Demand for sustainable finance, particularly in Asia, continues to be supported by underlying structural growth in areas such as clean energy and resilient infrastructure. At the same time, capital tends to gravitate towards sectors with more established and bankable models, while emerging areas such as adaptation, resilience and newer transition technologies face constraints from higher costs of capital, risk allocation challenges and limited project pipelines.

The next phase of sustainable finance will depend on strengthening the conditions for capital to be mobilised at scale — through clearer regulatory guidance, more effective risk-sharing structures, and broader financing pathways. 

On the regulatory front, MAS has issued supervisory expectations on transition planning. This provides clearer guidance for financial institutions to assess climate-related risks, align portfolios with credible decarbonisation pathways, and engage clients on their transition plans in an orderly and risk-proportionate manner.

MAS has also advanced efforts to support the market development and financing of transition activities. Ongoing enhancements to the Singapore-Asia Taxonomy will help to identify credible transition and enabling activities, giving financiers greater clarity and confidence in allocating capital as Asia’s transition pathways evolve. Through the Financing Asia’s Transition Partnership (FAST P), MAS has worked with public, private and philanthropic partners to advance blended finance approaches and crowd in commercial capital for transition and infrastructure projects that are not yet fully bankable. This has demonstrated how such platform structures can be used to mobilise capital more systematically.

Carbon markets have also seen further development. At COP30, MAS supported the publication of the Transition Credits Coalition (TRACTION) final report, which sets out a practical framework for using high integrity energy transition credits to support emissions reduction, while incorporating Just Transition considerations.

In addition, MAS also launched the Financial Sector Carbon Market Development Grant in October 2025 to provide targeted support to build capabilities in carbon project financing, trading, insurance and risk management. MAS has seen promising response from financial institutions looking to build deep carbon market capabilities in Singapore.

Adaptation and resilience financing is gaining priority as physical climate risks affect assets, supply chains and infrastructure. While activity remains nascent, with gaps in standards, data and investible pipelines, the need to scale financing for resilience is becoming clearer. MAS is working with the financial sector to build capabilities and explore approaches that can support more systematic investment in resilience, including through risk transfer and insurance-based solutions.

Sustaining momentum will require continued collaboration across regulators, financial institutions, development partners and private capital. While transition pathways may remain uneven, significant effort will be needed to ensure effective mobilisation of capital that can support Asia’s transition and resilience in an orderly and effective manner. The next phase will require sustained progress in strengthening investible pipelines, improving data and transparency, and deepening institutional capabilities. MAS will continue to work with industry to translate these imperatives into practical and scalable financing solutions for the region’s evolving needs.

Abigail Ng
Chief Sustainability Officer