Helge Muenkel, chief sustainability officer, DBS
Victor Wong, head of sustainability office, UOB Asset Management
Mike Ng, group chief sustainability officer, OCBC
BT: Sustainable investing has ebbed and flowed along with market sentiment and political winds. Why are investors hesitant, and what needs to be done to get climate-aware investing into the mainstream?
Helge Muenkel: We have witnessed continuous improvement and strong efforts to transition our global economies to a net-zero future. According to the International Energy Agency, last year’s global investments in clean energy were around double the amount going into fossil fuels. Ten years ago, fossil fuel investments were about 20 per cent larger than clean energy investments. Meanwhile, India is projected to achieve a major milestone in 2025, with renewable electricity providing for more than half of the country’s power capacity, while China added more renewable power capacity in 2024 than the rest of the world combined.
Notwithstanding this, current investment flows are still insufficient to allow us to meet the goal of the Paris Agreement. Furthermore, complexities in the macroeconomic and geopolitical landscape have understandably made investors more cautious in recent times.
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Importantly, sustainable investing is not a short-term but a structural trend. Climate risk is increasingly recognised as a major driver of financial risk. And hence, most major investors integrate environmental, social and governance (ESG) considerations into their overall decision process.
Encouragingly, Asian regulators are stepping up. Across the region, many policies and regulations have been put in place that create an enabling environment, which supports climate action and related financing flows. This includes green and transition taxonomies and ESG disclosure standards. These developments bolster investor confidence and embed greater transparency in sustainable investing – important steps in shifting these financing flows into the mainstream.
More work needs to be done. For instance, there is some ambiguity around what qualifies as transition and transition finance. The vast majority of assets and economic activities globally and in Asia are not yet green, and DBS believes it is critical to also allocate capital to support their transition to becoming greener. Beyond financing those assets and activities, transition finance can also help companies transform their entire businesses, all of which will contribute to the greening of the entire economy.
We see progress across the region on several fronts. Localised taxonomies are evolving to reflect regional contexts and developmental needs. Markets like Singapore are evolving disclosure rules and incentives for credible transition finance.
At DBS, we have observed growing sophistication in how capital is being deployed. For instance, we saw strong investor appetite for two green bonds DBS brought to the market recently. The first was the issuance of Equinix’s S$500 million green bond in March 2025, its first Singapore dollar issuance. The second was Asia’s first public sustainability-linked securities offering by ST Telemedia Global Data Centres in January 2024. Both bonds were meaningfully oversubscribed, signalling growing investor demand for credible climate instruments.
Victor Wong: Investors’ hesitation around sustainable or climate-aware investing, despite growing interest, often stems from structural challenges and other key concerns. For example, the lack of standardisation and transparency in how ESG factors are assessed and reported. Without consistent metrics, it becomes difficult for investors to compare ESG investment products and evaluate their true impact. Additionally, some investors are concerned that corporates and governments may scale back their climate commitments which affect the short-term viability of such investments.
At UOB Asset Management, we view ESG integration as a strategic tool for value creation and risk mitigation. By embedding ESG considerations into our investment process, we aim to support long-term sustainability for our investees and their businesses. We also recognise that some investors may wish to explore and capitalise on advanced strategies to achieve specific impact or invest in specific themes. To meet these needs, we make ESG a core element of our investment thesis, aligning our strategies with both market realities and investor aspirations.
Mike Ng: One of the key considerations for investors when it comes to their investment decisions is the potential return. The recent increased geopolitical uncertainty and evolving regulatory landscape have tested investors’ appetite to commit to sustainable investments since they are unsure about the future regulatory environment and the impact it may have on their investment returns. In addition, some investors may be hesitant given concerns about low-quality ESG data, greenwashing as well as the perceived trade-off between sustainability and returns.
While interest in sustainable investment may fluctuate from time to time due to market sentiments and the geopolitical context, we believe that the overarching trend towards investments that take ESG factors and risks into consideration is here to stay. The challenges of sustainable investment are also being actively addressed. Collaboration between stakeholders – asset managers, data providers and regulatory bodies – is paving the way for more standardisation in reporting frameworks and taxonomies, which will help mitigate concerns on data quality and greenwashing. Meanwhile, leading financial institutions are developing diverse and accessible products catering to varying preferences and risks appetites, and – over time – are also showing that sustainable investments can deliver required returns.
Sometimes, enabling investors with information can also make a big difference in mainstreaming sustainable investing. Take, for example, the OCBC Sustainability Hub, launched in 2024. The innovative platform empowers investors with a personal ESG rating, enabling them to track, understand and act on their investments, and to make informed financial decisions. Within just six months of its launch, the Sustainability Hub achieved a 2.3x year-on-year increase in sustainability-themed investments.
BT: What do you see as the most promising areas of investments for corporates and individuals that will address climate risks and reap a return?
Helge Muenkel: The business case for climate-aligned investing remains robust particularly in Asia, where climate risk is acute, economic growth is rapid, and the green transition is gaining momentum.
We see strong opportunities emerging across several areas that offer both meaningful climate impact and attractive risk-adjusted returns.
One such area is energy. Investments in solar, wind and battery storage systems are increasingly competitive against fossil fuel alternatives. More importantly, enablers such as smart grids and demand management technologies – especially in high-growth urban centres – are essential to stabilising renewable energy supply and unlocking further scale.
Mobility is another sector where climate action meets opportunity. Across Asia, countries are racing ahead in electric vehicle (EV) manufacturing, charging infrastructure and intelligent traffic systems. Innovations such as ultra-fast charging and connected transport systems are also improving convenience and range, spurring consumer adoption. Investors are increasingly focused on mobility platforms, EV supply chains and battery recycling, all of which present strong growth prospects as urbanisation and climate pressure reshape how people and goods move across the region.
In the agriculture sector, South-east Asia’s role as a major rice producer makes agricultural adaptation a top priority. Agri-tech innovations and advanced water management systems can boost food security while safeguarding millions of livelihoods. With strong social returns, such investments are increasingly attracting private capital, from agribusinesses investing in resilient seeds to impact investors funding water-saving irrigation technologies.
Another high-impact, cost-effective climate adaptation strategy is investing in nature-based solutions. Restoring and protecting ecosystems such as mangroves, wetlands, coral reefs and forests provides “natural infrastructure” that reduces disaster risks, regulates water flows, buffers heat and sequesters carbon. For instance, mangrove restoration in Vietnam and the Philippines has proven effective in shielding coastal communities from storm surges. These solutions are relatively low-cost compared to traditional infrastructure such as concrete sea walls.
We are also seeing transition finance emerge as an investment theme, which is why we enhanced our Transition Finance Framework in 2025 – to provide clients and stakeholders with greater clarity and transparency on eligible transition financing activities and enhance access to the financial resources required to accelerate climate action. This creates confidence not just for the bank but also for other ecosystem players.
Victor Wong: Renewable energy sources such as solar and wind continue to gain traction as demand for clean power grows. Promising investment areas that address climate risks while delivering returns include:
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Transmission infrastructure, such as grid transmission, as renewable energy sources are often located far from demand centres. Globally, these projects are backed by governments – particularly in Europe and parts of Asia – to build new transmission lines.
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Battery storage and smart grid technologies, which are critical to ensuring the reliability and efficiency of renewable energy systems.
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Green data centres, driven by the rise of artificial intelligence (AI) and cloud computing, which is increasing demand for high-performance, energy-efficient infrastructure. Sustainability goals, technological innovation, commitments from hyperscalers such as Microsoft and Meta to achieve carbon neutrality, and government incentives for low-emission facilities further strengthen the investment case.
Mike Ng: In its 2025 Supertrends Report, the Chief Investment Office at our private banking subsidiary, Bank of Singapore, stated its view that the power-hungry nature of technology and the energy transition will accelerate over the medium term. This will be fuelled by the proliferation of AI use cases and the accelerating demand growth for electricity over the long term, driven by developments in the clean energy transition, electric mobility, cooling, data centres and AI sectors.
As improvements in energy efficiencies of data centres, cooling and power systems infrastructure will be required, the search for cleaner energy sources including solar, wind and nuclear technologies to supplement existing energy sources will present investment opportunities.
While the US has sidelined the green agenda for now, the global shift towards clean energy remains crucial for humanity’s long-term survival and offers substantial economic and investment prospects. According to a World Economic Forum White Paper from 2023, an estimated additional US$4.3 trillion in revenue and 232 million new jobs could be created in Asia by 2030 due to climate adaptation and mitigation initiatives.
We see opportunities in companies with exposure to clean energy and EVs, as well as transition enablers focused on smart grid infrastructure, energy storage and efficiency, and producers of metals and minerals. Policy shifts have also enabled the oil and gas industry to be part of the energy transition, by leveraging technology – bioenergy and carbon capture – and the ability to manage complex energy systems.
From a geographical perspective, China in particular has emerged as a green industry powerhouse. The country added 373 gigawatts of renewable energy capacity in the past year and now accounts for over 70 per cent of global EV production. In 2024 alone, it exported nearly 1.25 million electric cars.
BT: Plugging the funding gap to mitigate climate risks is even more challenging today amid economic uncertainty and geopolitical tensions. What do you see as the most promising sources of capital that remain relatively untapped, and how can corporates help?
Helge Muenkel: Despite the positive momentum described earlier, the financing gap for climate action in Asia remains daunting. DBS estimates that over the next decade, the region will require approximately US$2.2 trillion for mitigation, US$2.5 trillion for adaptation, and a further 10 per cent of that total for resilience-related investments. In comparison, climate finance flows to South-east Asia from 2018 to 2019 totalled just US$27.8 billion annually. Even if this were to increase to US$50 billion annually, the shortfall over 10 years would still exceed US$4 trillion.
While the scale of capital needed is immense, it is not necessarily capital availability that is the issue – rather, it is the lack of risk-adjusted returns that remain attractive enough to mobilise capital at scale. The priority must be on designing financing structures that shift the risk-return profile in favour of scalable investments.
This is where policy and regulatory frameworks become essential. Policymakers and regulators can create enabling environments through measures such as regulatory clarity on transition plans and incentives for green investments – which can reduce uncertainty and improve the bankability of climate projects.
At the same time, financial innovation plays a pivotal role in unlocking new capital at a larger scale, such as concessionary and philanthropic capital. Structures like blended finance are particularly promising. They can de-risk early-stage projects, helping to crowd in commercial capital. For example, DBS inked a loan agreement alongside Karian Water Services, Export-Import Bank of Korea, the Asian Development Bank and the International Finance Corporation. The loan went towards the development of a regional water supply system to deliver fresh water to around two million people across Jakarta, Tangerang and South Tangerang, marking the first blended finance transaction in the water sector in Indonesia.
We are also seeing the potential of transition credits to support decarbonisation pathways in hard-to-abate sectors. DBS co-leads a working group under the Transition Credits Coalition convened by the Monetary Authority of Singapore (MAS). It seeks to catalyse the creation of high-integrity, transition-related carbon credits. A core focus is to support the early and managed phaseout of thermal coal power across Asia, paving the way for credible, just-transition pathways – particularly in industrial and emissions-intensive sectors.
Victor Wong:
As both major asset holders and stakeholders in climate risk, insurers are well-positioned to play a dual role: investing in resilience infrastructure and integrating climate risks into underwriting and asset management. These areas remain relatively untapped, presenting a significant opportunity for impact.
Corporates also have a critical role to play. They can issue green and sustainability-linked bonds to fund climate-related activities, embed sustainability into procurement as corporates can stimulate demand for low-carbon goods and services – thereby indirectly channelling capital into green innovation – and engage in transparent reporting aligned with international frameworks. These actions can help build investor confidence and attract ESG-focused capital.
A good example within Asean is Indonesia, where the funding gap for climate action is particularly prominent. To decarbonise its energy and transportation sectors, Indonesia requires an average investment of US$9.1 billion annually from 2018 to 2030. Under its national plan, the government allocated US$2.1 billion annually from 2020 to 2024, leaving a significant annual shortfall of US$7 billion. This highlights the potential of private financing in advancing climate action.
Corporates – especially national banks in Indonesia – can play a key role in mobilising private financing, as fossil fuels continue to receive a bigger share of private investment compared to renewable energy.
Mike Ng: There is ample liquidity in the system. Banks are still committed to financing green and transition projects and technologies. One often-cited problem lies in the bankability of such projects is the ability to generate enough cashflow to make it suitable for financing or to attract investors.
Central to the issue of bankability is risk allocation; allocating specific risks to the party most capable of managing and mitigating them is critical. For instance, in a utility project, having the project offtaker (often a state-owned utility company) take on regulatory risks or manage market demand risks by establishing long-term take-or-pay offtake agreements is one avenue for risk allocation.
Another problem contributing to the climate finance gap is the high cost of adoption. If the cost of a new green solution is several times that of a fossil fuel-based solution, it simply does not make economic sense for companies to adopt it. To overcome this, governments can consider implementing subsidies and regulations that lower the cost of adoption and stimulate demand in the process. When supply grows along with demand, the cost curves associated with the new technology come down. When the technology becomes economically viable, the financing gap naturally narrows.
Besides tapping traditional financing for climate finance, there are other funding mechanisms to consider. One is blended finance. Traditionally, blended finance structures have been deployed at the project level, with each individual project attracting capital from different providers including multilateral agencies, development finance institutions, export credit agencies, banks and others. As each project has its own risk profile and characteristics, deployment of blended finance at the project level tends to be bespoke and time-consuming, making scalability a challenge.
To achieve scalability, blended finance structures can be deployed at the fund level which combines capital from multiple stakeholders with different risk-return requirements but with common impact objectives into a single investment scheme. The fund in turn allocates capital to the individual projects. Funds have the flexibility to accommodate different risk-return profiles and objectives in the choice of capital providers and fund structure, as well as distribution waterfalls in the fund’s documentation. Such flexibility enables the “crowding in” of additional capital from commercial investors, achieving scalability to deliver outcomes in areas such as energy transition, climate mitigation, resilience and adaptation.
An example is the MAS’ Financing Asia’s Transition Partnership initiative, which aims to use an initial injection of US$500 million by the Singapore Government to raise funding from other sources up to a projected US$5 billion. The goal is to finance green projects in Asia focused on accelerating the energy transition, ramping up green investments, and decarbonising emissions-intensive sectors such as cement and steel production.
Another benefit of blended finance is the blending of knowledge and expertise. The diversity of the participants brings a wealth of knowledge which can be shared. For example, multilateral agencies could advise on governance structures, engage local policymakers in enhancing bankability of project documentation, or provide training on ESG standards. Fund managers bring with them the expertise to evaluate project risks and returns, and to structure the fund to cater to the different investor profiles.
BT: How open is your organisation to investing catalytic capital for climate or transition purposes – where risk is higher and returns may be concessionary at best?
Helge Muenkel: Catalytic capital has played a critical role as part of a tool kit of solutions to enable a just and orderly transition in Asia. As a bank, our approach is to leverage our industry knowledge, sustainability advisory and financial expertise as a structuring and equity and debt distribution partner that helps bring catalytic capital into the fold.
We work closely with our clients and partners to structure solutions. We bring our sector teams and sustainable finance teams together to explore opportunities with our clients and offer well-informed solutions that manage risks and drive real impact.
The transition journey is not linear, and it is not without trade-offs. But we believe deeply that by leaning in early and by helping shape the market, not just react to it – we can catalyse real-economy decarbonisation and unlock pathways that would otherwise remain out of reach.
Victor Wong: Catalytic capital plays an important role in accelerating the transition to a low-carbon economy, particularly in areas where commercial capital may be more risk-adverse. While such investments may carry higher risks or concessionary returns, they can generate long-term value that aligns with the goals of long-term investors.
At UOBAM, we recognise the importance of sustainability in investment decision-making. While we currently do not participate directly in catalytic capital structures, we continue to monitor developments in this space. Our primary responsibility remains delivering returns for our shareholders, but we also invest with purpose by incorporating ESG considerations into our investment analysis and decision-making processes. Embedding material ESG considerations into our fundamental investment thesis helps us identify long-term risks and opportunities.
UOBAM is one of the few regional investment managers in Asia with a dedicated ESG investment team covering all internally-managed major asset classes. Our strong regional footprint allows us to identify global ESG trends and anticipate how they will shape markets in Singapore and across the Asean region.
Mike Ng: Addressing climate change and supporting the transition to a sustainable economy is the cornerstone of OCBC’s business strategy. We believe that by strategically allocating resources to innovative projects and initiatives, we can drive meaningful environmental impact and position ourselves to benefit in the long term. We see value in balancing our lending portfolio with investments that align with our sustainability goals and allow us to support our clients on their sustainability journeys in alternative ways.
In alignment with these principles, OCBC has developed a Sustainability Investment Programme which aims to deploy capital into climate or transition-related projects in areas such as energy transition, sustainable food and water, and the circular economy. The programme enables our commercial clients with suitable projects to have access to an alternative funding source. We are actively seeking more opportunities and suitable projects to support in this space.
