APAC’s pragmatic green transition draws investors

The framework gives industries a more flexible pathway to cut emissions.

The Asia-Pacific region’s pragmatic approach to the green transition is spurring interest in sustainable assets, according to Dublin-based ION Investment Group Ltd.

“Transition finance focuses on supporting high-emission sectors as they gradually decarbonise over time instead of imposing strict, immediate targets that could lead to penalties for noncompliance,” Steven Strange, head of product for asset management at ION, told ESG Business.

He said this framework offers industries a more flexible pathway to cut emissions, recognising that sweeping change can’t happen overnight. “This drives companies in high-emission sectors, such as those that use coal and natural gas, to gradually move toward cleaner alternatives.”

The strategy contrasts with the US, where green finance has become politically contentious. Several states are debating whether to restrict sustainable investing, creating uncertainty for funds.

“The Asia-Pacific region is taking a much clearer stance by providing definitive regulations,” Strange said via Zoom.

China remains the most active issuer of green bonds globally, channelling capital toward solar, wind, and electric-vehicle infrastructure, he said. Singapore, Hong Kong and Japan are also tightening ESG (environmental, social, and governance) disclosures with fund-labelling rules and climate-related reporting requirements.

“Hong Kong and Singapore are actively promoting their Green Finance Action Plans and are focused on avoiding greenwashing,” Strange said, referring to deceptive practices where companies exaggerate their environmental credentials.

Investor scepticism remains high after years of funds marketing themselves as green with little evidence of impact, he pointed out.

Even so, Strange sees momentum building. Governments are deploying tax incentives and subsidies to attract capital. “In India, investors can enjoy tax incentives when investing in solar and wind energy,” he said.

Over time, sustainable investing in Asia is likely to shift from broad-brush labels toward more specific themes.

“We'll see less of a focus on calling out a fund as a green fund, but instead, it will be more specific, targeted themes—a sign of market maturity,” he added.

That evolution could give investors greater control and alignment with personal or institutional priorities.

Asia’s sustainable investment market is valued at more than $6b and may quintuple to $30b in the next decade, Strange said. Asia is poised to lead in all things sustainable investing, he added.