Background information

The report by the Asia Investor Group on Climate Change (AIGCC) examines progress among 17 leading Asian investors managing USD 7.9 trillion in assets. It explores trends in climate-aligned investment practices, barriers to action, and the implementation of net zero strategies. The research is based on AIGCC’s 2022 Net Zero Investment Survey and aligns with the Paris Aligned Investment Initiative (PAII) Net Zero Investment Framework (NZIF) and the Investor Climate Action Plans (ICAPs). Respondents comprise asset owners and managers active in Asia, reflecting well-resourced and climate-engaged investors.

Climate targets, metrics, and measurement

Most investors have yet to set full net zero targets, with only 29% committing to whole-portfolio targets for 2050 and 18% setting interim goals to 2030. A further 41% are actively considering these targets. The Science Based Targets initiative (SBTi) is the preferred methodology, used by 47% of investors, alongside frameworks such as PAII NZIF and the Partnership for Carbon Accounting Financials (PCAF).

A majority (56%) use emission intensity to measure targets, while 33% use absolute emissions. Over 40% have measured carbon footprints across their entire portfolios, mainly within listed equities (94%) and fixed income (93%). Measurement in private equity, infrastructure, and real assets lags due to data gaps. Only 25% have undertaken full portfolio climate scenario analyses, though 44% plan to do so.

Physical risk analysis is less advanced; only 6% have conducted assessments and confirmed portfolio resilience, while 53% are considering such reviews. Metrics such as Weighted Average Carbon Intensity (WACI) and absolute emissions are most used for disclosure. Case studies from BNP Paribas Asset Management, Dynam Capital, and Sustainable Fitch demonstrate approaches to net zero alignment, carbon tracking, and scenario-based risk analysis.

Climate governance and strategy

Over one-third (38%) of respondents have formal climate policies, and the same proportion have fossil fuel investment policies. Most investors (81%) apply exclusions to thermal coal, while 47% are investing in transition strategies. Stewardship and shareholder engagement remain the dominant net zero investment approaches (80%), with growing use of climate voting policies (60%).

Disclosure practices are improving—69% of investors have produced Task Force on Climate-related Financial Disclosures (TCFD)-aligned reports, and a further 25% plan to do so. Half have published climate action plans, and nearly one-third link executive remuneration to climate targets. A similar proportion (44%) integrate a just transition into their strategies, acknowledging the socioeconomic implications of decarbonisation. However, only 13% have undertaken detailed biodiversity or deforestation risk assessments.

Asset owners’ mandates are not yet fully aligned with climate aspirations. Most do not require managers to decarbonise portfolios but increasingly expect reporting on emissions and engagement outcomes. About 33% of mandates include some climate solution investment criteria. The lack of standardised taxonomies across Asia remains a key limitation.

Investing in opportunities

Investors plan to be active across all asset classes, particularly public equities (86%), private debt (86%), and private equity (82%). Climate solution investments are growing, with 29% of respondents setting public targets and 41% considering doing so. Internal frameworks are most used to define such investments (59%). Case studies from GIC and Invesco illustrate investment in green technologies and sustainable fixed income strategies in Asia, highlighting scalable decarbonisation and active ownership approaches.

Barriers to investment

A lack of reliable and granular data is the main barrier for 47% of respondents, replacing the previous concern of limited tools. Other barriers include unclear definitions (40%), limited tools to measure ‘green impact’ (40%), and low client demand (40%). Policy and regulatory uncertainty are also cited.

Most investors (87%) address these challenges through direct or collaborative company engagement, including initiatives such as Climate Action 100+ and AIGCC’s Asian Utilities Engagement Program. A majority (80%) also participate in policy advocacy, including joint investor statements and consultations calling for stronger climate policy alignment.

Overall, the report highlights growing momentum among Asian investors towards net zero integration. However, it identifies persistent data and policy gaps that limit progress. AIGCC calls for improved data quality, harmonised taxonomies, and expanded investor collaboration to accelerate climate-aligned investment across the region.