Forget the pandemic. For at least one corner of ASEAN finance, the past two years were boom years. A report released June 20, 2021, by the Climate Bonds Initiative and backed by HSBC, shows the region’s sustainable finance market kept its foot on the accelerator even as COVID-19 battered economies. The stakes are now clear: can this momentum survive the recovery, or will governments revert to old habits?
The numbers from Malaysia tell a concrete story. The country’s green bond and Sukuk market sits at US$2.6 billion. That is not theoretical. That is real money, raised through 15 separate green bond, sukuk, and loan arrangements. Six of those deals happened in 2019. Three more closed in 2020, in the teeth of the worst economic disruption in a generation. The report singles out a specific project: proceeds financing two solar photovoltaic power plants in Kedah. That is a state in northern Malaysia. That is actual construction. That is sunlight turned into electrons, backed by ringgit-denominated debt.
One deal in particular shows how the machinery works. The principal ASEAN Green Sustainable and Responsible Investment Sukuk, valued at RM260 million (US$61 million), was issued in 2020 by Leader Energy. HSBC Amanah Malaysia served as lead arranger. The Climate Bonds Initiative noted this marked Leader Energy’s debut project financing issuance in the ringgit bond market. A first-time issuer, in a pandemic year, for solar farms. That is not a feel-good story. That is a signal.
Why this matters now: the recovery is coming. Governments across Southeast Asia are drawing up stimulus plans. The question is what gets funded. The report, titled the ASEAN Sustainable Finance State of the Market 2020, makes an explicit case for a sustainable financial recovery. HSBC put it in plain language: “sustainable finance is set to further support national recovery and development plans to ‘build back better’.” That phrase carries weight. It means the next round of infrastructure, the next wave of borrowing, the next set of bonds — all of it could lock in carbon-heavy systems for decades, or shift toward renewables and efficiency.
Policy is beginning to catch up. The report flags Malaysia’s Joint Committee on Climate Change, co-led by Bank Negara Malaysia and the Securities Commission Malaysia. That committee has a 2021 priority: writing guidance documents on climate risk management and scenario analysis. This is not abstract. Banks and asset managers need rules to price climate risk. Without them, green financing stays boutique. With them, it scales.
Malaysia and Singapore have emerged as the regional hubs for this activity. That is not a prediction. That is the report’s finding. The issuance of sustainability securities across ASEAN is now more active because these two markets are functioning as anchors. The report does not say the job is done. It says the market exists, it grew through a crisis, and the policy framework is being built.
The risk is straightforward. If governments treat green finance as a niche, the recovery will pour money into the old economy. If they treat it as a core tool, the US$2.6 billion Malaysian market — and whatever Singapore has mobilized — becomes a floor, not a ceiling. The Kedah solar plants will generate power for decades. The bonds that paid for them will mature. What comes next depends on whether the next deal is for solar, or for something else.
