Panorama of a green mountain landscape. © GIZ/Binh Dang

Promoting environmentally responsible investments in Southeast Asia

Financing Green Recovery in ASEAN

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  • Client

    Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ)

  • Country

    ASEAN

  • Political sponsors

    More

  • Runtime

    2022 to 2026

  • Products and expertise

    Climate, environment, management of natural resources

Context

The Association of Southeast Asian Nations (ASEAN) region stands at an economic crossroads. Witnessing remarkable growth, the region faces mounting concerns over escalating CO₂ emissions, which have surged from 0.5 to 1.7 billion tons annually over the last three decades. This trend underscores the urgent need for a more environmentally friendly growth trajectory. Addressing this challenge requires estimated annual investments of 190 billion United States Dollars (USD) to finance a clean energy transition that aligns with the climate targets of ASEAN Member States (AMS) by 2030.

Several AMS have already initiated steps to foster more eco-friendly financial markets. The ASEAN Development Programme, particularly the ASEAN Economic Community Blueprint 2025, underlines the importance of eco-friendly economic growth. However, shifting towards a low-carbon growth path remains challenging due to an investment-unfriendly environment and conflicting policy priorities.

Objective

Eco-friendly finance is more firmly established in the financial market of the ASEAN region.

Approach

The project is commissioned by the German Federal Ministry of Economic Cooperation and Development and cooperates with the ASEAN Secretariat. It aims to promote eco-friendly financing in the ASEAN region and focuses on two main areas:

  1. Developing green taxonomies: The project establishes frameworks for classifying green financial products and activities, ensuring a common understanding and standard across the ASEAN region.
  2. Expanding financial instruments: The project builds expertise and diversifies the range of eco-friendly financial instruments available in the market, enhancing the ability of financial institutions to support green investments.

To achieve these goals, the project fosters regional coordination, enhances regulatory frameworks, and creates incentive structures that encourage private capital to flow into environmentally friendly investments.

Last update: July 2024

Additional information