The ASEAN region is highly vulnerable to the impacts of climate change. According to the ASEAN State of Climate Change Report (2021), the ASEAN region faces escalating consequences of climate change, including rising temperatures, more frequent extreme weather events, and rising sea levels.
These environmental challenges threaten the region’s economic development, food security, and well-being. A collaborative approach involving both governments and the private sector is essential to address these issues effectively.
Private sector collaborations are becoming increasingly important. These can be crucial in providing technologies, climate solutions, and climate adaptation initiatives. In addition, addressing climate change challenges presents new business opportunities for the private sector and can enable companies to transition towards sustainability, potentially saving operating costs. With the right policies in place, the private sector can benefit significantly from engaging in both climate change mitigation and adaptation efforts.
The Policy Brief on Facilitating Private Sector Climate Investment Decision Making: Leveraging on Data and Regulation in ASEAN explores the potential of private capital in driving climate action within the region and identifies the critical data and regulatory challenges that must be addressed.
A data dilemma
The policy brief highlights that various challenges persist despite the growing importance of private sector engagement in climate change. Identifying and addressing these obstacles from a policy perspective is crucial for ASEAN Member States to foster private sector participation.
One of the most significant challenges is the timely provision of climate change and investment data. Additionally, outdated data management systems within institutions hinder informed decision-making, discouraging private sector investment. More often than not, comprehensive data is unavailable at national and regional levels, and when they are, they are often without detailed aggregation.
Providing accurate climate-related data is crucial for the private sector. Not only does it help secure financial support, but it also enables the private sector to understand climate issues, assess the feasibility of their solutions, and make informed investment decisions. For example, detailed data on flooding due to climate change can facilitate the development of applications and other service platforms. Similarly, sharing energy consumption data can help energy service providers develop effective energy management solutions for industry and households. Data sharing can create new business opportunities and drive growth potential in the ASEAN region.
Despite these challenges, several Member States have made progress in attracting private sector climate investment. For example, the Philippines has fostered initiatives for sustainable egg production, while Malaysia has implemented certification schemes for sustainable palm oil. These cases demonstrate the potential for private sector engagement in various sectors, including agriculture, water management, and renewable energy.
Policy recommendations
The Policy Brief assesses various policy options to strengthen and facilitate private sector engagement, including:
- Localising climate risk and strengthening data and information-sharing services: Establishing a central hub for sharing regional climate data is crucial for effective climate change planning, encompassing adaptation and mitigation efforts. A unified climate risk tracking system with a common methodology and database can facilitate this process. Expanding and utilising the efforts of the ASEAN Specialised Meteorological Centre (ASMC) can further support private sector investment decisions. Identifying and implementing best practices in climate change communication, data use and management, and scientific advancement will enhance public data sharing.
- Strengthen institutional coordination, policy, and effective planning for climate change data and management: Establishing a regional platform for open data exchange is essential for supporting stakeholders in climate projects and enhancing regional digitalisation policies. Digital platforms can broaden access to climate and investment data. A partnership framework is necessary for effective data management. Climate risk data can incentivise the private sector to invest in climate solutions while identifying investment gaps can attract foreign and domestic investments. For instance, the ASEAN Investment Framework for Haze-Free Sustainable Land Management aims to build partnerships to highlight priorities and opportunities, providing essential data for informed investment decisions.
- Focus and promote research efforts on the climate data collection, analytics, and use: More vital collaboration between academia and the private sector is necessary to boost investment in climate change adaptation. The government should provide targeted funding for climate adaptation research to ensure that scientifically validated research guides private sector investments. An ASEAN-level research network, supported by funding, fellowships, and mobility schemes, can foster these collaborations. Aligning with international research institutions and initiatives like the ASEAN Climate Resilience Network (ASEAN-CRN) and ASEAN Centre for Climate Change (ACCC) will further enhance cooperation.
- Build partnerships to promote climate change best practices: Recognising the private sector’s role in climate change, developing standard policies and best practices, and fostering partnerships with various stakeholders is essential. Strengthening global partnerships through multi-stakeholder collaborations can mobilise knowledge, expertise, technology, and resources to achieve climate goals. In the long term, the private sector can drive sustainable development and explore new business models, leveraging emerging technologies like machine learning, AI, and big data.
In conclusion, the availability and accessibility of investment and climate data, often incomplete, lacking in quality, and invalid, can significantly deter private sector investment in risky and uncertain climate change projects. Furthermore, limited and fragmented climate change data and information can prevent investment in vulnerable sectors. Policymakers must address these challenges to attract private capital and scale up climate finance.
This soon-to-be-published Policy Brief is part of the ASCC R&D Platforms on Climate Change with the title Facilitating Private Sector Climate Investment Decision-Making: Leveraging on Data and Regulation in ASEAN by S.Sarpaneswaran (C&G Analytica, Malaysia) and VGR Chandran Govindaraju (Universiti Malaya, Malaysia). It was made possible with the support of the Government of Japan through the Japan-ASEAN Integration Fund (JAIF).
This policy brief is a publication of the ASEAN Socio-Cultural Community Department of the ASEAN Secretariat. The views expressed in this publication are those of the author(s) and do not necessarily reflect the views of ASEAN and ASEAN member States, the ASEAN Secretariat, and ASEAN Dialogue Partners. For more Information about the ASCC Research and Development Platforms, contact the ASCC Analysis Division at ASCCAD@asean.org.
