Labelled Bonds for the Net-Zero Transition in South-East Asia: The Way Forward

Requiring an investment of over $3 trillion annually until 2025 to achieve net zero, the world faces a significant financial challenge. Emerging markets and developing economies (EMDEs) are pivotal in this global transition, yet they encounter substantial funding gaps.

The Labelled Bonds for the Net-Zero Transition in South-East Asia white paper focuses on green bonds as an effective tool to direct capital towards sustainable projects in EMDEs. Despite their potential, EMDEs hold a minimal share of the global market, suggesting vast untapped potential. Challenges in expanding the labelled bond market in these regions arise from local differences in issuer types, industries and market maturity.

Through extensive consultations with stakeholders in the ASEAN region, this paper proposes solutions to overcome these barriers. It emphasizes the need for an enabling market environment, alignment of issuer and investor priorities and robust regulatory frameworks. Strategies to support issuers include enhanced engagement with investors, regulatory clarity and financial incentives. This approach aims to expand the labelled bond market effectively, facilitating EMDEs' contribution to a net-zero future.