The latest Transition Finance Tracker from the MSCI Sustainability Institute has unveiled significant climate and investment risks across the Asia-Pacific (APAC) region. The report projects that by 2050, cities such as Melbourne, Tokyo, and Shanghai could experience up to a 31% increase in extreme heat days under a 3°C warming scenario.
Additionally, over 70% of listed companies in major APAC markets, including Singapore, Hong Kong, and Mainland China, are on emissions trajectories exceeding the 2°C threshold.
The report underscores the urgency for investors to manage both transition risks and the immediate financial implications of climate-induced disruptions. It highlights that nearly two-thirds of listed firms globally are on warming paths above 2°C, with a global average of 2.7°C. In Singapore, 81% of listed companies are on an emissions trajectory breaching the 2°C threshold, with 28% exceeding 3.2°C.
Despite these challenges, the report identifies progress in transition-focused climate funds, which have seen assets rise nearly 20-fold to $590 billion since 2018. These funds are increasingly targeting high-emission sectors like utilities to accelerate decarbonisation. Publicly traded climate funds now account for almost 40% of all climate funds, with significant investments in transition-enabling sectors such as information technology and materials.
The findings suggest a growing recognition among investors of the need to finance hard-to-abate industries to achieve real-world emissions reductions. As climate funds continue to grow, they predominantly invest in US-listed companies, with a notable presence in Europe and APAC.
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