Need for Enhanced Climate Adaptation Strategies Among Asian Nations to Encourage Private Funding, Suggests Study

In a recent report released by the Asia Investor Group on Climate Change (AIGCC), significant gaps in adaptation planning in major Asian markets have been highlighted. The report, relevant to the SDGs of cities, climate, biodiversity, and partnerships, identifies National Adaptation Plans (NAPs) as crucial for channeling private capital towards adaptation projects.

The world faces a daunting gap of up to US$359 billion annually needed to finance climate adaptation and resilience, according to the United Nations Environment Programme. However, most markets lack detailed numbers on how extreme weather events such as floods would affect their economies, with Hong Kong and Singapore being particularly deficient in this regard.

The report points out that only Thailand has submitted its NAP to UNFCCC, and Malaysia is currently developing one for submission in 2026. None of the major Asian markets have shown sufficient national coordination for adaptation planning. In contrast, some countries have outlined adaptation strategies and priority areas within their government plans, such as China, Japan, and South Korea. Four markets (China, India, Japan, and South Korea) have defined climate-vulnerable groups and communities and communicated specific plans to protect them.

A major barrier investors face is a lack of accessible information about physical climate risks, insufficient data on risks at a sectoral or provincial level, and unclear adaptation project pipelines or financing pathways. The report recommends that governments improve the accessibility and clarity of their adaptation planning processes, engaging investors early on in the development and implementation of NAPs.

Asset managers and financiers can advocate for stronger regulatory frameworks to enable investment in climate resilience, such as mandatory corporate disclosures and clear financing policies. Indonesia and Thailand are not yet aligned on the rule requiring corporate disclosures of physical risks using international standards.

The report also suggests that asset managers and financiers build capacity within their own organizations to assess their exposure to physical climate risks and quantify the benefits of adaptation measures. Investors want to invest in adaptation projects but require sound adaptation strategies at the national level, and NAPs can bridge this gap.

Promising examples of best practices are showcased in the report, such as Japan's Climate Risk Industry-Government-Academia Collaboration Network and localised climate finance pilots in China. The report emphasizes the importance of collaborative efforts by policymakers and investors, as well as innovations within financial markets and public policy, to unlock financing for adaptation and resilience projects.

The report builds on AIGCC's 2022 study of investor expectations of NAPs in Asia. It is tagged with adaptation, climate science, floods, investment, natural disasters, UNFCCC, climate, sustainable development, sustainable finance, climate risk, extreme weather, carbon and climate, policy and finance, and the regions of Asia Pacific, China, Japan, and the global context. The report underscores the urgent need for Asian markets to address the gaps in adaptation planning to secure a more resilient future.