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Flint advises international businesses and investors on policy, politics, regulation and competition.
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Building on Part A of our analysis of regulatory developments on climate, sustainability and ESG in financial services, Part B looks at how financial institutions (FIs) are adapting to the changing regulatory environment and more nuanced regional and stakeholder demands in APAC.
Public-private partnerships and innovative finance mechanisms are playing an increasingly important role in APAC, where infrastructure needs and vulnerability to climate change overlap significantly. In sectors such as energy and infrastructure, the focus is increasingly on enabling credible transition pathways that require risk-adjusted investments. These approaches are considered essential for mobilising capital on a large scale, particularly in markets where traditional financing models may be insufficient or unsuited to address both climate resilience and development requirements.
As regulatory expectations for FIs tighten and investor demands become more sophisticated, FIs are rethinking their governance structures and developing tools to support credible transition finance. The focus is shifting from ambition to execution – turning sustainability commitments into measurable, actionable outcomes.
The role and functions of ESG and sustainability teams within Fls are evolving, driven by regulatory pressure, commercial expectations, and a shifting political landscape.
For asset managers, ESG investment teams are advancing beyond traditional integration and screening, adopting increasingly sophisticated, data-driven approaches to assess material risk and opportunities, while responding to heightened scrutiny around labelling, greenwashing, and the actual impact of ESG strategies.
In banks, sustainable finance teams continue to explore green and transition financing opportunities – such as green and sustainability-linked loans and IPO narratives designed to appeal to ESG-aligned investors – but they face ongoing pressure to achieve returns on par with traditional banking.
As regulatory demands grow increasingly detailed and outcome-oriented, more FIs are assessing how climate risk and sustainability responsibilities are organised – embedding them more deeply in core business units and governance frameworks. Across FIs, corporate sustainability functions are being streamlined. Reporting responsibilities are shifting from designated sustainability teams to Chief Financial Officer divisions, while climate and ESG risks are increasingly integrated into traditional risk and compliance operations.
This corresponds to a broader trend, namely the shift from public commitments and alliance-building to operational delivery, internal risk management, and regulatory compliance – often under tighter cost control and legal scrutiny.
In 2025, the emphasis has shifted from broad climate commitments to financing credible decarbonisation pathways – particularly in hard-to-abate sectors – with sustainability-linked loans gaining traction and transition bonds growing steadily. The ASEAN Taxonomy explicitly supports this shift by providing a multi-tiered, principles-based framework that enables FIs and real economy companies – especially those in emissions-intensive sectors – to access financing.
Singapore’s Monetary Authority of Singapore (MAS) has advanced its support for the Financing Asia’s Transition Partnership (FAST-P) in 2025, establishing a dedicated FAST-P office and committing up to US$500 million in concessional capital to catalyse blended finance in APAC – supporting the energy transition, green investments, and the decarbonisation of emissions-intensive sectors. This growing momentum is also reflected in major deals such as Keppel’s US$1.5 billion sustainable infrastructure partnership with the Asian Infrastructure Investment Bank’s (AIIB). Furthermore, the Green Climate Fund is set to invest US$1.2 billion in climate projects across Asia and Africa, while Southeast Asia’s -labelled bond issuances market continues to expand robustly, posting a 46% year-on-year increase. These developments underscore both the growing sophistication of green finance instruments and the increasing importance of cross-sector collaboration.
Climate action, ESG, and sustainable finance are not dead. But, in 2025, they look certainly different. Moving from rhetoric to rigour, climate-related areas of finance are entering a more demanding phase. Regulatory frameworks are becoming more technical, investor expectations are increasingly outcome-focused, and political (and legal) scrutiny is intensifying. The real challenge for FIs is how to deliver in these areas credibly, commercially, and under mounting pressure, including divergent policy and regulatory landscapes internationally on these themes. At Flint Global, we are assisting clients in recalibrating to and navigating this complexity – translating evolving rules and risks into practical, actionable strategies that deliver measurable, commercial outcomes.
This blog was written by Matthew Chan, Dr Lisa Ross, and Gwenda Ang. Based in Hong Kong, Matthew spent three years at J.P. Morgan, establishing its APAC Corporate Sustainability function, prior to which he held senior policy and business roles at ASIFMA and DTCC. Lisa and Gwenda are both based in Singapore. Lisa has 13 years of experience in the financial services industry and legal academia, with a PhD in law in sustainability regulation in the financial sector. Gwenda has experience in sustainability policy including previous roles in the banking and carbon industries.