Introduction

The report examines fossil fuel expansion in Southeast Asia, highlighting rising climate risks, including heatwaves, flooding, and food insecurity. Despite renewable ambitions of 397.8 GW, fossil fuels dominate energy financing, receiving USD 142.1 billion since 2016 versus USD 52.8 billion for renewables. Financial institutions play a central role in enabling this imbalance.

About the scorecard

The scorecard evaluates 35 banks with the largest coal and gas exposure in Southeast Asia from 2016–2024. It assesses project financing, policies, and climate commitments using criteria such as exclusion policies, phase-out targets, and renewable financing. Banks are ranked based on cumulative financing and policy strength, with higher scores indicating poorer sustainability performance.

Results and findings

Total downstream coal and gas financing reached USD 45.17 billion, with 65.1% from international banks. Coal accounted for 71.9% of funding, though financing has declined since 2017, while gas financing remains steady. Domestic banks increasingly finance coal, while foreign banks continue support through equity and underwriting.

Japan is the largest fossil fuel financier, contributing around 30% of total funding. JBIC is the top financier, reflecting national strategies to secure energy supply and export fossil fuel technologies. Chinese and South Korean banks also contribute significantly, though some have reduced coal financing following policy shifts.

Coal financing is concentrated in Indonesia, Vietnam, and the Philippines, while gas financing is more distributed, with Thailand receiving the largest share. Domestic banks support regional fossil fuel expansion despite limited domestic coal development in some countries.

Coal finance ranking

East Asian banks dominate coal financing, with Japanese, Chinese, and Korean institutions leading. Some have exclusion policies, but these often contain loopholes, such as permitting financing for projects using “low-carbon” technologies. Domestic banks in Indonesia and Vietnam lack robust exclusion policies, continuing to fund coal expansion.

In Southeast Asia, Indonesian, Vietnamese, Malaysian, and Filipino banks are major coal financiers. Policies such as coal moratoria include exemptions, allowing continued expansion. Some banks have introduced restrictions or phase-out targets, but implementation remains inconsistent.

Gas finance ranking

Gas financing is driven by international and Southeast Asian banks, particularly from Japan, Malaysia, and Thailand. Gas is often framed as a transition fuel despite methane emissions. Few banks have policies restricting gas financing, with only limited conditions applied by institutions such as ADB and Kasikornbank.

Domestic banks finance gas expansion aligned with national energy strategies. Thailand and Malaysia rely heavily on gas, with plans for continued capacity growth. Financial support includes loans and underwriting for major infrastructure projects, reinforcing long-term fossil fuel dependence.

Banks and ESG practices

Banks have integrated ESG considerations, but policies lack effectiveness. Only 11 of 35 banks have sector-specific net-zero pathways, and few provide clear transition strategies for clients. Sustainable finance commitments are often broad, with only ING setting a specific renewable financing target.

Coal exclusion policies are inconsistent, with many allowing financing through loopholes such as underwriting or revenue-based thresholds. Gas is frequently classified as a transition activity in regional taxonomies, enabling continued financing. Transition finance frameworks may support coal-to-gas switching or other fossil-related activities.

Policy backtracking is evident, with major banks withdrawing from the Net-Zero Banking Alliance and regulatory standards weakening. These developments risk undermining climate commitments and slowing progress towards decarbonisation.

What must be done to move the needle away from fossil fuels?

The report calls for stricter divestment policies, including clear timelines to phase out coal and gas financing and eliminate loopholes. Banks should restrict funding to fossil fuel developers and align portfolios with 1.5°C pathways.

Financial institutions are urged to scale up renewable energy investment and prioritise climate mitigation and adaptation. Public and development banks should de-risk renewable projects to attract private capital. Global North institutions should redirect financing towards sustainable energy and support a just transition in Southeast Asia.