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MSCI Report Reveals Growing Climate Action in APAC

Recently published by MSCI, a comprehensive study unveils a significant acceleration in corporate climate action across the Asia-Pacific region (APAC). The report, titled Asia Pacific Climate Action Progress Report 2025, indicates that more companies are setting science-based targets (SBTs) and disclosing their transition plans amid the growing urgency of climate change. While the desire for action is present, the pace and scale of decarbonization depend on several factors including technological roadmaps, capital allocation, and access to emerging clean technologies.

Key Insights into Climate Disclosure

The report, crafted by Kenji Watanabe and Kaldeep Yadav from MSCI’s Sustainability & Climate Research Division, offers an in-depth analysis of clean technology investments across 13 APAC markets. As the region faces heightened climate risks due to extreme weather events, immediate emission reductions are paramount. Here are the salient findings:

• - Enhanced Climate-Related Disclosures: APAC firms are increasingly improving their disclosure of climate-related data and transition plans. For instance, under the worst-case scenario, physical climate risks could lead to discounts in company value exceeding 10%. Particularly in the ASEAN and Indian markets, companies face a climate value-at-risk (VaR) over 20%. In Hong Kong, Japan, and Australia, the numbers are approximately 15%, 13%, and 13%, respectively.
• - Leading the Disclosure Rate: Japan has reported the highest transition plan disclosure rate in APAC, with about 45% of its companies already reporting. Following this, South Korea at 33% and Taiwan at 30% show positive trends, while Hong Kong and ASEAN countries lag behind with only 9% and 8% respectively. Among the 837 companies disclosing their transition plans, compliance with the SBTi standards surged from 25% in 2023 to 50% in 2025.
• - Significant Emission Tracking: Companies with developed transition plans are actively disclosing scope 1, 2, and 3 emissions and setting ambitious reduction targets, marking a proactive stance in addressing climate-related indicators.

APAC as a Hub for Clean Technology Innovation

The MSCI report also highlights the potential for APAC to evolve into a clean technology innovation hub. Through the analysis of transition plans in carbon-intensive sectors, the research identifies promising pathways for growth in clean technology demand across the region:

• - Energy Sector Developments: Among the 90 energy sector firms listed under MSCI AC Asia Pacific IMI, 18% are actively disclosing their transition plans. Notably, 50% of these firms plan to report their capital allocation strategies to the Carbon Disclosure Project (CDP) by 2024, signaling commitment to clean energy investments. All disclosing oil & gas firms are integrating hydrogen fuel supply into their transition strategies, a vital component for the anticipated energy transition.
• - Public Utility Sector Insights: Of the 23 companies from the utilities sector with disclosed transition plans, over 80% are incorporating hydrogen or ammonia co-firing into their strategies. This could ensure stable and significant hydrogen demand creation. Additionally, over 70% of these companies are exploring carbon capture technologies to align with their decarbonization goals.
• - Material Sector Highlights: More than 90% of 99 companies disclosing transition plans within the material sector base their strategies on renewable energy and low-carbon products. With ongoing developments in low-carbon steel, cement, and hydrogen technologies, there is potential for substantial progress in decarbonizing material sector operations.

Risks in the Transition Process

Despite these promising advancements, the report also warns of existing risk factors that could hinder progress:

• - Fossil Fuel Subsidies: Many APAC markets still provide indirect subsidies for fossil fuels, leading to artificially low prices that distort the market. This discourages necessary investments in clean technologies and reduces the incentive for companies to make short-term actions towards climate goals.
• - Lack of Credible Carbon Markets: Out of approximately 4,000 carbon projects in circulation, only 2% have received high integrity ratings. For APAC firms planning to utilize carbon credits to meet emissions reduction targets, this presents a significant challenge.

The insights from MSCI’s Asia Pacific Climate Action Progress Report 2025 showcase a critical juncture for APAC companies as they navigate the urgent demand for climate action. The tendencies towards embracing clean technologies and strategic planning present a hopeful outlook, but the road ahead still requires addressing systemic barriers.

For more detailed analysis, refer to the full report. For inquiries, please contact MSCI, a leading financial services firm providing critical tools and services for institutional investors worldwide. With over five decades of expertise in research, data, and technology, MSCI is committed to helping its clients make informed investment decisions while enhancing transparency across their processes.