While global markets pull back from environmental, social, and governance (ESG) commitments, Southeast Asia is doubling down, transforming sustainability into a tangible “alpha” factor for investors.
A landmark report by Maybank Investment Banking Group (Maybank IBG), titled the seventh edition of ASEAN ESG Alpha, reveals that the region is moving in a “firmly opposite direction” to a faltering global sentiment. In 2025, while global sustainable funds saw massive net outflows and 71% of ESG-linked indices failed to beat benchmarks, ASEAN saw a consistent improvement in ESG quality and investor rewards.
The Performance Gap: ESG as an Alpha Driver
The report highlights a stark contrast between global and regional performance. At the regional level, ASEAN companies with negligible, low, or medium ESG risk generated significant excess returns over a 1-, 3-, and 5-year horizon compared to their MSCI country indices.
- 1-Year Outperformance: +16.8%
- 3-Year Outperformance: +6.7%
- 5-Year Outperformance: +6.3%
Currently, 68% of companies in the ASEAN-6 universe are rated within manageable risk categories (negligible to medium), with larger, systemically important companies leading the transition.
Thailand: The Regional “Torchbearer”
Despite global outflows of USD 61 billion from sustainable funds in the first nine months of 2025, Thailand emerged as a rare bright spot. The country attracted USD 1.5 billion in inflows and launched 37 new sustainable funds during the year.
Thailand’s leadership is underscored by one of the region’s most ambitious climate pledges: a 47% emissions reduction by 2035 (vs 2019 levels), supported by an estimated USD 7 billion investment requirement.
Regional Sustainable Finance Highlights
ASEAN-6 raised USD 51 billion in sustainable bonds and loans in 2025, accounting for 3.5% of global issuance.
- Singapore: Remains the region’s primary sustainable finance hub, leading both bonds and loans.
- Indonesia & Malaysia: Successfully increased their share of sustainable lending, signaling deeper participation in transition finance.
- Indonesia’s Pipeline: Holds a massive USD 472.6 billion investment requirement for its 2035 climate goals, creating long-term opportunities in utilities and financials.
Top Thematic Stock Picks
Maybank IBG has identified several key “ESG Winners” across diversified sectors that are positioned to benefit from the region’s decarbonization momentum
Sector Top Regional Picks Utilities Sembcorp Industries (SCI SP), B.Grimm Power (BGRIM TB), Yinson (YNS MK) Banks & Financials DBS (SP), CIMB (MK), SGX (SP) Automotive & Tech ComfortDelGro (CD SP), GoTo (IJ), Greatech (MK) Mining Vale Indonesia (INCO IJ), Merdeka Copper Gold (MDKA IJ) Industrials Press Metal (PMAH MK), SD Guthrie (SDG MK), Ayala Land (ALI PM)
Policy Ambition Meets Capital
The resilience of ASEAN’s ESG story is anchored by policy. In 2025, Singapore, Malaysia, Thailand, and Indonesia formally updated their Nationally Determined Contributions (NDCs) towards 2035.
“ESG quality in ASEAN continues to improve, and investors are being rewarded for backing lower-risk companies,” the report notes. “This combination of policy ambition, capital inflows, and improving corporate scores positions the region as a safe harbor in a volatile global ESG landscape.”
