The largest electric utilities must significantly accelerate their efforts to reduce greenhouse gas emissions if they are to align with the Paris Agreement and protect investor portfolios from escalating climate risks. According to the latest progress update from the Asia Investor Group on Climate Change’s (AIGCC) Asian Utilities Engagement Program (AUEP), eight of the region’s systemically important power firms are not moving fast enough to address the structural shifts required for a low-carbon future.
The AUEP is a five-year engagement process led by a coalition of 23 institutional investors worth US$13 trillion in assets, focused its advocacy on major players including CLP Group, JERA, and Tenaga Nasional. The investors evaluate companies against five core expectations: the implementation of strong governance frameworks; the establishment of Paris-aligned emissions targets; enhanced corporate disclosure; the assessment of physical climate risks; and proactive engagement with public policy.
The 2026 update notes that utilities have made commendable progress in several areas. Most notably, there has been a marked improvement in corporate governance, with board-level oversight of climate issues becoming standard practice and executive pay increasingly linked to climate performance. Furthermore, most companies under review have now disclosed more detailed decarbonisation strategies and provided clearer information regarding their capital allocation plans for renewable energy and grid infrastructure.
The report also identified critical gaps where improvement is needed to protect long-term shareholder value. AUEP members were particularly concerned that capital is not yet shifting away from high-emitting assets at the scale or speed required to meet 2030 milestones. Additionally, physical resilience remains a major blind spot, with only CLP Group conducting asset-level climate risk assessments. Without such strategies, utilities face potential annual earnings drops of up to 7.3% due to climate-driven disruptions.
Further, none of the utilities have yet promoted greenhouse gas reductions across their entire value chains, leaving significant Scope 3 risks unaddressed. Investors also warned that the credibility of firms’ coal phase-out plans would face intense scrutiny toward 2030.
The AIGCC said it would deepen the quality of engagement with investors, businesses and policymakers on the AUEP’s key expectations; widen the existing engagement to non-listed and state-owned utilities; and support the AUEP through other thematic projects and external collaborations.
