Energy transition is no longer a far-off global theme — it’s an investment reality taking on increasing gravity. The question is no longer about whether it is happening, but instead how fast, and who’s ready.
Against this context, investors are seeking structured and granular data to better separate transition leaders from laggards systematically. This is especially important as they explore markets such as Singapore, Malaysia and their Asean peers. Despite their modest weights in global investment footprints today, new opportunities may emerge as the region positions itself as a strategic hub in the green economy.
A multidimensional view for a multi-speed transition
Traditional sustainability and climate assessments often regard carbon emissions as the sole transition-risk indicator: the sum of all emissions — Scopes 1, 2 and 3 — blurred into a single metric. But not all emissions carry the same financial risk. Investors need a sharper approach.
- Carbon footprint: How much a company emits.
- Transition risk: How much those emissions — alongside policy, technology and market forces — impact financial value.
Understanding this difference matters. Companies with lower emissions tend to perform better financially, as MSCI’s prior research showed.[1] Yet, this relationship tends to exist only when companies are exposed to real financial pressure, such as from emissions regulations and technology standards.
In other words, accounting for policy and technology dynamics is essential to forming a holistic view of transition risk, which unfolds at different speeds in across markets. This is equally important for understanding companies’ transition feasibility too as not all industries have access to cost-competitive decarbonisation technologies.
And as global contestations intensify, these policy and technology divides may widen further, with significant implications for how companies plan and execute their energy transitions.
How to read energy transition risk and readiness
Asean’s energy transition is unique: marked by asymmetries but rich in potential. Using the MSCI Energy Transition Framework — which evaluates over 11,000 listed companies[2] globally — we found that companies in Singapore and Thailand tend to show stronger readiness to transition while facing relatively lower risks.
Companies in Indonesia, the Philippines and Malaysia, on the other hand, exhibit lower readiness and higher transition risks.
Source: MSCI Sustainability & Climate Research Services, data as of Oct 16, 2025. Datapoints indicate the weighted average scores of MSCI ACWI IMI constituents (as of June 30, 2025) in the APAC region (based on country of classification). Global (ex. APAC) indicates the weighted average scores of MSCI ACWI IMI constituents excluding companies classified in the APAC region. Color scale indicates overall Energy Transition Score of the market: grey (low) to green (high).
Policy explains part of this divide. Across Asia-Pacific, countries such as South Korea, Japan and Singapore have implemented strong decarbonisation mandates, backed by carbon pricing and ambitious national decarbonisation targets.
By contrast, much of emerging Asean runs under less regulatory pressure for emissions today. While this could mean lower near-term policy risk, the impending rollout of carbon pricing across the region could alter companies’ cost structures and margins. Companies that fail to adapt quickly could still face pressure on their competitive positioning.
Technology is another source of divergence. Major emitters in Asean are split between those where transition pathways tend to be more complex, including steel, cement, and agricultural commodities, and those where commercially-viable options are more readily available, such as power generation and coal mining. The uptake of transition technologies is ultimately driven by costs, which is in turn shaped by policy.
Policy and technology are thus the twin levers that move the transition.
Technological readiness: Defining the next growth frontier
Yet within these divergences lie the green shoots of new opportunity. Today, green revenue from Asean-listed companies only accounts for about 2% of the global total, based on MSCI’s estimates. While this indicates limited participation in the global green economy, it also highlights considerable room for growth.
In sectors such as power generation and transport, low-carbon technologies — including renewables and electric vehicles — are nearing or have already achieved cost parity. Companies operating across these value chains could benefit as ASEAN anchors itself as a global supply chain hub, interconnected with major regional economies, including China, Japan and South Korea.
Asean is also well placed to support areas such as the sustainable bioeconomy, transition-enabling commodities, and energy-flexibility and storage solutions — sectors poised for rising demand as the transition broadens and gains momentum.
Notably, unlike in many other APAC markets, Asean’s industrial conglomerates — which operate across multiple sectors — are among the most active participants in these transition opportunities outside the energy and utility space.
This highlights that transition opportunities are no longer limited to traditional players, but can be a cross-sectoral growth opportunity.
Identifying Asean’s transition-ready leaders
As policy and technology factors evolve at pace, how can global investors identify the Asean companies best placed to succeed in the transition? As Anthony Chan, Vice President, APAC Sustainability & Climate Research & Development at MSCI, notes in his latest research: “Knowing risks is only half the picture. Equally important is understanding whether companies are ready to adapt and capitalise on the opportunities that the transition brings.”
To avoid undervaluing transition leaders or missing upside from emerging growth sectors, global investors are increasingly looking for credible transition plans from companies. The MSCI Energy Transition Framework supports this effort by translating key readiness indicators into clear, comparable scores. This helps investors distinguish companies that are well prepared to capture transition opportunities, and avoid those most vulnerable to disruption.
Transition leadership rests on clear strategic directions and effective implementation. How deeply companies embed climate transition into board oversight and risk management provides an indicator of strategic preparedness.
On this metric, Singaporean companies stand out across Asean and the broader APAC region, leading peers in integrating transition considerations into corporate governance. Malaysian firms also rank among the strongest performers in emerging APAC, while companies in Indonesia, the Philippines and Thailand are less likely to have these measures in place.
Source: MSCI Sustainability & Climate Research Services, data as of Oct 16, 2025. Analysis based on constituents of the MSCI ACWI IMI in the APAC region as of June 30, 2025. Each bar represents the average scores for companies classified in an APAC market. Each component is assessed on a 0 to 10 scale, with 10 indicating that companies have shown strong evidence of disclosure based on the scoring rubrics defined in the MSCI Energy Transition Framework methodology.
However, these are mainly indicators of intent, not action. Investors are also seeking evidence that firms are turning pledges into action. Are companies linking executive pay to climate-related performance? Are they establishing low-carbon capex plans, or articulating a well-defined transition strategy? On these fronts, Asean companies generally show limited evidence, suggesting that climate integration is still maturing.
A common ruler for a complex transition
For Asean, the energy transition is entering a decisive phase. The coming years could be critical for determining which markets and companies can attract the lion’s share of global transition capital. For companies, the ability to navigate policy, technology and market risks with agility may become a defining edge.
For investors, applying a sharper lens on policy, technology and readiness may help them better position portfolios to capture upside and preserve value.
The MSCI Energy Transition Framework supports this by offering a common language for measuring companies’ readiness relative to the pressures they face. With its structured and systematic approach, alongside a multidimensional, sector-sensitive view, the framework enables clearer insights and more informed capital allocation.
This article draws on findings from MSCI’s latest research, Corporate Asia’s Energy Transition: Policy, Technology, Readiness. For a deeper look into how this framework can be applied, watch our on-demand webinar, Navigating the APAC Energy Transition.
[1] Materiality-weighted carbon emissions
[2] As of end of September 2025.
