Malaysia tops emerging ASEAN banking benchmark on climate action

Malaysia’s banks have emerged as the strongest climate performers amongst the 14 ASEAN Banks assessed, according to Bridging the Gap: Have ASEAN Banks Caught Up on Climate Action?, a new report launched by Asia Research & Engagement (ARE).

The study finds that ASEAN banks in Malaysia, Indonesia, Thailand, and the Philippines are making measurable progress, with 11 of 14 setting long-term net-zero goals for financed emissions—up from three in 2022—but they still trail banks in Japan, Singapore, and South Korea, where decarbonisation targets are broader, deeper, and aligned with national net-zero goals for 2050.

Within emerging ASEAN, Malaysia stands out. The assessment of CIMB, Maybank, and Hong Leong Bank (HLB) underscores the country’s leadership:

Based on public disclosure, sustainable finance now represents a growing proportion of lending of the Malaysian banks, although the definitions vary so the numbers are not fully comparable.

Yet challenges remain. Heavy financing exposure to palm oil and limited policies on upstream oil & gas leave gaps.

“Malaysia’s banks have raised the bar for emerging ASEAN, but credibility will rest on closing loopholes in palm oil and for gas finance,” said Ben McCarron, Founder and Managing Director of ARE.

Across the region, banks in Thailand, Indonesia, and the Philippines are rapidly improving governance and disclosure, while counterparts in Japan, Singapore, and South Korea continue to set the global benchmark with broader sectoral policies and 2050-aligned net-zero goals.

Opportunities Ahead for Malaysia Malaysia’s leadership in ASEAN positions its banks to capture new opportunities:

Accelerate sustainable finance growth by channelling capital into industrial decarbonisation and grid-enabling investments, turning current ambition into system-level impact.

Commenting further on the findings, McCarron, said, “Malaysia’s banks are setting the pace in emerging ASEAN with stronger policies, governance, and disclosures. The challenge now is to expand this leadership into broader sector coverage and 2050-aligned targets so the region can meet the demands of a low-carbon economy.”