APAC Climate Action Progress 2025
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In 2024, global average temperatures exceeded the 1.5°C threshold for the first time on record, highlighting increased climate risks for Asia-Pacific (APAC) economies given their vulnerability to extreme heat. Despite this urgency, APAC remains heavily reliant on fossil fuels, contributing significantly to global emissions. While governments in the region have introduced stricter climate regulations — including ISSB-aligned disclosure standards and carbon markets — macroeconomic uncertainties, geopolitical tensions and continued fossil-fuel subsidies are hindering progress. Many countries have also missed the initial deadline to update their Paris Agreement commitments.
Corporate transition plans show promise, however, with commitments based on the Science-Based Targets initiative doubling since 2023. Clean-tech companies in India and China have outperformed regional peers, catalyzing the adoption of clean technologies in the region and accelerating the energy transition. Yet, concerns remain about carbon-credit integrity, as very few projects demonstrably support effective emissions reductions.
Ultimately, the decarbonization pace for APAC companies relies not only on their ambition but also their technological development, capital investment choices and access to commercially adoptable clean-tech.
Data as of March 31, 2025. Physical risk Climate VaR indicates the potential financial losses due to the physical impacts of climate change. MSCI ESG Research models six acute hazards (tropical cyclones, river low flow, coastal, fluvial and pluvial flooding and wildfire) and five chronic hazards (extreme heat, extreme cold, strong gust, extreme precipitation and extreme snowfall). The flood-hazard model updates led to a decrease in overall flood risk from last year. Source: MSCI ESG Research
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