Malaysia’s leading institutional investors are making steady progress in integrating climate considerations into their investment strategies, with a growing number committing capital to climate solutions and transition finance, according to new research.

Notably, 55% of 11 of Malaysia’s largest institutional investors, which collectively manage 2.5 trillion ringgit ( US$624 billion ) in assets, have committed to increasing investments in climate solutions or transition finance, finds research by the Asia Investor Group on Climate Change ( AIGCC ). That percentage represents a 15% increase from last year and places Malaysia ahead of the broader Asian average of 48%.

Malaysia’s strongest gains were recorded in climate investment, reflecting increasing alignment between institutional capital and the country’s National Energy Transition Roadmap, which targets 40% renewable energy capacity by 2035.

As well, gradual improvements in governance and investor engagement have taken place, the research notes, although these areas continue to lag behind regional peers.

Around 55% of Malaysian investors now have board-level oversight of climate-related issues, up 5% from last year while the same proportion have adopted policies to integrate climate considerations into investment decisions. However, both measures remain below the Asian averages of 70% and 75% respectively.

Transparency is also improving as 27% of investors now publicly disclose support for climate policy advocacy or related engagement activities, compared with none a year earlier. The same proportion have published annual stewardship or engagement reports, although this still trails the regional average of 45%.

Positive momentum

Among the institutions strengthening their climate commitments is state-owned Permodalan Nasional Berhad ( PNB ), which recently recalibrated its sustainability framework.

“As a long-term institutional investor managing the financial futures of millions of Malaysians, we recognize that climate risk is investment risk,” says Rizal Rickman Ramli, PNB’s president and group chief executive. “Our whole-of-portfolio approach to integrating climate considerations reflects our commitment to delivering sustainable returns for our unitholders while contributing to Malaysia’s transition to a low-carbon economy.

“Under our refreshed sustainability framework, we have committed to investing 15 billion ringgit into green and transition assets by 2030 and reducing portfolio emissions intensity by 35% over the same period, against our FY2022 baseline.

The research forms part of the AIGCC’s State of Investor Climate Transition in Asia 2026 report, its annual assessment of 240 major institutional investors across the region. The report evaluates investors using 28 climate-related metrics covering governance, investment practices, risk management and stewardship.

The research demonstrates encouraging momentum, says Rebecca Mikula-Wright, the AIGCC’s chief executive officer, despite a more uncertain global climate policy environment.