CLIMATE change is now the region’s most pressing challenge, overtaking economic issues in priority, a recent regional survey reveals.
The survey, conducted by the Asean Studies Centre at the ISEAS-Yusof Ishak Institute, finds that 55.3% of respondents identified climate change and extreme weather events as their top concern, surpassing unemployment and economic recession – issues that had ranked highest for the past two years.
This shift suggests a growing public awareness of the environmental crisis and its far-reaching impact on daily life and long-term sustainability, says one industry player involved in the renewables sector.
“Countries are experiencing more floods, droughts, heatwaves, wildfires and storms, and these directly disrupt livelihoods and health. It’s not surprising, then, that more people perceive climate change as the root cause of economic problems,” the industry player adds.
Elaborating on the findings, Maybank Investment Bank Research (Maybank IB) says climate change is the top challenge in four of the 10 Asean countries.
“The Philippines and Vietnam, the two front-line countries in the way of strong typhoons, had 70.9% and 70.3% respondents, respectively, ranking climate change as the biggest challenge.
“This is followed by Malaysia (55%) and Thailand (54.6%), where respondents also say that climate change has impacted them,” Maybank IB said in its recent environmental, social and governance (ESG) report.
It notes that the number of companies making long-term climate commitments has been increasing, as evidenced by them aligning their strategies with global climate goals in verifiable and transparent ways.
“As of end March 2025, more than 10,000 companies have committed to setting CO2 (carbon dioxide) emissions reduction targets totalling about 19 gigatonnes (Gt) versus global emissions of 53Gt.
“There are about 3,230 companies that have either committed to setting net-zero targets or have already validated their net-zero targets with the Science Based Targets initiative (SBTi). These total about 9Gt of CO2 emissions,” Maybank IB states.
SBTi is a global organisation that helps companies set science-based greenhouse gas reduction targets.
Earlier this month, the World Bank noted that Malaysia is not lacking in climate-related policies. However, for these to be effective, climate change and its associated impacts must be integrated into public financial management systems.
This recommendation comes from Marco Larizza, a senior public sector specialist at the World Bank, following discussions between the organisation and the Malaysian government.
The World Bank is currently preparing the Climate Change Institutional Assessment for Malaysia – a diagnostic tool to evaluate how well a country’s institutions, governance systems, and public financial management frameworks are aligned to support effective climate action.
The tool has already been applied in 76 countries, offering valuable comparative insights.
Malaysia’s report is currently being validated and is expected to be published by end-2025.
An earlier joint report by the World Bank and Bank Negara projects that by 2030, climate change could lead to a 9% drop in production and an 8.4% decline in gross domestic product.
These losses are attributed not only to natural disasters, but also to shifting weather patterns that reduce agricultural yields.
In light of these growing risks and the need for more robust climate responses, Asean countries – including Malaysia – are increasingly turning to carbon markets as part of their climate strategies. These markets offer a way to mobilise climate finance, support emissions reductions and drive low-carbon development.
Currently, Indonesia has a carbon market for its power sector, while Vietnam plans a pilot programme in 2025.
Meanwhile, Malaysia, the Philippines and Thailand are exploring emissions trading system (ETS) frameworks as part of their climate policy toolkit, according to Maybank IB.
Beyond Asean, middle-income countries such as Brazil, India, Chile, Colombia and Turkiye have accelerated their efforts to establish ETS.
Their implementation goes beyond traditional sectors, with maritime transport, road fuel use, buildings, and waste management now included or considered for inclusion in an increasing number of jurisdictions.
In Malaysia, a voluntary carbon market was launched through the Bursa Carbon Exchange in December 2022.
While it has potential, there are hurdles due to low domestic participation and market volatility. Under Budget 2025, the government plans to introduce a carbon tax by 2026, initially targeting the iron, steel, and energy sectors. The proceeds will be used to fund decarbonisation research and technology development.
