ASEAN Finance Ministers Push for a Green Framework Amidst Competing Visions

Credit: ASEAN Finance Ministers’ Meeting 2025, Image by Malay Mail

Finance ministers from ASEAN and observer states are edging closer to an agreement on a regional framework for green finance, following days of impassioned and often fractious deliberations.

The latest council session saw ministers from Timor-Leste, India, Russia and the European Union outline competing frameworks for mobilising funds for the implementation of their green transition strategy.

Early dialogue in the AFMM was marked by a common consensus on the urgency of advancing sustainable finance. However, subsequent debate has since revealed factions over the jurisdiction of the regulatory mechanisms and the degree of flexibility required to accommodate ASEAN’s economic heterogeneity. the second day of discussions saw little movement towards the consolidation and harmonisation of solutions.

“We are dealing with a lack of time, we need to start passing a declaration.” The Minister representing South Korea reminded the AFMM of the time-pressed situation they are in. The United States echoed the appeal, suggesting that the blocs with overlapping solutions consider merging their ideas.

“Any projects with similar plans should be open to incorporating theirs with other ideas to create a plan that everyone would agree with,” the US secretary reiterated. In the words of the minister of India, the committee had produced “strong ideas in different areas”, but lacked cohesion. With some ministers sharing this same observation, many ministers have given in to the demands to put their differences aside, and work on consolidated solutions.

After a series of formatting delays, heated arguments, and unmoderated caucuses, the committee narrowed its focus to two draft declarations: one spearheaded by the European Union and the other by India.

Credit: The ministers of Singapore and Australia discussing potential solutions during an Unmoderated Caucus

The EU-backed declaration proposes the creation of a regionally specific finance taxonomy, drawing inspiration from Europe’s regulatory model. It calls for an ASEAN version of the Sustainable Finance Disclosure Regulation (SFDR) and the establishment of a ‘Green FinTechHub’, modelled after Singapore’s Project Greenprint.

Mentioned by the EU, the declaration “also includes tranche-based, concessional loans \ backed by EU capital and introduces a bond structure with tiered risk-return profiles for the MNCs and SMEs.” The proposal outlines strict criteria enforcement: Funding under the green bonds would be suspended for any violations of the predefined sustainability metrics a mechanism that the EU proclaims is essential to “standardise expectations and attract consistent private capital.”

The EU states, “Which bloc was the one that continuously came to ask for opinions and \ yield to points of information? The only bloc achieving this is the EU.” Implementing the projects was tailored to meet ASEAN's situation. In contrast, India’s competing framework focuses more on transparency, capacity building, and innovation. It promotes tools such as SEED - Sustainability Evaluation for Environmental Development - and VERITAS, a verification and reporting framework aimed at mitigating greenwashing. The concern about greenwashing is valid, given that research from data science company RepRisk, found that one in every four climate-related ESG risk incidents globally was tied to greenwashing in 2023.

The plan includes a dual-track system of friendly competition between MNCs and SMEs, which would be assessed separately to avoid structural disadvantages. India’s proposal thus emphasises credibility and equity, offering a model that addresses the risk of greenwashing while supporting smaller enterprises through mentorship and contextualised evaluation systems.

The EU, which has reportedly secured support from a majority of participating states, is

reportedly leading efforts to resolve clause-level discrepancies and prevent a dual declaration outcome. Ministers are preparing to lead negotiations aimed at reconciling competing proposals into a single declaration.

The debate revolving around ASEAN’s green finance framework underscores a fundamental

tension between the political realities of these countries with their economic ambitions.

The EU-backed declaration proposes the creation of a regionally specific finance taxonomy,

drawing inspiration from Europe’s regulatory model. It calls for an ASEAN version of the

Sustainable Finance Disclosure Regulation (SFDR) and the establishment of a ‘Green FinTech Hub’, modelled after Singapore’s Project Greenprint.

Mentioned by the EU, the declaration “also includes tranche-based, concessional loans backed by EU capital and introduces a bond structure with tiered risk-return profiles for the MNCs and SMEs.” The proposal outlines strict criteria enforcement: Funding under the green bonds would be suspended for any violations of the predefined sustainability metrics a mechanism that the EU proclaims is essential to “standardise expectations and attract consistent private capital.”

The EU states, “Which bloc was the one that continuously came to ask for opinions and yield to points of information? The only bloc achieving this is the EU.” Implementing the projects was tailored to meet ASEAN's situation.

In contrast, India’s competing framework focuses more on transparency, capacity building and innovation. It promotes tools such as SEED - Sustainability Evaluation for Environmental Development - and VERITAS, a verification and reporting framework aimed at mitigating greenwashing.

The concern about greenwashing is valid, given research from data science company RepRisk, found that one in every four climate-related ESG risk incidents globally was tied to greenwashing in 2023.

The plan includes a dual-track system of friendly competition between MNCs and SMEs, which would be assessed separately to avoid structural disadvantages. India’s proposal thus emphasises credibility and equity, offering a model that addresses the risk of greenwashing while supporting smaller enterprises through mentorship and contextualised evaluation systems.

The EU, which has reportedly secured support from a majority of participating states, is reportedly leading efforts to resolve clause-level discrepancies and prevent a dual declaration outcome. Ministers are preparing to lead negotiations aimed at reconciling competing proposals into a single declaration. The debate revolving around ASEAN’s green finance framework underscores a fundamental tension between the political realities of these countries with their economic ambitions.

Written by Tay Yong Le, Jomin Ng Min Rui, and Krishay Gautam Patel

Bibliography:

1. Malay Mail: Asean holds fire on US tariffs, calls for dialogue instead (AFMM)

https://www.malaymail.com/news/money/2025/04/10/asean-holds-fire-on-us-tariffs-call

s-for-dialogue-instead/172571

2. Reprisk.com. (2023). Rean pRisk | RepRisk data suggest an increase in greenwashing and rise

of social washing. [online] Available at:

https://www.reprisk.com/insights/news-and-media-coverage/reprisk-data-shows-increase- in-greenwashing-with-one-in-three-greenwashing-public-companies-also-linked-to-social