Promoting Local Currency Sustainable Finance in ASEAN+3

The ASEAN+3 sustainable debt market reached USD 449 billion by Q3 2021, driven largely by the People's Republic of China, Japan, and Hong Kong, China. While green bonds remain dominant, the COVID-19 pandemic accelerated the issuance of social and sustainability-labeled instruments. Local currency (LCY) issuance represents 64% of the region's total sustainable debt, though this is unevenly distributed; Thailand has the highest LCY share at 98.5%, while Viet Nam and Indonesia rely heavily on foreign currencies. The report identifies barriers such as lack of market awareness, high transaction costs for small deals, and a shortage of bankable green projects. It recommends increasing sovereign GSS bond issuance, expanding the investor base through ETFs and indices, and establishing centralized sustainable finance platforms to improve project visibility.

• By the end of the third quarter of 2021, the cumulative sustainable debt market in ASEAN+3 reached USD 449 billion, with the People's Republic of China, Hong Kong, China, and Japan accounting for 61.4% of this volume.
• Local currency (LCY) sustainable debt issuance accounted for 64% of the region's total sustainable debt as of Q3 2021, with a strong preference for LCY in smaller instruments (90% of issuances under USD 200 million).
• There is a significant disparity in LCY adoption across the region: Thailand has the highest LCY share at 98.5% (USD 10.6 billion), whereas Viet Nam and Indonesia have the highest foreign currency shares at 96.1% and 94.6% respectively.
• The People's Republic of China is the regional leader in sustainable bond issuance, contributing USD 44.5 billion in the first nine months of 2021, with a focus on renewable energy and transport.
• The ASEAN Taxonomy for Sustainable Finance (Version 1), published in November 2021, uses a phased approach with a 'Foundation framework' (qualitative classification) and a 'Plus standard framework' (quantitative screening criteria).
• The 'unlabeled climate-aligned universe' in ASEAN+3 consists of USD 406.4 billion in outstanding bonds from 1,458 companies, with transport being the dominant theme at 72% (USD 293.3 billion).
• Key impediments to the growth of the GSS market include a lack of local market awareness, higher transaction costs for smaller issuances, and a limited number of 'bankable' green projects.
• Sovereign GSS bond issuance is recommended as a catalyst for local markets because it provides benchmark pricing, liquidity, and a demonstration effect for domestic issuers.
• The report suggests that central banks can support a 'build back better' recovery by resuming environmental stress testing and prohibiting sectors with high transition risks from accessing credit released via pandemic-era regulatory loosening.
• The ASEAN Catalytic Green Finance Facility (ACGF) and the subsequent Green Recovery Platform aim to bridge bankability gaps and support post-pandemic green infrastructure in Southeast Asia.

APA

Climate Bonds Initiative (2022). Promoting Local Currency Sustainable Finance in ASEAN+3. https://www.climatebonds.net/files/documents/publications/Promoting-Local-Currency-Sustainable-Finance-in-ASEAN3.pdf

Chicago

Climate Bonds Initiative. Promoting Local Currency Sustainable Finance in ASEAN+3. 2022. https://www.climatebonds.net/files/documents/publications/Promoting-Local-Currency-Sustainable-Finance-in-ASEAN3.pdf.

Wikipedia

{{cite report |author=Climate Bonds Initiative |title=Promoting Local Currency Sustainable Finance in ASEAN+3 |date=June 2022 |url=https://www.climatebonds.net/files/documents/publications/Promoting-Local-Currency-Sustainable-Finance-in-ASEAN3.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatebondsinitiative2022promoting, author = {{Climate Bonds Initiative}}, title = {{Promoting Local Currency Sustainable Finance in ASEAN+3}}, institution = {Climate Bonds Initiative}, year = {2022}, month = jun, url = {https://www.climatebonds.net/files/documents/publications/Promoting-Local-Currency-Sustainable-Finance-in-ASEAN3.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }