Indonesia and the Philippines led the bulk of the US$6.3 billion surge in green investments across Southeast Asia in the past year, as revealed by a study jointly conducted by consultant Bain & Company and Singapore’s Temasek. This marked a 20% increase from 2022, propelled by investments in solar and wind projects alongside funding for renewables-powered data centers.
Despite their significant contributions, the Philippines and Indonesia faced challenges in aligning national targets with policies and business initiatives, as indicated by the report’s index assessing progress toward decarbonization goals. Notably, the Philippines has yet to declare a net zero goal, while Indonesia, the region’s largest economy, aims for emissions neutrality by 2060 but faces hurdles in securing favorable financing terms to phase out coal power.
In contrast, Singapore and Vietnam, although not securing large-scale renewable energy deals as in previous years, maintained leadership in aligning national targets with the Paris climate accord. However, their investments did not match the scale seen in Indonesia and the Philippines.
The report also highlighted Malaysia and Laos for significant increases in climate-friendly investments compared to 2022, with Malaysia notably investing in solar-powered data centers and Laos attracting foreign investors for large-scale renewable projects.
While the region saw a rise in climate investments in 2023, there remains a substantial investment gap of US$1.493 trillion to meet decarbonization targets by 2030. This gap is exacerbated by the lack of shareholder activism in Southeast Asia, a factor that has driven corporate sustainability initiatives in regions like Europe and the United States.
In those regions, shareholder pressure has prompted major corporations like Shell to realign their emissions reduction targets with the Paris Agreement. However, Southeast Asia has yet to experience a similar level of shareholder engagement, hindering the flow of investments needed to accelerate decarbonization efforts.
