While climate-related investing has already become a key focus in Asia, more speed is required if countries in the region wish to meet their net-zero targets, according to MSCI chairman and CEO Henry Fernandez.

Net-zero ambitions worldwide are facing headwinds. The US is posting record oil production, electric vehicle (EV) sales are declining and political resistance is on the rise.

«This sense of climate pessimism could become a self-fulfilling prophecy unless governments and industries regain momentum,» said MSCI chairman and CEO Henry Fernandez in a commentary. 

APAC: More Efforts Required

While Asia accounts for the majority of global greenhouse gas emissions and an even larger share of coal-fired power generation, the region is also a major contributor to low-carbon and green innovations. Notable examples include China’s leadership in renewable power and EVs or Japan’s pole position on climate finance and clean-energy research. Nonetheless, Fernandez believes more needs to be done. 

«Given the scale of the net-zero challenge and the need for faster decarbonization, Asian countries will need to accelerate their climate efforts to meet global emissions targets,» he stated, citing a report by Asia Society Policy Institute estimating that the region will require over $70 trillion in cumulative investments by 2050 to meet net-zero goals.

Green Finance Challenges

Aside from the need for greater efforts, Fernandez also underlined data and pricing as the biggest gaps in climate investing.

«As high-quality data becomes more widely available, asset prices can better reflect long-term risks and opportunities, promoting the capital reallocation essential for a net-zero economy,» he said.

MSCI Solutions

At MSCI, Fernandez highlighted a series of solutions to support green finance ambitions including a diverse array of climate datasets, ratings, models and indexes.

«For instance, our climate indexes measure the performance of listed companies progressing towards key climate goals, such as reducing emissions, managing transition risks, generating green revenue, or aligning with global net-zero targets,» he added.

«Of course, we cannot know how the APAC region’s path to net-zero will evolve over time. But we do know that its pursuit of that ambitious goal will continue reverberating across the global investment landscape.»