Executive Summary
The ASEAN region faces escalating physical climate risks and a widening adaptation finance gap. The Phase 1 White Paper supporting the mitigation co-benefit and Adaptation for Resilience (mARs) Guide explains why ASEAN needs a practical, adaptation-focused companion to the ASEAN Taxonomy for Sustainable Finance, and how it will be built (ASEAN Capital Markets Forum, 2025, pp. 7, 10). It cites climate finance needs of about USD 422 billion per year by 2030, including about USD 129 billion per year for adaptation, while noting persistent barriers to mobilizing private capital due to bankability uncertainty (ASEAN Capital Markets Forum, 2025, p. 10).
The Guide is positioned as a voluntary, non-binding companion that helps taxonomy users apply Environmental Objective 2 (Climate Change Adaptation), strengthen climate risk and vulnerability assessment practices, and manage maladaptation risk (ASEAN Capital Markets Forum, 2025, p. 14). Phase 1 sets the principles and methodological approach for a three-year initiative intended to improve usability, consistency, and interoperability for adaptation-specific finance (ASEAN Capital Markets Forum, 2025, pp. 7, 11–12).
Why Adaptation Finance And Taxonomies Matter In ASEAN
Southeast Asia is already experiencing more frequent and intense hazards, sea-level rise, and temperature extremes, with compounding vulnerabilities in coastal and urban areas and in climate-sensitive sectors (ASEAN Capital Markets Forum, 2025, p. 10). The White Paper also highlights the region’s exposure and cost signals, including 77.4 million people displaced by hydro-meteorological disasters between 2008 and 2021, USD 91 billion in estimated disaster losses across ASEAN from 2004 to 2014, and USD 210 billion in annual investment needed for climate-resilient infrastructure in Southeast Asia (ASEAN Capital Markets Forum, 2025, p. 17).
In parallel, adaptation finance remains comparatively limited. The White Paper points to Southeast Asia receiving about USD 27.8 billion in climate finance in 2018–2019, with approximately 12% directed to adaptation, while mitigation volumes remain far larger (ASEAN Capital Markets Forum, 2025, p. 23). This gap matters because adaptation projects often struggle to translate risk information into investable structures, measurable outcomes, and credible disclosures that private finance requires.
What The Phase 1 White Paper Covers
The Phase 1 White Paper is designed to set up the foundation for the mARs Guide by:
- Contextualizing ASEAN adaptation needs and the role of sustainable finance taxonomies in mobilizing adaptation-aligned capital (ASEAN Capital Markets Forum, 2025, p. 10);
- Proposing key principles to guide development and long-term maintenance of the Guide (ASEAN Capital Markets Forum, 2025, pp. 11–12), and;
- Outlining methodological approaches informed by mapping ASEAN Member States’ adaptation plans and reviewing relevant taxonomies and frameworks (ASEAN Capital Markets Forum, 2025, p. 7).
It also clarifies that the publication was developed with financial support from the European Union through the Sustainable Finance Advisory Hub and reviewed in collaboration with the European Commission (ASEAN Capital Markets Forum, 2025, p. 2).
What The mARs Guide Is Designed To Do
The Guide is envisioned as a practical companion to help ASEAN Taxonomy users prepare and apply Environmental Objective 2 (Climate Change Adaptation) assessments, while improving clarity on adaptation-relevant activities, outcomes, and risks (ASEAN Capital Markets Forum, 2025, pp. 7, 14). The White Paper describes it as a voluntary, non-binding companion that works alongside the ASEAN Taxonomy, rather than replacing it (ASEAN Capital Markets Forum, 2025, p. 14).
A key usability feature is the explicit focus on enabling better climate risk and vulnerability assessment and helping users identify and manage maladaptation risks, where actions intended to reduce vulnerability inadvertently increase it (ASEAN Capital Markets Forum, 2025, p. 14). For financial institutions and issuers, this is the “translation layer”: turning adaptation intent into consistent assessment logic, credible outcomes, and decision-useful documentation aligned with taxonomy expectations.
Key Principles Proposed For The mARs Guide
Phase 1 proposes six principles intended to complement the ASEAN Taxonomy’s core principles and EO2 guiding principles:
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Science-based and evidence-led, grounded in recognized scientific authorities with transparent assumptions and uncertainty ranges (ASEAN Capital Markets Forum, 2025, p. 11);
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Context-relevant and locally prioritized, reflecting local vulnerabilities, priorities, and governance conditions across ASEAN Member States (ASEAN Capital Markets Forum, 2025, p. 11);
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Inclusive across ASEAN Member States, with requirements that are accessible and proportionate across market maturities and capabilities (ASEAN Capital Markets Forum, 2025, p. 12);
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Maladaptation risk management (uncertainty-aware), explicitly considering future uncertainty, calibration error, residual risk, and avoiding lock-in and burden shifting (ASEAN Capital Markets Forum, 2025, p. 12);
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Interoperable and comparable, enabling mapping to major partner frameworks such as the EU Taxonomy (ASEAN Capital Markets Forum, 2025, p. 12), and;
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Usable for finance and the real economy, producing decision-useful outputs with minimal reporting burden and clearer articulation of desired adaptation outcomes (ASEAN Capital Markets Forum, 2025, p. 12).
Methodological Approach And What Comes Next
The White Paper frames the Guide as a three-year initiative, with Phase 1 outlining the underlying developmental approach (ASEAN Capital Markets Forum, 2025, p. 7). That approach includes mapping national adaptation plans and related strategies across ASEAN Member States, referencing international taxonomies and frameworks, and using stakeholder engagement to identify common methodological building blocks suitable for region-wide use (ASEAN Capital Markets Forum, 2025, p. 7).
In practice, this signals a shift away from treating adaptation as a narrative add-on. It moves the market toward a consistent framework that can strengthen bankability and improve comparability. Over time, it can also enable more scalable, decision-useful reporting across the ASEAN financial ecosystem. This creates clearer signals for issuers and financial institutions on what qualifies as credible, outcomes-oriented resilience investment.
Sources
- ASEAN Capital Markets Forum. (2025, November). Phase 1 white paper on key principles and methodological approaches for the development of the mitigation co-benefit and Adaptation for Resilience (mARs) Guide in support of the ASEAN Taxonomy for Sustainable Finance. United Nations Environment Programme Finance Initiative.
- United Nations Environment Programme. (2024). Adaptation gap report 2024. United Nations Environment Programme.
- United Nations Framework Convention on Climate Change, & ASEAN Secretariat. (2024, December). Climate finance access and mobilization strategy for the member states of the Association of Southeast Asian Nations (2024–2030). UNFCCC and ASEAN Secretariat.
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