New research by the CFA Institute has unscored the growing importance of adopting a comprehensive investment approach that integrates net zero targets alongside traditional risk and return metrics. The report explored the challenges asset owners and managers face in integrating climate risks into their portfolios, outlining how climate objectives, risk management and financial goals can be better integrated to more effectively manage investments in a transitioning economy. “As the global push for net zero carbon emissions accelerates, investors must look to adapt their strategies to meet both climate and financial objectives,” said Chris Fidler, the CFA Institute’s Head of Global Industry Standards. “Our research shows that managing these transitions requires more than just setting long-term climate targets. It involves integrating net zero benchmarks, aligning incentives, and adopting suitable time horizons for meaningful progress.” A successful net zero investment programme should enhance, not compromise, traditional financial objectives, the report said. In addition, the CFA Institute suggested that investors adopt a ‘scorecard’ approach to holistically evaluate portfolio performance – both financial and climate-wise – against selected benchmarks. The report also highlighted the need for asset owners to provide more incentives to motivate asset managers to engagement in portfolio decarbonisation and climate solutions. Investors should adopt a minimum five-year performance evaluation period to better capture the impact of climate investments and engagement efforts, the report noted. “Climate change has the potential to materially and unexpectedly impact portfolio assets both now and in the future, as the world works to mitigate this systemic risk,” said Fidler. “Evaluating the success of a net zero investment strategy must account for this, as it differs significantly from the typical three- to five-year performance cycles used by many investors.”

Singapore has committed up to US$500 million in concessional funding to support the Financing Asia’s Transition Partnership (FAST-P) launched by the Monetary Authority of Singapore (MAS) last year. FAST-P is a blended finance initiative which combines public, private and philanthropic investment to support decarbonisation and climate resilience across the region. As announced at COP29, Singapore will pledge up to half a billion dollars as concessional capital, matched against investments on similar terms from governments, multilateral development finance institutions and philanthropies. This combined pool will crowd-in commercial capital and other funding, with the aim of raising up to US$5 billion to support Asia’s green and transition financing needs. FAST-P was launched at COP28 in December 2023 with support from Allied Climate Partners (ACP), Asian Development Bank, Global Energy Alliance for People and Planet, the International Finance Corporation (IFC) and Temasek, the Singaporean sovereign wealth fund. AIA Group, HSBC, Mitsubishi UFJ Financial Group (MUFG) and Nippon Export and Investment Insurance (NEXI) are in discussions for potential collaboration. FAST-P has established a new Industrial Transformation infrastructure debt programme, in addition to two existing blended finance programmes – the Energy Transition Acceleration Finance partnership and Green Investments partnership – announced at COP28. The latter is supported by ACP, IFC, MAS and Temasek, with Pentagreen Capital – founded by HSBC and Temasek - deploying capital to marginally bankable green and sustainable infrastructure in Asia, such as renewable energy and storage, electric vehicles, transport, as well as the water and waste management sectors. AIA, BlackRock, IFC, MAS, MUFG and NEXI have signed up to collaborate on the Industrial Transformation infrastructure debt programme. Separately. MAS announced a series of new green finance and capital markets initiatives to enhance financial cooperation with China, aimed at expanding cross-border green financing flows, enhancing bond market connectivity, and deepening collaboration on index and ETF products. 

The Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE) and Beijing Stock Exchange (BSE) have published guidance to support listed companies preparing sustainability reports. The guidelines outline a toolbox and encyclopedia to help listed companies improve their sustainable development governance frameworks, and analyse related risks and opportunities. The exchanges have included disclosure tips, examples, explanations of key concepts, recommended implementation steps, and relevant references for companies to draw on. In addition, the guidance includes methods for assessing the importance of climate-related issues, performing scenario analysis, accounting for greenhouse gas emissions, and preparing climate transition plans. Smaller companies listed on the SSE and SZSE will be encouraged to make voluntary aligned disclosures. The BSE will adopt a voluntary disclosure regime, as its market comprises mostly SMEs. The guidance is open to feedback until 21 November. It follows separate guidelines published in April which require companies included in the SSE 180, STAR 50, SZSE 100 and ChiNext Indexes – including those dually listed overseas – to publish 2025 sustainability reports before 30 April 2026.  

Governments were asked to increase the flow of climate finance and reform the global financial system at the opening ceremony of COP29 by Simon Stiell, Executive Secretary of UN Climate Change. Stiell said agreement on a new climate finance goal is “entirely in the self-interest of every nation”, rather than an act of charity. “If at least two thirds of the world’s nations cannot afford to cut emissions quickly, then every nation pays a brutal price,” he said. “If nations can’t build resilience into supply chains, the entire global economy will be brought to its knees. No country is immune.” Agreement on the New Collective Quantified Goal, which will determine financial support for developing nations impacted by climate change, is a key priority at this year’s climate COP. “We must work harder to reform the global financial system,” Stiell added. “Giving countries the fiscal space they so desperately need.” The gap between current climate investment and the funds needed until 2030 to achieve the net zero targets of the Paris Agreement currently stands at US$6 trillion annually, according to research from the Climate Policy Initiative (CPI) and law firm A&O Shearman. This equates to approximately 6% of global annual GDP or 2.5% of global investable assets. To increase private-sector climate finance flows, investors surveyed by the Asia Investor Group on Climate Change called on governments to set 1.5°C-aligned sector pathways to help their portfolios meet the Paris goals (52%), and introduce more “clearly defined” public-private financing mechanisms for climate adaptation and resilience projects (50%). Data and analytics firm MSCI’s latest Net Zero Tracker – which assesses listed companies across 15 markets – reported that 24% of listed companies have set a target aiming to reduce greenhouse gas emissions to net zero by 2050, an increase of seven percentage points from last year. It also found that 62% of listed companies are on an emissions trajectory that would result in warming greater than 2°C, with 24% on trajectories which would exceed 3.2°C.