond emissions reduction to encompass broader socio-economic benefits such as food security, clean water access, renewable energy availability, and inclusive economic participation.

“A credible climate strategy must go hand in hand with human development,” Sallahuddin added. “Through this fund, we aim to invest in solutions that strengthen Malaysia’s resilience, create jobs, and deliver prosperity that is both sustainable and inclusive.”

This multi-dimensional approach reflects a growing recognition in climate finance that environmental performance and social inclusion must be pursued together.

Anchoring Malaysia’s Green Finance Ecosystem

Dana Iklim+ builds on KWAP’s earlier catalytic programs Dana Pemacu and Dana Perintis which were designed to deepen Malaysia’s private markets and foster innovation. With its new climate vehicle, KWAP is positioning itself as a regional leader in sustainable investment, aligning its portfolio with national initiatives such as the Madani Economy Framework and GEAR-uP (Green Economy Accelerator for Resilient Urban Projects). KWAP, which manages over USD $40 billion in assets, has committed to achieving a net-zero investment portfolio by 2050, consistent with Malaysia’s Nationally Determined Contributions (NDCs) under the Paris Agreement.

By allocating capital to renewable energy, green real estate, and conservation-linked nature projects, KWAP seeks to demonstrate that pension funds can balance fiduciary responsibility with environmental stewardship. “We want to prove that institutional investors can drive exponential impact not only in decarbonisation but in resilience and equitable growth,” said Sallahuddin.

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A Regional Model for Climate Finance

Malaysia’s move comes as regional peers such as Singapore, Indonesia, and Thailand race to establish their own transition financing frameworks. Dana Iklim+ is expected to complement other national efforts, including Bank Negara Malaysia’s Climate Change and Principles-Based Taxonomy and Bursa Malaysia’s ESG reporting standards, both of which aim to align corporate finance with sustainability principles. Analysts say the fund’s structure blending institutional capital, impact measurement, and policy alignment could serve as a prototype for other emerging markets seeking to scale climate finance through public-private collaboration.

Driving Southeast Asia’s Low-Carbon Transformation

By combining financial innovation with measurable climate action, Dana Iklim+ positions Malaysia as a credible player in Asia’s transition finance arena. The initiative not only reinforces the country’s national sustainability ambitions but also signals to global investors that Southeast Asia’s climate finance momentum is accelerating from vision to execution. If successful, the model could help close the region’s vast green financing gap, unlocking billions in investment needed to meet energy transition and resilience goals.

“Malaysia can be a bridge between developed and emerging markets in the climate economy,” said Johari. “Dana Iklim+ is more than an investment fund, it’s a statement that sustainable growth is possible, profitable, and imperative for our shared future.”

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