Malaysia is one country with specific regulatory mandates on climate risk. Photo: twenty20photos / Unsplash
Regulators in the Asia-Pacific (APAC) region are increasingly recognising that climate risks pose a threat to financial stability and are seeking to address the impact through regulation and oversight, the UN has said.
A policy brief issued by the UN Environment Programme Finance Initiative (UNEP FI) notes that the APAC region was very vulnerable to the impact of climate change, prompting policymakers to actively work on solutions to align their financial sectors with climate action.
“Overall, a broader and deeper integration of climate considerations into prudential frameworks is emerging. This can support more climate-resilient financial systems and encourage capital flows towards sustainable activities to support the climate transition,” said Laura Canas da Costa, global policy co-lead at the UNEP finance initiative.
The report says central bank mandates vary across the region in terms of how explicitly regulators can address the impacts of climate change, with some like Malaysia, the Philippines, Singapore and New Zealand explicitly including sustainability in their mandates. Meanwhile, central banks in China, South Korea, Thailand and Indonesia implicitly refer to green objectives.
Climate change has increased the risk of drought and floods for the region and the UN estimates that it needs about US$422bn by 2030 for climate mitigation and adaptation, but current finance flows into the region are only up to $6bn a year.
UNEP FI says central banks can incorporate climate-related risks into financial regulation and oversight even within traditional mandates, with all the 12 jurisdictions covered in the report conducting climate stress testing and scenario analysis including authorities in Hong Kong and Japan.
The report also says many of the regulators in the region are already integrating climate considerations into risk modelling in a way that is broadly consistent with the framework set out by the Basel Committee on Banking Supervision, with a growing emphasis on climate-related disclosures.
“There is a clear trend towards stronger mandates, greater alignment with international frameworks, more refined risk assessment methodologies and broadening of central banks’ regulatory scope to include environmental risks,” UNEP FI said. “Strengthened regulatory foundations, informed by industry input and international best practices, will support financial stability while contributing to a broader shift towards sustainable economic growth in the region.”
This page was last updated June 23, 2025
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Emma Thomasson is a British journalist, consultant and trainer based in Berlin. She is an expert in economics, politics, business and technology. She previously worked for Reuters as a correspondent and bureau chief in Germany, Switzerland, the Netherlands, South Africa and the UK.
