This overview chapter introduces the framework used throughout the report to assess policies, frameworks and investment conditions shaping sustainable infrastructure development in development in Kazakhstan, Mongolia and Uzbekistan in Central Asia as well as Indonesia, the Philippines and Thailand in Southeast Asia. It situates infrastructure as a driver of economic growth, social inclusion and environmental outcomes, while highlighting risks of carbon lock-in, stranded assets and exposure to climate hazards. Drawing on the Sustainable Infrastructure Programme in Asia (SIPA), it provides a cross-regional overview of progress in infrastructure planning, project evaluation, sectoral frameworks and sustainable finance across six countries. The chapter also analyses infrastructure investment gaps, regional dynamics and initiatives and evolving climate commitments, including Nationally Determined Contributions (NDCs) and long-term low-emission development strategies (LT-LEDS).
Accelerating Sustainable Infrastructure Investments
Abstract
This report summarises and consolidates the analyses, findings and recommendations delivered to governments of Central and Southeast Asia through the Sustainable Infrastructure Programme in Asia (SIPA). Between 2021 and 2026, this Programme, funded by the government of Germany through the International Climate Initiative, engaged with governments of these regions and delivered several analyses and capacity-building activities supporting sustainable infrastructure planning, financing and delivery for sustainable and inclusive economic growth. This Overview chapter first sets the rationale and context for this work, then details the approach and theory of change underpinning the framework of the Programme and, finally, provides a cross-regional assessment of frameworks and policies for delivering sustainable infrastructure in Central and Southeast Asia, drawing on the conclusions of the country chapters in this report.
Infrastructure plays a foundational role in driving economic growth and national prosperity. Analysis shows that infrastructure investment can boost economies through the so-called multiplier effect by which a public investment stimulus of 0.5% of GDP can raise output by 1.6% on average in large, advanced economies, according to OECD research (Mourougane et al., 2016[1]). For instance, transport and electricity infrastructure investments have been shown to lower trade and travel costs, boost crop production and local consumption and reduce poverty risks. Even modest investments (e.g. 10% improvement in transport costs or travel time) can yield double-digit gains in agricultural output and incomes (Foster et al., 2023[2]). This multiplier effect could even be greater in emerging economies where initial public capital stock is lower (OECD, 2020[3]). OECD work looking at the sub-national scale has also shown that the impact of infrastructure provision on economic growth depends on how other policy issues, pertaining to the business environment, human capital and innovation, are addressed (OECD, 2009[4]). This means that, in order for investments in infrastructure to yield economic benefits, these should be integrated into comprehensive policy packages.
Infrastructure is also central to sustainability and resilience.1 It is a driver of inclusiveness and social equality, as it enables access to public services across segments of the population. Its design, quality, and longevity significantly influence carbon emissions, land use and biodiversity, and defines its capacity to withstand climate shocks and natural hazards. It underpins essential services such as energy, water and transportation, which are essential services to both citizens and economic activity. On the other hand, once built, infrastructure can also lock in its climate and environmental impacts for decades, making sustainable and resilient planning crucial from the outset.
The world faces an annual sustainable infrastructure gap exceeding USD 3 trillion. In the energy sector alone, an estimated USD 2.2 trillion needs to be mobilised annually, while transport and telecommunications projects require a further USD 400 billion and water and sanitation account for another USD 500 billion (UNCTAD, 2023[5]). Moreover, the gap for sustainable investment is widening: USD 1.5 trillion annually was the estimated cost to achieve the SDGs in 2015, but the estimate was revised to USD 4.0 trillion in 2023 as annual shortfalls in spending compared to estimated needs continued to accumulate (UNCTAD, 2023[5]). This gap is particularly acute in emerging and developing economies. The need to modernise and expand existing infrastructure systems, combined with this lock-in effect, underscore the urgency of aligning infrastructure planning and investment with climate, sustainability and development goals.
Investing in sustainable and resilient infrastructure makes economic sense. On the climate change mitigation front, OECD research on G20 economies (2017[6]) demonstrates that infrastructure compatible with greenhouse gas (GHG) reduction targets is not a cost to growth but a driver of it. Modelling shows that if ambitious climate action were combined with pro-growth structural reforms and clean infrastructure investment, average G20 GDP could be nearly 3% higher by 2050 – and nearly 5% higher when avoided climate damages are taken into account. Moreover, the additional cost of making new infrastructure climate-compatible (about USD 0.6 trillion per year) is outweighed over time by fuel savings, improved health outcomes and productivity gains. On the adaptation and resilience front, investing in infrastructure that can withstand floods, droughts, heatwaves and other climate risks reduces future fiscal and economic vulnerabilities. Developing countries particularly exposed or vulnerable to climate change stand to reap particularly strong dividends from investing in climate-resilient infrastructure: each USD 1 invested in resilient infrastructure systems is estimated to garner a net benefit of USD 4 thanks to fewer disruptions and reduced economic impacts (Hallegate, Rentschler and Rozenberg, 2019[7]). Additional benefits could accrue from ensuring infrastructure is not only environmentally sustainable but contributes towards social development goals, especially gender equality. While infrastructure is only one piece of the puzzle, designing infrastructure systems that support women’s participation in the economy, and achieving gender equality could add an estimated USD 28 trillion to global annual GDP (UNOPS, 2020[8]). Despite this, gender considerations are still often treated as secondary co-benefits rather than as core components of infrastructure planning. To unlock the full economic and social value of sustainable infrastructure, gender perspectives need to be systematically integrated across all stages – from planning and design to participation, procurement and accountability.
At the same time, the economic rationale for investing in sustainable infrastructure is reinforced by the high costs associated with “lock-in” effects. The world, and Asia in particular, will need to embark on a large-scale expansion of infrastructure over the coming decades. One reason that sustainable choices will be critical concerns the lock-in effects of land-use and infrastructure decisions. These tend to have very long-lasting effects on transport, settlement patterns and trade. Urban systems and flows of both goods and people in Europe are still shaped by Roman roads, and rail networks in much of the world – though much expanded and upgraded – often reflect decisions made in the 19th and early 20th centuries. Around the world, the location and form of many cities are defined by choices made hundreds of years ago. Thus, the infrastructure built over the next decades will shape the way people live far into the future. Decisions to invest in high-emitting, maladaptive or unsustainable options will endure and could prove significantly more costly to remediate than making sustainable choices today. However, efforts to address infrastructure needs over the coming decades also offer unprecedented opportunities for reform and innovation – the benefits of sustainable choices are also likely to be felt over the very long term.
Achieving transformative change in infrastructure requires a whole-of-government approach that mainstreams sustainability and resilience into planning and finance, shifts incentives away from fossil fuels, and embeds long-term resilience to avoid stranded assets. OECD and partner country experience shows that prioritising infrastructure quality – through life-cycle value, resilient performance, good governance and integration of environmental and social factors – improves reliability, reduces risks and attracts investment (OECD/The World Bank/UN Environment, 2018[9]; OECD, 2021[10]; OECD, 2024[11]). To scale sustainable infrastructure, governments must develop robust project pipelines aligned with climate mitigation and adaptation objectives by strengthening upstream planning, aligning with long-term strategies and NDCs, and supporting project preparation facilities, thereby sending strong signals to investors and mobilising the trillions needed annually (OECD, 2018[12]). It is recommended to further strengthen the linkage between national strategic plans and annual budget allocation mechanisms to ensure that sustainable infrastructure projects are systematically prioritised. In this regard, the adoption of tools such as Climate Budget Tagging may be considered to enhance the tracking and evaluation of public expenditures aligned with climate objectives.
1.2.1. Central and Southeast Asia’s infrastructure investment gap and unique sustainable infrastructure opportunity
Estimates of investment needs vary, but it is clear that developing Asian economies face an immense infrastructure investment challenge. ADB estimates that the annual needs gap to 2030 amounts to USD 33 billion (6.8% of GDP) in Central Asia and USD 184 billion (5% of GDP) in Southeast Asia, without accounting for climate commitments. However, the additional investment required to ensure a sustainable future in these regions is, by comparison, marginal: an additional USD 5 billion in Central Asia (15% increase) and USD 26 billion in Southeast Asia (14% increase) (ADB, 2017[13]).
While the overall investment gap is daunting, there is an opportunity to build infrastructure systems fit for the future. Given the scale of the required infrastructure build-out across developing Asia, countries can seize a unique opportunity to develop infrastructure systems aligned with sustainability and development goals. While sustainability-aligned infrastructure is indeed more expensive, the difference between business-as-usual infrastructure scenarios to meet economic and demographic growth trends and sustainability-adjusted alternatives is relatively small (Table 1.1).
Investing in sustainable, climate-resilient and inclusive infrastructure is not a burden but a strategic choice. Considering the risks of carbon lock-in and stranded assets from business-as-usual systems, alongside the growing investor appetite for sustainable projects, the additional cost of greener and climate-resilient options is relatively modest and declining, compared to the large volumes already required. Crucially, resilient infrastructure reduces vulnerability to climate-related shocks, such as floods, storms and heatwaves, lowering future costs associated with supply chain disruptions, maintenance and post-disaster repair (OECD, 2018[22]). At the same time, sustainable and inclusive infrastructure delivers major co-benefits: reducing air pollution and related health burdens, creating quality green jobs and promoting more inclusive access to essential services. By directing resources toward low-carbon, climate‑resilient and inclusive infrastructure systems today, countries can avert higher long-term costs from climate damages, retrofits and stranded assets and reap economic gains from environmental and social co‑benefits. Adherence to sustainability standards can unlock access to green finance, climate funds and private capital increasingly tied to ESG benchmarks. In this way, marginally higher upfront expenditures yield outsized returns, enhancing adaptive capacity against climate shocks, strengthening social cohesion, bolstering competitiveness and advancing both national development priorities and global climate commitments. It is recommended to accelerate the development of a robust pipeline of bankable green projects with strong technical and financial readiness to enhance the country’s ability to attract private and international investment. In parallel, the development of public de-risking mechanisms should be considered to mitigate investment risks, particularly in emerging technologies and energy transition projects.
1.2.2. Regional initiatives in Central and Southeast Asia
Aligning infrastructure development in Central and Southeast Asia is pivotal to delivering the Paris goals because the region’s demographic and economic momentum implies a step-change in future build-out. Infrastructure in Asia’s dynamic economies has become increasingly attractive to investors: A 2021 survey of portfolio managers indicated that Asia accounted for over half of their global infrastructure investment volumes, and 78% of investors expressed an intention to grow their teams in the region (Draper, Kelly and Power, 2021[23]).
Ambitious cross-boundary infrastructure development initiatives in Asia are emerging. The Belt and Road Initiative (BRI), a global initiative led by the People’s Republic of China, is accelerating, with 2024 marking the highest engagement to date of USD 70.7 billion in construction contracts (10% in Southeast Asia, 6% in Central Asia) and approximately USD 51 billion in investments (35% in Southeast Asia, 12% in Central Asia) (Nedopil, 2025[24]). Europe is also scaling up: under Global Gateway, the EU announced a EUR 10 billion commitment to invest in the Trans-Caspian Transport Corridor (Middle Corridor) linking Europe and Central Asia (European Commission, 2024[25]).
Locally-led initiatives seek to improve linkages between neighbouring countries. In addition to international initiatives like the BRI and Global Gateway, initiatives led by the Association of Southeast Asian Nations (ASEAN) and Central Asian governments have also emerged, contributing to intraregional infrastructure integration and articulating infrastructure development objectives shared among each region’s national governments. This trend is particularly strong in Southeast Asia, where it has extended to ASEAN-wide strategic plans, sectoral strategies and governance mechanisms, while in Central Asia there is a more piecemeal, project-by-project approach (Table 1.2).
Note: TPES = total primary energy supply.
However, misalignments between the projects receiving investments and sustainable development pathways raise concern. Fossil-fuel energy investments still represent 79-93% of total energy investments in certain Central Asian economies, despite stated policy goals to decarbonise and diversify national energy mixes (OECD, 2025[26]). While renewable energy projects represent a growing share of BRI-linked energy investments (including in the Philippines, Thailand and Uzbekistan), fossil fuel projects still account for nearly all energy investments in Kazakhstan and Mongolia, and nearly half in Indonesia (Nedopil, 2025[24]), further entrenching fossil fuel dependence. In many cases, large-scale infrastructure initiatives based around megaprojects, like many of those proposed or under construction in Central and Southeast Asia, lack robust sustainability, climate adaptation and resilience components, and tend to prioritise prestige projects over the basic infrastructure under increasing strain in fast-growing economies (Dimitriou and Field, 2020[27]).
1.2.3. Central and Southeast Asia’s sustainable infrastructure challenges
Despite considerable progress, Central and Southeast Asia’s economies remain emissions-intensive and highly vulnerable to climate impacts. Both regions have seen significant drops in emissions per unit of GDP (63% and 58% respectively between 1990 and 2022), but the gap with OECD economies remains imposing: Southeast Asian economies’ emissions intensity is fourfold higher than the OECD average, and Central Asia is nearly twice as emissions-intensive as Southeast Asia (Figure 1.1). Despite early gains in decoupling economic activity from emissions in the 1990s and 2000s, both regions’ progress has plateaued over the past the past decade. In parallel, growing exposure to increasingly frequent and intense extreme events continues to underscore the need for climate-resilient and adaptive infrastructure systems.
Sustaining momentum in reducing emissions has become increasingly difficult for Central and Southeast Asia, as structural barriers slow further progress. Rapid urbanisation, continued dependence on fossil fuels and rising energy demand from industrialisation are straining efforts to decarbonise. At the same time, inadequate adaptation measures and limited infrastructure resilience planning increase vulnerability to floods, droughts, heatwaves and other climate-related shocks. Compounding this challenge, continued reliance on the established models of existing infrastructure risks locking in higher emissions trajectories for decades unless offset by significant investments in greener and more resilient alternatives.
Infrastructure paths reliant on fossil fuel combustion often neglect broader sustainability impacts such as air pollution, health burdens and inequalities. Disadvantaged groups and women tend to bear disproportionate harm from local pollution and poor urban planning (e.g. exposure to vehicle emissions). Low-income and marginalised populations are more likely to suffer from air pollution–related respiratory and cardiovascular disease, aggravating environmental inequalities (OECD, 2021[28]), and transport-derived pollutants (e.g. fine particulate matter, NO2) particularly affect vulnerable communities including women and the poor (ITF, 2024[29]).
tCO2e per million USD of GDP
Note: Weighted averages scaled to the size of each economy within the region. Central Asia includes Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan and Uzbekistan. Southeast Asia includes all ASEAN member states.
Both regions are at a crucial turning point. Given the ambitious infrastructure development initiatives across Central and Southeast Asia, a rapid outlay of unsustainable large-scale infrastructure projects would counteract efforts to decarbonise regional economic activity and further ingrain dependence on fossil fuels and risks exacerbating vulnerability to increasing climate risks. While GHG profiles vary considerably from country to country, energy (including end-use sectors like transport) accounts for the largest share of most SIPA country emissions (Figure 1.2). Notable exceptions include Indonesia, where land use, land-use change and forestry (LULUCF) represents over half of total emissions, and Mongolia, where agriculture is the highest-emitting sector. Even in these cases, energy-related emissions.
Energy-related emissions, including from end-use sectors, are particularly critical to address because they are deeply embedded in the region’s infrastructure systems. Decisions on power plants, industrial facilities and transport networks shape future emissions trajectories due to their long asset lifespans and capital-intensive nature. As such, the energy sector is both the largest source of greenhouse gas emissions and the most directly influenced by infrastructure investment choices. Focusing on this sector allows governments to leverage upcoming infrastructure buildout to accelerate decarbonisation, while avoiding carbon lock-in and stranded assets that could undermine competitiveness and long-term growth. At the same time, ensuring energy infrastructure is adapted to the growing challenges posed by climate change is critical to ensure the resilience of energy supply during climate shocks. In this context, it is recommended to consider the systematic application of Strategic Environmental Assessment (SEA) for large-scale infrastructure projects in the energy and transport sectors, to help prevent carbon lock-in and stranded assets in the long term. In addition, enhancing the use of economic instruments, such as carbon pricing mechanisms, should be considered to better reflect environmental costs.
Note: Most recent data available for each country (Kazakhstan, 2023; Mongolia, 2020; Uzbekistan, 2021; Indonesia, 2019; Philippines, 2000; Thailand, 2018). “Sinks” refers to negative emissions from LULUCF.
Source: Author’s elaboration from UNFCCC National Communications and Biannual Update Report registries (Kazakhstan’s National Inventory Document, 2025; Mongolia’s 4th National Communication, 2024; Uzbekistan’s 4th National Communication, 2024; Indonesia’s 3rd Biannual Update Report, 2021; Philippines’ 2nd National Communication, 2014; Thailand’s 4th National Communication, 2022).
Unlike energy-related emissions, which stem directly from the operation of infrastructure, most emissions from land use, land-use change and forestry (LULUCF) arise indirectly, as infrastructure is planned and sited. Poorly designed projects can trigger deforestation, cropland conversion and other land-use changes that release substantial carbon stocks. Similarly, from an adaptation perspective, poorly planned infrastructure can hinder the resilience of whole communities to climate shocks. Conversely, well-planned infrastructure can reduce such risks, playing a decisive role in safeguarding carbon sinks and adaptive ecosystem functions (e.g. enhancing groundwater recharge in Mongolia, maintaining forests in the Philippines, or protecting cropland in Thailand). It can do so not only by limiting encroachment, but also by promoting land-efficient designs and nature-based solutions (NbS) as core elements of urban and transport infrastructure, thereby reducing land conversion and ecosystem loss and degradation. Reductions in LULUCF emissions can be achieved by avoiding expansion into ecosystems with high carbon-fixing capacity, prioritising infill development, restoring degraded land and explicitly embedding NbS in infrastructure projects. Indeed, mainstreaming NbS into infrastructure is emerging as a key strategy to reconcile climate, health and equity goals: NbS can lower pollution, cool urban areas, and enhance the availability of green spaces that benefit underserved populations (OECD, 2021[31]).
Yet, current infrastructure pipelines in Central and Southeast Asia reveal a stark contradiction between climate mitigation and adaptation goals and planned infrastructure investments. The most striking example from across both regions is the continued expansion of coal-fired power generation. Despite recent cancellations, Southeast Asia still has 31.9 GW of coal projects in the pipeline (equivalent to lifetime emissions of 4.9 Gt CO2e, or around 121.49 Mt annually, comparable to Chile’s total annual emissions). In Central Asia, 12.7 GW of planned projects would lock in 2.0 Gt CO₂e over their lifetimes, or 57 Mt annually, in line with Ireland’s annual emissions (Global Energy Monitor, 2025[32]). Countries such as Indonesia, Lao PDR, Kazakhstan, Kyrgyzstan, Mongolia, the Philippines and Viet Nam continue to drive these additions, underscoring the risks of locking in carbon-intensive infrastructure (Figure 1.3). This persistence of coal investments not only conflicts with national and global climate objectives but also further entrenches reliance on coal, which accounts for the majority of power generation in Indonesia (69%), Kazakhstan (58%), Mongolia (86%) and the Philippines (60%). Further expansion increases exposure to stranded assets and delays the structural shifts needed to align energy systems with net-zero pathways.
Beyond coal, a wide range of other carbon-intensive projects in the infrastructure pipeline threaten to undermine regional climate mitigation ambitions. Across Southeast Asia, more than 100 GW (USD 220 billion) of new gas-fired power capacity is proposed, including in sensitive ecological areas like the Coral Triangle and Mekong Delta; the cumulative buildout would double currently operating capacity (Ajaz, 2025[33]). Central Asia plans to add 13 GW of gas-fired generation capacity (3.6 GW of which is already under construction) (Martos and Joly, 2022[34]). Transport-related investments likewise remain misaligned, although progress is being made: the region continues to prioritise highway expansion over low-carbon alternatives, with road infrastructure projected to receive more than 60% of transport investment in both regions from 2020 to 2035, although rail and urban transport projects make up an increasing share (Asian Transport Observatory, 2025[35]). Climate adaptation and resilience priorities also remain largely neglected in national infrastructure pipelines.
Capacity in MW
Note: Planned includes announced, under construction, permitted and pre-permitted. Cancelled includes cancelled, mothballed and shelved.
Source: (Global Energy Monitor, 2025[32]).
In recognition of the dual role of infrastructure as both a driver of growth and a determinant of long-term environmental outcomes, the Sustainable Infrastructure Programme in Asia (SIPA, Box 1.1) was established to build capacity within government for aligning national infrastructure project pipelines with sustainable development and climate goals. At its core, SIPA’s theory of change posits that building the enabling conditions for sustainable infrastructure requires co-ordinated shifts across four levels. First, legislation and regulations must embed sustainability principles to create binding requirements that guide infrastructure development. Second, national and sectoral strategies and policies must provide a coherent vision that aligns infrastructure planning with long-term climate and sustainable development objectives. Third, processes and tools, such as project evaluation methodologies, screening criteria and procurement frameworks, must be designed to operationalise these policies in practice. Finally, institutional and human capacity must be strengthened so that governments, regulators and project developers can apply these tools effectively and consistently. Without reforms across all four levels, infrastructure projects risk continuing to be developed in fragmented ways that lock in carbon-intensive, low-resilience and environmentally harmful pathways.
SIPA is an initiative supported by Germany’s International Climate Initiative (IKI) and the Federal Ministry for the Environment, Climate Action, Nature Conservation and Nuclear Safety (BMUKN) to support emerging Asian economies better plan, evaluate, finance and deliver essential infrastructure projects aligned with sustainability objectives. SIPA provides country-level support to Kazakhstan, Mongolia and Uzbekistan in Central Asia as well as Indonesia, the Philippines and Thailand in Southeast Asia, and it promotes intra- and interregional peer learning and policy exchange in the wider Central and Southeast Asian regions.
Running from October 2021 until June 2026, SIPA is implemented by an OECD-led consortium of international partners selected for their complementary expertise on topics related to sustainable infrastructure. In addition, the OECD, these partners include the Institute for Sustainable Development and International Relations (IDDRI), the International Institute for Sustainable Development (IISD), the International Transport Forum (ITF), the United Nations Development Programme (UNDP), the University of Central Asia (UCA) and the World Wildlife Fund (WWF).
SIPA tackles these challenges through four interconnected pillars designed to drive transformative change. It supports governments improve
strategic planning and infrastructure evaluation to integrate sustainability into decision-making and build robust project pipelines;
sectoral frameworks focuses on energy, transport and industry;
investment and responsible business conduct frameworks to mobilise green finance;
regional knowledge sharing through peer learning exercises, dialogue and knowledge exchange to accelerate progress across Central and Southeast Asia.
Source: (OECD, 2026[36]).
By intervening across these dimensions, SIPA seeks to address a central barrier to sustainable infrastructure development: the misalignment between national development strategies, project pipelines and available finance. The programme’s approach therefore rests on a logic of sequencing and reinforcement: upstream policy reforms create demand for sustainable infrastructure and the framework conditions for its development, the use of improved project evaluation, screening and preparation capacities ensure that this demand translates into a pipeline of bankable projects and financial mobilisation unlocks capital flows to these projects at scale. When these elements operate together, countries can shift from ad hoc, project-by-project approaches to a systemic transformation where sustainable infrastructure becomes the default, rather than the exception.
Unlocking sustainable infrastructure investment requires a coherent package of reforms that align policies, markets, and institutions around a shared low-emission and climate-resilient development vision. To support participating countries, SIPA designed a series of interlocking activities (Table 1.3) targeting high-priority areas in each country.
Note: AIT = Asian Institute of Technology; ENTEC = National Energy Technology Centre (Thailand); IDDRI = Institute for Sustainable Development and International Relations (Institut du développement durable et relations internationales); IFS = Institute of Finance and Sustainability; IISD = International Institute for Sustainable Development; ITF = International Transport Forum; UCA = University of Central Asia; UNDP = United Nations Development Programme; WWF = World Wildlife Fund.
Source: Author’s elaboration.
An assessment of SIPA’s pillars points to priority areas for reform (Table 1.4). Strategic planning and infrastructure assessments require particular attention in Mongolia, the Philippines and Uzbekistan, while all countries need to better align their sectoral framework conditions with long-term sustainability and development goals. Green finance ecosystems and frameworks for private sector mobilisation are generally more advanced in Southeast Asia than in Central Asia. Through SIPA as well as through regional collaborative platforms, all countries are engaging in peer learning and cross-border knowledge dissemination activities, but this pillar is excluded from the assessment given its less concrete nature.
The qualitative assessments in this table represent aggregated, high-level views of the detailed assessments provided in the respective country chapters, building on five years of SIPA implementation. The categories summarise progress towards alignment with established good practices under each assessment pillar: 1 – initial, 2 – early, 3 – partial, 4 – moderate, 5 – substantial and 6 – considerable.
The sections below (1.4.1., 1.4.2. and 1.4.3.) present the results of SIPA’s assessment by framework subcomponent, while overarching conclusions by pillar are presented in section 1.5.
1.4.1. National strategic planning framework for sustainable infrastructure
Across Central and Southeast Asia, countries have begun to embed sustainability into high-level strategies and planning documents, yet challenges remain in ensuring coherence across ministries, sectors and levels of government. While long-term visions often acknowledge climate and SDG commitments, practical implementation is hampered by fragmented governance, limited technical capacity and the persistence of fossil-fuel-centric development models. Strengthening national planning systems, enhancing co-ordination mechanisms and embedding sustainability criteria from the outset of project pipelines are essential steps to ensure that infrastructure development supports low-carbon and climate-resilient growth pathways.
National governance and strategic framework for sustainable infrastructure development
In both Central and Southeast Asia, infrastructure strategies increasingly recognise the dual role of infrastructure as a driver of competitiveness and as a determinant of long-term environmental outcomes. Yet gaps persist between policy ambition and execution. Fragmented institutional responsibilities, frequent restructuring of agencies and weak vertical co-ordination with subnational authorities create inconsistencies in implementation. Strengthening whole-of-government approaches, improving accountability mechanisms and aligning national strategies with sectoral and local priorities are key for translating strategic visions into bankable, sustainable infrastructure pipelines.
The OECD Infrastructure Governance Indicators (IGIs) in Southeast Asia reveal both progress and persistent gaps. Indonesia has established strong long-term planning frameworks and has integrated climate considerations, but governance would benefit from clearer project-specific benchmarks and independent review mechanisms. The Philippines systematically applies affordability assessments and detailed climate data in planning but lacks a comprehensive framework to evaluate procurement against green and social objectives. Thailand has made strides in promoting green procurement and environmental standards, however there are no requirements for early-stage stakeholder consultation or independent project review, limiting transparency and inclusiveness. According to preliminary IGI scores focusing on sustainability and climate-resilient infrastructure, Indonesia and the Philippines as well as Singapore outperformed the OECD average (Figure 1.5), demonstrating strong progress on infrastructure governance for sustainability.
Note: Data not available for Thailand.
Source: (OECD/ADB, 2025[37]), based on the Survey on the Governance of Infrastructure, 2024-2025 (SEA) and 2022 (OECD).
In Central Asia, the infrastructure governance assessments highlight similar challenges of aligning long-term ambitions with practical implementation. Uzbekistan has placed infrastructure at the core of its development strategies, but persistent institutional fragmentation and weak integration of environmental and social assessments limit the effectiveness of planning and project selection. Kazakhstan has developed an extensive portfolio of strategies, from its Green Economy Concept to its Strategy 2050 and Carbon Neutrality Strategy, but implementation is hindered by overlapping mandates, inconsistent targets and weak co-ordination between national and subnational authorities. Strengthening inter-ministerial co-operation, embedding sustainability criteria in project appraisal, and ensuring better alignment between national strategies and investment pipelines are identified as priorities. Mongolia, meanwhile, is only beginning to build a coherent governance framework for sustainable infrastructure. Long-term visions such as the Vision 2050 and the Government Action Plan set broad priorities, but enforcement capacity, institutional coherence and the integration of sustainability and long-term resilience into decision-making remain limited. Infrastructure governance across the region remains uneven and would benefit from applying the OECD IGIs to benchmark practices and identify gaps.
Across the six SIPA countries, gender equality is increasingly recognised in national governance frameworks, but systematic integration into infrastructure development remains limited. Indonesia, the Philippines and Thailand have comparatively stronger institutional frameworks for gender mainstreaming, with national gender strategies and budgeting tools that could be leveraged for infrastructure planning, though translation into practice is inconsistent due to patchy sex-disaggregated data, limited monitoring of outcomes, and uneven integration across planning, appraisal, procurement and evaluation. Kazakhstan and Mongolia have established legal commitments and strategic documents that reference gender equality, yet enforcement and co-ordination gaps limit their impact on infrastructure governance. Uzbekistan’s framework remains largely gender-neutral, with weak accountability mechanisms and limited use of sex-disaggregated data. The shared challenge across all countries is moving from general gender policy commitments to operational mechanisms that embed gender into infrastructure strategies, institutions and project cycles.
Long-term planning tools: modelling, scenario-building and foresight capabilities
Across both Southeast and Central Asia, countries are increasingly turning to modelling and scenario tools to guide long-term infrastructure and climate strategies, though capacity and integration remain uneven. These tools are critical for understanding exposure to climate risks, exploring multiple decarbonisation and adaptation pathways, assessing trade-offs, and stress-testing infrastructure plans under uncertain future conditions.
However, integration into decision-making remains partial, and technical capacity to design and apply such tools is uneven. In Southeast Asia, Indonesia, the Philippines and Thailand have begun to apply economy-wide and sectoral models to inform net-zero pathways, but gaps persist in translating outputs into concrete investment decisions. In Central Asia, progress on modelling tools for long-term planning is advancing but uneven. Kazakhstan has made the most headway, adopting a Carbon Neutrality Strategy to 2060 underpinned by economic and energy system modelling, though translating scenarios into sectoral targets remains a challenge. Uzbekistan is developing its LT-LEDS with World Bank support, applying modelling to align its 2060 net-zero goal with sectoral reforms, but integration into decision-making is still limited. Mongolia, meanwhile, is at an early stage: its Vision 2050 sets broad goals, but modelling capacity is weak and reliant on external expertise. Strengthening national modelling and foresight capabilities will be essential across the three countries to underpin credible, data-driven pathways to low-carbon development.
Under SIPA, Indonesia and the Philippines have piloted strategic foresight which is an essential tool for long-term planning, allowing governments to anticipate uncertainty and design infrastructure strategies that remain robust across a range of possible futures. Both countries organised foresight workshops that applied scenario planning and stress-testing to evaluate how infrastructure strategies might perform under diverse climate, technological, and economic conditions for their medium-term strategies (i.e., Indonesia’s Medium-Term National Development Strategy, RPJMN 2025-2029; and the Philippine Development Plan). These exercises demonstrated the value of embedding foresight methodologies, such as the OECD’s Strategic Foresight Toolkit for Resilient Public Policy, into infrastructure governance, enabling policymakers to anticipate disruptive change and test the resilience of development pathways before major investments are committed. Foresight tools, not yet adopted by Central Asian countries, could serve to strengthen existing and future plans.
Credible national sustainability and climate commitments
Across Central and Southeast Asia, governments have strengthened their climate commitments, with many adopting carbon-neutrality targets and increasingly incorporating climate adaptation and resilience goals. Yet, significant gaps remain between these commitments and infrastructure policies, as project pipelines often prioritise fossil-fuel-based or emission-intensive assets and as climate resilience is not systematically integrated throughout the project lifecycle. Ensuring that NDCs and climate strategies are effectively translated and mainstreamed into investment plans, budget frameworks and sectoral policies will be critical for credibility and impact.
Across the six SIPA countries, progress on long-term low-emission development strategies (LT-LEDS) and the ambition of Nationally Determined Contributions (NDCs) reflects a mix of advances and gaps. Kazakhstan, Indonesia, and Thailand have already adopted LT-LEDS, each anchored in net-zero or carbon neutrality pledges by mid-century, while Uzbekistan is developing its own LT-LEDS following its 2050 neutrality announcement (Table 1.5). Mongolia has laid the groundwork through its draft Long-Term Vision 2050 but has yet to translate this into a comprehensive LT-LEDS, and the Philippines still lacks a formal long-term strategy despite strong planning and governance systems. On NDCs, all six countries have updated their commitments since 2020, with varying levels of ambition. Indonesia and Thailand stand out for relatively stronger conditional targets, while Kazakhstan’s latest update maintains more modest ambitions at 15-25% below 1990 levels. Uzbekistan has pledged a 35% reduction in emissions intensity by 2030 compared to 2010, a framing that makes absolute reductions less certain. Mongolia and the Philippines have ambitious conditional targets above 70% compared to BAU, but with limited unconditional components (22.7% for Mongolia and just 2.7% for the Philippines), underscoring the heavy reliance on international support.
Source: UNFCCC Long-term strategies portal, https://unfccc.int/process/the-paris-agreement/long-term-strategies; UNFCCC NDC Registry, https://unfccc.int/NDCREG.
The credibility of long-term decarbonisation plans is closely tied to the strength of coal phase-out commitments. Indonesia has committed to phasing out unabated coal by 2050, but the moratorium on new coal plants excludes projects in the national pipeline and “captive” plants for industry, which have expanded rapidly in recent years, creating a major loophole. The Philippines introduced a ban on new greenfield coal projects in 2020, yet approved plants continue to advance, limiting the impact of the policy. In Thailand, the latest draft Power Development Plan (2023-2037) no longer foresees new coal plants, a significant step forward, but lacks a clear roadmap for retiring existing capacity. In Kazakhstan, coal still provides nearly half of electricity and plants are on average over 60 years old, with limited retirement plans, raising risks of stranded assets and undermining the credibility of its carbon neutrality strategy. Mongolia remains highly dependent on coal for both power and heating as well as for export revenue, and while its Vision 2050 acknowledges climate challenges, it lacks concrete policies for phasing out coal, with state-owned enterprises continuing to invest heavily in coal extraction and related infrastructure. In Uzbekistan coal and gas remain central to its energy expansion plans, and no detailed strategy exists to phase out coal and greenfield projects still planned.
Carbon pricing instruments can help align price signals with transition plans, but their application remains uneven across the six SIPA economies. Kazakhstan operates a national Emissions Trading Scheme (ETS) launched in 2013, covering large power and industrial emitters. Uzbekistan has developed a legal basis for national carbon trading with the market’s launch planned for 2025 (Umarova, 2025[38]), while Mongolia approved the concept for a Domestic Carbon Market (MDCM) in 2022 and is designing the institutional framework (FAO and UNDP, 2025[39]). Among Southeast Asian peers, Indonesia launched a voluntary carbon trading mechanism in 2023, which was made mandatory for the power generation sector in 2023 (IEA, 2024[40]). Thailand runs the Thailand Voluntary Emission Reduction Programme (T-VER) voluntary carbon credit market and is preparing an ETS (Greenhouse Gas Mitigation Mechanism, 2016[41]), while the Philippines is still assessing options for carbon pricing., with a proposed bill on a carbon pricing framework nearing adoption (International Carbon Action Partnership, 2025[42]).
Strengthening adaptation and resilience commitments is equally vital to ensuring the credibility and balance of national climate agendas. As climate risks and impacts intensify across Central and Southeast Asia, robust adaptation frameworks and clear long-term objectives are needed to safeguard communities, infrastructure, and entire economies. Integrating concrete adaptation targets within development plans, national budgets, and sectoral strategies can help effectively integrate climate risk consideration and resilience criteria in infrastructure plans and investments. and nature-based solutions will be key to protecting development gains and sustaining long-term resilience.
Policy-level and asset-level sustainability evaluation tools integrating environmental and social considerations
Sustainability evaluation tools are increasingly applied across the two regions, but their systematic integration into infrastructure decision-making remains uneven. Many policies and projects still proceed without robust appraisal of environmental and social impacts, including strategic environmental assessments (SEAs) and environmental impact assessments (EIAs) or with limited enforcement of evaluation outcomes. Expanding the use of SEAs, EIAs and integrated cost-benefit analysis, green public procurement standards and asset-level sustainability and resilience criteria can help ensure that infrastructure projects deliver long-term value while safeguarding ecosystems and communities. Multidimensional assessment tools are essential for capturing the full costs and benefits of infrastructure projects, particularly those environmental and social dimensions that are often overlooked in traditional cost-benefit analysis.
Under SIPA, pilot case studies of infrastructure projects in all participating countries were carried out using the International Institute of Sustainable Development (IISD)’s Sustainable Asset Valuation (SAVi) tool. The studies demonstrated how integrating externalities, such as reduced emissions, poverty reduction benefits, avoided accident costs and ecosystem services, can shift projects that appear unviable under narrow financial metrics into positive net contributors to sustainable and resilient development. By combining system dynamics with project finance modelling, SAVi not only quantifies climate, environmental and social risks but also provides policymakers and investors with a lifecycle perspective that strengthens the case for sustainable infrastructure. SAVi assessments across SIPA countries monetised environmental, social and indirect economic costs and benefits that are rarely captured in traditional cost-benefit analysis, including avoided carbon emissions, improved transport system safety and impacts on poverty, economic inclusion and economic diversification: Combined benefits, summarised in a sustainable benefit-to-cost ratio (BCR), exceeded parallel analysis using a traditional BCR by a factor of up to 10, pointing to the scale of factors missed using standard cost-benefit analysis (Figure 1.6).
Note: BCR = benefit-to-cost ratio. Two case studies were undertaken in Indonesia, on two sets of rural roads.
Source: Author’s elaboration based on IISD case studies.
However, sustainability, climate resilience, gender and other social considerations can only be effectively reflected in infrastructure evaluation if national institutions build the capacity to apply, interpret and mainstream them into regular appraisal processes. Strengthening domestic expertise in integrated valuation therefore represents a critical step for Central and Southeast Asian countries to align investment choices with climate and development goals.
Mainstreaming resilience
Climate and disaster risks are already imposing substantial costs on infrastructure systems across the SIPA countries, and these pressures are set to intensify. In Indonesia, the Philippines and Thailand, rapid urbanisation, coastal development and growing infrastructure demand intersect with exposure to floods, sea-level rise, typhoons, storms, heat extremes and drought. Major economic centres and transport corridors are located in low-lying or flood-prone areas, as illustrated by the 2011 floods in Thailand and recurrent coastal and riverine flooding in Indonesia and the Philippines. Inadequate drainage, ageing networks and expanding informal settlements further heighten vulnerability. In Central Asia, countries face a different but related risk profile dominated by drought, water scarcity, extreme heat, floods and landslides, with knock-on impacts on roads, energy systems and agriculture. Across both regions, climate impacts are already undermining infrastructure performance, generating mounting maintenance backlogs and threatening long-term economic stability.
Mainstreaming resilience into infrastructure planning has emerged as a common challenge in both regions. In Indonesia, Mongolia and the Philippines, SIPA analysis shows that while governments recognise the growing risks posed by climate change, resilience remains only partially integrated into infrastructure project cycles. Risk assessments are often incomplete, cross-ministerial co-ordination is weak and nature-based solutions are underutilised, especially in rapidly urbanising or ecologically fragile areas. To address these gaps, countries are being encouraged to integrate climate resilience throughout all steps of the project lifecycle, from project planning to design, selection, construction and operation. This can be achieved, for example, by updating sectoral regulations to reflect growing climate risks, adopting resilience standards and certifications, embedding climate resilience criteria into project appraisal and approval processes and strengthen institutional capacity for risk-informed planning.
Clearer standards and operational guidance are required to define what constitutes climate-resilient infrastructure, applicable across sectors and institutions. This includes defining minimum requirements for risk screening, the use of climate scenarios, and the treatment of resilience in feasibility studies, environmental and social assessments and project approval processes. Such standards can help reduce fragmentation, provide greater certainty for project proponents and financiers, and create a basis for monitoring progress. In parallel, climate risk and hazard data need to be made more forward-looking, spatially explicit and accessible, with stronger links to infrastructure databases and spatial planning systems so that risk information is routinely used for siting, design and prioritisation decisions.
Financing, procurement and PPP frameworks need to be aligned with resilience objectives. This involves integrating climate risk criteria and lifecycle resilience considerations into tender documents, concession agreements and public investment management procedures. Experiences from Thailand and the Philippines illustrate that conventional cost–benefit analysis can underestimate the value of adaptation if indirect and avoided-disruption benefits are not fully accounted for; revising appraisal methodologies to capture these benefits can significantly strengthen the economic case for climate-proofing. Climate expenditure tagging, more systematic use of resilience-related eligibility criteria in budget and PPP pipelines, and targeted support for subnational governments to access climate funds and blended finance can further help shift investment towards adaptation.
Nature-based solutions (NbS) and broader land-use management are key to supporting resilient infrastructure. SIPA work in Indonesia and the Philippines demonstrates that strategically conserving and restoring ecosystems such as mangroves, forests and wetlands can materially reduce exposure of people and road networks to flood and erosion risks, often at lower cost than purely grey alternatives and with significant co-benefits (Box 1.2). Yet uptake is constrained by regulatory gaps, inconsistent definitions, limited technical capacity and competing spatial planning objectives. Mainstreaming NbS requires incorporating ecosystem services into infrastructure planning criteria, expanding or complementing protected and conserved area networks to cover high-priority “natural infrastructure” zones, and updating planning and risk tools to systematically map and integrate these areas into project identification and routing decisions. It is also recommended to further develop standards and guidelines for green infrastructure design that integrate NbS, particularly at the local level, to enhance climate resilience while reducing long-term costs.
WWF’s collaboration with Indonesia and the Philippines under SIPA has demonstrated how ecosystem-service modelling can reveal where nature-based solutions (NbS) offer the greatest resilience gains for people and infrastructure. National analyses identified robust, climate-resilient hotspots for flood mitigation, sediment retention, coastal protection and water recharge, pinpointing locations where conservation or restoration can reduce long-term infrastructure risks and costs. Sub-national studies in Sumatra’s RIMBA corridor and Mindanao’s Caraga region translated these findings into actionable priorities for regional planners.
The work also generated several practical lessons:
Accessible tools matter: An interactive mapping platform (sipanbsmapper.org) and step-wise university-developed modules have enabled national agencies to replicate and update analyses as conditions change.
Institutional uptake requires clear pathways for data integration: Emerging data-sharing arrangements with NAMRIA in the Philippines and with Bappenas in Indonesia are helping embed NbS evidence into mainstream infrastructure planning.
Capacity and co-ordination remain critical bottlenecks, particularly in Indonesia, where varying levels of understanding across government tiers highlight the need for sustained support to ensure NbS are systematically considered in investment decisions.
Source: (WWF, 2025[43]).
Finally, strengthening institutional capacity and co-ordination is essential to move from ad hoc projects to systemic integration of resilience. The country cases highlight the need for clearer roles across central planning bodies, infrastructure ministries, environment and climate agencies, and disaster management authorities, alongside practical mechanisms – such as joint guidelines, shared data platforms and co-ordinated review processes – to align their actions. Capacity-building for practitioners at national and subnational levels remains a cross-cutting requirement, including training on climate risk assessment, the use of NbS, and the application of revised appraisal and financing tools. For Central Asian countries such as Kazakhstan, Uzbekistan and Mongolia, which are in the process of designing or operationalising National Adaptation Plans, there is an opportunity to draw on these emerging lessons from Southeast Asia to embed resilience more systematically in infrastructure planning from the outset.
Mainstreaming gender
Strengthening long-term strategies also requires integrating social dimensions, particularly gender, into planning and implementation. Doing so ensures climate policies reflect diverse needs, enhance equity and unlock broader social and economic benefits that strengthen the effectiveness of climate action, and countries are increasingly reflecting gender in UNFCCC submissions. A September 2023 UNFCCC stocktake showed that while half of LT-LEDS referred to gender, only a quarter treated it as a cross-sectoral issue or applied tools such as gender analysis in planning (UNFCCC, 2023[44]). Among SIPA countries, gender is only referred to in Indonesia’s LT-LEDS, which frames it as a cross-sectoral issue and identifies existing Indonesian gender mainstreaming indices and budgeting tools to be used in implementation (Government of Indonesia, 2021[45]). By contrast, NDCs have seen stronger progress in incorporating gender considerations: A November 2024 UNFCCC stocktake revealed that 82% of Parties including gender-related information and nearly half committing to take gender into account in implementation. Many countries are strengthening earlier commitments: 32% included gender in their updated NDCs for the first time, while another 28 % elaborated further on previous references (UNFCCC, 2024[46]). Among SIPA countries, only Mongolia’s NDC lacks any reference to gender or gender-sensitive implementation, while in others only refer to gender in the context of adaptation (Kazakhstan and Uzbekistan) or as general principles (Philippines and Thailand). Indonesia’s NDC is unique among SIPA countries in that it approaches gender as a cross-cutting issue with interlinkages to most parts of the NDC. Recent guidance documents provide concrete approaches to mainstreaming gender considerations in LT-LEDS and NDCs (Box 1.3).
The UNFCCC Technical Guide on Integrating Gender into NDCs and LT-LEDS and the Climate and Development Knowledge Network’s Advancing Gender Equality and Climate Action highlight that embedding gender equality in climate strategies not only addresses fairness, but also strengthens policy effectiveness, ambition and legitimacy.
Both guides stress the importance of early integration of gender in planning processes. This includes undertaking gender analysis to identify differentiated vulnerabilities and capacities, applying sex-disaggregated data, and ensuring women’s voices are part of participatory planning. The CDKN guide emphasises linking gender equality objectives with climate goals, such as by aligning climate actions with national gender policies or SDG targets.
The UNFCCC guide sets out a step-by-step approach to gender mainstreaming in NDCs and LT-LEDS: from governance arrangements and institutional co-ordination, through to sectoral entry points in energy, agriculture, transport, and forestry. It also underscores the need for capacity-building of government officials, the designation of gender focal points, and the use of gender-responsive budgeting and monitoring frameworks.
Both sources point to examples of good practice, including inclusive consultations, gender-responsive sectoral policies, and mechanisms to track gender outcomes alongside climate impacts. They stress that success requires not only technical tools, but also political commitment and sustained institutional support.
Integrating gender into infrastructure project evaluation is emerging as a priority across SIPA countries. Indonesia, the Philippines and Thailand already have robust legal frameworks that acknowledge gender equality, yet their translation into infrastructure planning remains fragmented, with inconsistent application of gender-responsive targets, impact assessments and monitoring systems. Kazakhstan, Mongolia and Uzbekistan have all made strides in recognising gender equality, but integration into infrastructure policy and evaluation remains limited. In Kazakhstan, legal frameworks are strong, yet gender is rarely embedded in project cycles beyond donor-driven initiatives. Mongolia’s Vision 2050 acknowledges gender objectives, but women remain underrepresented in decision-making and gender-sensitive evaluation tools are inconsistently applied. Uzbekistan’s infrastructure strategies remain largely gender-neutral, with gaps in sex-disaggregated data, accountability and systematic gender impact assessments.
1.4.2. Framework conditions for attracting investments into sustainable energy, transport and industrial infrastructure
In Central and Southeast Asia, entrenched fossil-fuel dependence in high-impact sectors, limited awareness of climate risks, policy inconsistencies and limited liberalisation of key markets constrain the scale of private sector engagement in emissions-reduction and resilience-building efforts. Addressing these gaps through regulatory reforms, clearer price signals and sector-specific roadmaps will be essential to unlock investment flows and accelerate the transition. Attracting investment into sustainable infrastructure requires supportive framework conditions that align sectoral policies, regulatory environments and financing incentives with low-carbon and climate-resilient development goals.
Framework conditions for sustainable energy infrastructure development
The energy sector is the largest source of emissions in both regions and central to achieving decarbonisation. While accelerated renewable energy integration, power sector reforms and grid modernisation initiatives are emerging, investment flows continue to favour fossil-fuel generation in many cases. Regulatory frameworks remain fragmented, with tariff structures, fossil fuel subsidies and permitting processes often deterring private investment in clean energy. Strengthening renewable energy targets, modernising grids and phasing out fossil-fuel subsidies are critical steps to mobilise capital into sustainable energy infrastructure.
OECD reviews under the Clean Energy Finance and Investment Mobilisation (CEFIM) programme of Indonesia, the Philippines (under SIPA) and Thailand highlight that clear renewable energy targets, transparent power purchase agreements, and predictable tariff structures can improve bankability, while phasing out fossil fuel subsidies and easing restrictions on market participation create a level playing field. Complementary measures such as credit guarantees, securitisation tools, and targeted support for emerging sectors like offshore wind and energy efficiency further expand opportunities for private capital, enabling governments to shift investment flows from fossil fuels towards cleaner, more resilient energy systems.
UNDP Indonesia’s contribution under SIPA has been instrumental in advancing Indonesia’s clean energy transition through the integration of waste-to-energy approaches, particularly via the Refuse-Derived Fuel (RDF) Roadmap 2025–2045. Developed in collaboration with Bappenas and line ministries, this roadmap provides a strategic policy and investment framework to link sustainable waste management with national energy diversification and low-carbon development goals. According to the RDF Roadmap, Indonesia currently generates around 68-70 million tons of waste per year, with only about 48% managed and approximately 41% still sent to final disposal sites. The study projects that RDF utilisation, if scaled up, can help reduce significant waste volume while contributing to emission reductions of approximately 1.9 million tons of CO2 equivalent. The roadmap anticipates that Indonesia could have up to 77 RDF facilities across 143 regencies/cities by 2045, reinforcing its alignment with the national energy transition, NDC and circular economy targets. This initiative exemplifies how SIPA’s analytical work is being translated into tangible investment and policy planning, strengthening Indonesia’s position as a regional leader in low-carbon waste-to-energy strategies (UNDP, 2025[49]).
Across Central Asia, governments are beginning to adapt their policy and regulatory frameworks to attract investment in sustainable energy. Renewable energy auctions in Kazakhstan have attracted growing private participation, though long-term stability of tariff regimes and grid modernisation remain pressing challenges. Uzbekistan has moved rapidly in recent years, launching competitive tenders for solar and wind projects with international partners, while also working to align its electricity market reform with private investment needs; however, institutional capacity and clarity on long‑term targets remain limited. In Mongolia, abundant renewable resources, particularly wind and solar, present major opportunities. However, Mongolia’s vast geography and the existence of four separate, unconnected electrical grid systems pose a major constraint, limiting the integration and efficient distribution of renewable energy across the country. Policy frameworks continue to prioritise coal in power generation, and the intermittency of renewables highlights the urgent need for grid upgrades and flexible regulatory mechanisms.
Fossil fuel subsidies remain a major barrier to clean energy, especially in Central Asia (Figure 1.7). In addition to their fiscal cost and dampening effect on clean energy investments, fossil fuel subsidies in isolation are widely considered socially regressive, as they tend to benefit higher-income energy consumers more than lower-income groups. Globally, the fiscal cost of fossil fuel subsidies amounted to USD 1 102.1 billion in 2023, out of which USD 514.1 billion consisted in direct transfers and tax expenditures (OECD, 2024[50]). The same report finds that, while support for household consumption accounts for most of these fiscal costs, 85% of fossil fuels sold below market prices remain largely untargeted, raising concerns relating to energy efficiency, environment and social equity. The OECD highlights that poorly designed reforms to such subsidies can further harm low-income households, but that this can be mitigated if governments recycle the savings into well-targeted cash transfers or programmes supporting energy efficiency and clean technologies for vulnerable groups. Phasing reforms in gradually and engaging affected communities are also essential to ensure that these complementary measures are in place before energy prices rise (OECD, 2025[51]). Box 1.4 expands on this point.
Fossil-fuel subsidies continue to distort markets and slow the transition towards clean energy. In Kazakhstan, regulated low tariffs and state support for fossil fuel producers depress incentives for efficiency and renewables, while in Uzbekistan, heavily subsidised natural gas and electricity continue to drive high consumption despite ongoing tariff reforms. Mongolia sustains coal subsidies and below-cost electricity pricing, which lock in coal dependence and crowd out cleaner alternatives. Indonesia’s case underlines the scale of the challenge: between 2016 and 2020, over 94% of energy support went to fossil fuels, with state support to PLN and regulated coal prices maintaining a subsidy-heavy power mix where coal accounts for around 60% of generation. Despite ambitious targets under the Just Energy Transition Partnership (JETP), fossil fuel support far outweighs renewable incentives, making subsidy reform and reallocation, through measures such as subsidy swaps, essential to redirect public and private finance towards clean energy.
Fossil fuel subsidies by subsidy target as a percentage of GDP
Note: All data from 2023 except for the Philippines (2022).
Source: (IISD and OECD, 2023[52]), Fossil Fuel Subsidy Tracker, https://fossilfuelsubsidytracker.org/.
Although they are widely considered as a priority for aligning investment and financial flows with climate and broader sustainability goals, the implementation of fossil fuel subsidy reforms remains socially sensitive. Critically, any reform initiative in this domain must be grounded in a thorough understanding of the country’s fiscal, energy, and social context. Elgouacem (2020[53]), proposes a sequential, analytical approach in support of a well-informed reform process. This approach highlights the use of analytical tools to identify fossil fuel support measures (e.g. through an inventory), assess their fiscal implications, and evaluate their broader economic, social, and environmental impacts. It also addresses the potential adverse effects of reform and identifies mitigation measures.
The approach is structured around four steps:
Identifying support measures, documenting their objectives and estimating their budgetary cost;
Measuring the effects of support measures for fossil fuels and prioritising them for reform;
Identifying and quantifying adverse effects that might hinder reform; and
Finding alternatives to subsidised activities.
Several analytical tools and indicators can be used to enable this process. Under the inventory phase, the effective tax rate analysis can be particularly useful for countries providing most of their fossil fuel support in tax expenditure. Indicators such as the Effective Marginal Tax Rate (EMTR) and the Effective Average Tax Rates (EATR) in energy sectors can inform on the distortions caused by tax expenditure measures on capital investments. The ranking of support measures according to the level of their distortion effect helps identify priorities, while a combination of economic modelling and empirical approaches can support the last two steps of the proposed approach.
Source: (Elgouacem, 2020[53]).
Framework conditions for sustainable transport infrastructure development
Transport infrastructure is expanding rapidly across both regions, but road-dominated investment pipelines risk locking in high emissions and congestion. Despite growing attention to urban transit, rail electrification and logistics efficiency, road projects still absorb the majority of investment. Weak policy coherence, fragmented planning, and insufficient support for modal shifts constrain the scaling of low-carbon alternatives. Establishing developing transport decarbonisation pathways aligned with LT-LEDS and NDCs, integrating climate mitigation objectives into transport master plans and prioritising public and rail transport investment will be crucial to reduce sectoral emissions while enhancing connectivity. In parallel, integrating climate resilience into transport planning through risk-informed planning, design, maintenance and asset management will help ensure that infrastructure remains reliable under a changing climate. Countries can draw on international guidance, including subsector-specific templates for integrating transport into NDC development (ITF, 2024[54]).
Central Asia faces a rapidly growing freight demand, projected to increase by over 150% by 2050, which presents both infrastructure development challenges and risks of emission lock-in if developed unsustainably. The region can avoid locking in high emissions and vulnerability to climate hazards by adopting a multi-dimensional strategy that combines improvements in connectivity with targeted decarbonisation and resilience measures. Alongside expanding rail links along high-volume corridors, modernising dry ports, investing in multimodal logistics nodes and harmonising border and customs procedures, countries should also promote modal shift to lower-emission transport, improve energy efficiency and rail electrification, optimise cargo flows through digital logistics tools, and strengthen climate risk management and infrastructure resilience planning. This broader approach reflects the report’s emphasis on the three interlinked pillars of connectivity, sustainability and resilience needed to transform freight systems in Central Asia. “Soft” policy measures (e.g. trade facilitation, regulatory harmonisation, digital logistics tools) are just as important as hard infrastructure for improving connectivity and resilience while mitigating carbon emissions from freight transport. Modelling shows that by combining infrastructure investment with such policies, Central Asia could reduce freight emissions by nearly 60% by 2050 even as freight activity increases (Figure 1.8) (ITF, 2025[55]).
Well-to-wheel GHG emissions in trillion tonnes of CO2e across three scenarios: business as usual (top left; overall growth +29%), connectivity (top right; overall growth -18%), connectivity and decarbonisation (bottom; overall growth -59%)
Source: (ITF, 2025[55]).
In addition, road freight records only limited gains under scenarios focused solely on connectivity but improves more markedly under a combined connectivity and decarbonisation scenario. In this case, the deployment of clean vehicles, digital traffic management systems, and automated border procedures contributes to reductions in both travel time and operating costs, underscoring the reinforcing effects of decarbonisation and digital measures on connectivity outcomes. Under the combined scenario, Kazakhstan and Turkmenistan continue to improve, reaching 35% and 38% respectively, supported by the development of multimodal terminals, port upgrades and stronger integration between border crossings and hinterland networks. By contrast, Kyrgyzstan, Uzbekistan, and Tajikistan perform less strongly than under the connectivity-only scenario. This suggests that a shift towards more optimised single-mode corridors, such as electrified rail, may enhance efficiency and emissions performance, but at the cost of reduced system adaptability. Overall, this points to a potential trade-off between decarbonisation and resilience, unless intermodality is maintained where it is most critical (ITF, 2025[55]).
In Southeast Asia, regional transport integration is relatively advanced thanks to ASEAN initiatives. Given the region’s geography, maritime transport dominates in eastern, predominantly archipelagic countries, while mainland countries depend on road infrastructure. To meet future demands for freight, emissions would increase by 69% under business-as-usual conditions, whereas combined action to improve connectivity and develop low-carbon modes of transport could satisfy demand without dramatic increases in emissions (Figure 1.9). To achieve decarbonisation and resilience objectives, infrastructure investment must be paired with regulations and incentives to promote fuel efficiency, support electrification of freight vehicles, enable modal shifts towards rail, maritime and inland water transport, and improve climate risk management in transport planning. For example, by improving trade facilitation, adopting emissions-based freight regulations, and investing in alternative freight routes and multimodal hubs, countries like Indonesia, Thailand and the Philippines can reduce transport costs (potentially by up to 20%) while lowering carbon emissions. Additionally, resilience measures such as climate-proof design standards, redundancy in key transport corridors, adaptive maintenance systems and co-ordinated emergency response protocols are needed to guard supply chains against extreme weather events and other systemic disruptions (e.g. extreme weather, geopolitical tensions, trade shocks) (ITF, 2025[55]).
Well-to-wheel GHG emissions in trillion tonnes of CO2e across three scenarios: business as usual (top left; overall growth +69%), connectivity (top right; overall growth +49%), connectivity and decarbonisation (bottom; overall growth 0%)
Source: (ITF, 2025[55]).
Clean urban transport is equally critical to sustainable infrastructure transitions, as rapidly growing cities risk locking in congestion, air pollution and high emissions if public and shared mobility systems do not keep pace with demand. Under SIPA, ITF developed practical decarbonisation pathways were developed for Ulaanbaatar (Mongolia) and Tashkent (Uzbekistan), combining demand modelling, policy scenarios and investment roadmaps to identify cost-effective strategies such as expanding bus rapid transit and rail networks, improving service integration, accelerating vehicle electrification and strengthening governance for metropolitan mobility planning. In Ulaanbaatar, the analysis helped prioritise cleaner bus fleets and integrated transit corridors to address severe winter air pollution while improving accessibility; in Tashkent, it supported the design of multimodal public transport expansion and parking and traffic management reforms to curb car dependence.
Framework conditions for sustainable industrial infrastructure development
Pilot applications of the OECD Framework for Industry’s Net-Zero Transition in Indonesia and Thailand, highlight the scale of investment needed to decarbonise hard-to-abate sectors such as cement, steel and petrochemicals, alongside the critical role of enabling conditions (Box 1.5). In Indonesia, efforts are focusing on developing sectoral roadmaps, strengthening sustainable finance taxonomies and piloting risk-sharing tools such as energy-savings insurance, while in Thailand, attention has turned to scaling industrial energy efficiency, improving permitting for small producers, and mobilising green finance for renewables and efficient cooling. Across both cases, the lessons converge: Robust regulatory frameworks, effective MRV systems and tailored financing mechanisms are indispensable to mobilise capital at scale.
The manufacturing industry is responsible for around 40% of global CO2 emissions, making its decarbonisation indispensable to achieving net-zero targets. Emerging and developing economies, where most new industrial capacity will be built, face particular challenges given the high costs and early-stage maturity of many low-carbon technologies.
The OECD Framework for industry’s net-zero transition provides a step-by-step approach to help countries design enabling conditions and financing solutions for industrial decarbonisation. It is structured around five stages: (1) engaging stakeholders and defining a focus area (e.g. a sub-sector or technology), (2) assessing the current policy, technology and financing landscape, (3) identifying business cases and pipelines of low-carbon projects, (4) developing market and financing solutions to close transition gaps, and (5) disseminating outcomes to inform wider policy dialogue. Flexibility is central, allowing the Framework to be adapted to national contexts and priorities while generating actionable, country-specific solutions.
Implementation of the Framework helps governments, industry and financial institutions to co-ordinate their efforts, reduce investment risks and crowd in private finance. By strengthening enabling environments and aligning financing instruments with net-zero pathways, the Framework not only accelerates low-carbon technology deployment but also informs broader climate and finance policies, supports international co-operation and promotes just transition outcomes.
Source: (OECD, 2022[56]).
Kazakhstan, Mongolia and Uzbekistan each face steep challenges in decarbonising their emissions-intensive industries but are beginning to chart distinct low-carbon pathways. In Mongolia, abundant solar and wind potential has spurred pilot hydrogen projects under the New Recovery Policy, but progress hinges on offtake agreements, regulatory certainty, resolving water use constraints and stronger innovation and financing frameworks. Uzbekistan is similarly exploring green hydrogen to decarbonise fertilisers, chemicals and metallurgy, supported by pilot projects and international partners, yet faces hurdles from its heavy reliance on natural gas, lack of carbon pricing, and acute water stress; public-private partnerships and long-term purchase agreements are being tested to attract investment. Kazakhstan, meanwhile, is exposed to trade risks from carbon-intensive exports under mechanisms such as the EU CBAM and is developing an Industrial Decarbonisation Roadmap to align its Carbon Neutrality Strategy and NDCs, reinforce carbon pricing and demand-side incentives, and build firm-level capacity for low-carbon competitiveness.
1.4.3. Policies for mobilising private finance into sustainable infrastructure development
Public finance alone will not be sufficient to meet infrastructure investment needs. Mobilising private capital requires credible frameworks that align financial markets with sustainability objectives, mitigate risks for investors and ensure environmental and social safeguards. While progress has been made in introducing green taxonomies, issuing green bonds and piloting blended finance instruments, uptake remains limited by shallow capital markets, inconsistent regulation and gaps in investor confidence. Scaling private sector participation will depend on strengthening financial infrastructure, enhancing transparency, and mainstreaming sustainability criteria across investment policies.
The lack of capacity remains a critical barrier for emerging markets and developing economies (EMDEs) in advancing sustainable investment. Many initiatives have been launched to strengthen capacity in these regions, including the Capacity-building Alliance of Sustainable Investment (CASI), which SIPA has supported. Launched at COP28 in response to G20 Technical Assistance Action Plan (TAAP), CASI focuses on the EMDEs and aims to improve the capacity across various stakeholders alongside the whole ecosystem of sustainable investment (Box 1.6).
CASiI is helping emerging Asian economies overcome one of the biggest barriers to scaling green finance: limited institutional and market capacity. Through targeted engagements across Southeast and East Asia, CASI has supported regulators, financial institutions and market actors in applying new sustainability frameworks, improving disclosure practices, and strengthening readiness for green and transition finance.
Recent activities in Thailand, Malaysia and Hong Kong, China highlight three core contributions:
First, CASI has helped translate rapidly evolving policy frameworks – such as Thailand’s expanded Sustainable Finance Taxonomy and Malaysia’s updated Transition Finance Framework – into practical guidance that improves market understanding and supports early implementation.
Second, its forums have strengthened institutional capability by clarifying emerging requirements on transition planning, climate-related disclosure, physical risk assessment and the use of innovative sustainable finance instruments.
Third, CASI has enhanced regional connectivity, promoting cross-border learning, more coherent approaches to taxonomies and disclosures, and better feedback channels between policymakers and market practitioners.
Across the region, these efforts are helping to close the “bankability gap” for sustainable projects, improve data accessibility, and empower financial institutions to mobilise capital toward low-carbon, resilient investment. CASI’s experience underscores a broader lesson for emerging markets: sustained, context-specific capacity building is essential for translating high-level ambitions into effective sustainable finance action.
Green taxonomies
All SIPA countries have adopted green or sustainable finance taxonomies to classify economic activities. These taxonomies provide a foundation for aligning investment with climate and sustainable development goals, but the disclosure and reporting of portfolio alignment with the taxonomies are voluntary in most jurisdictions and situations, with the notable exception of the Philippines for extending green credit and Uzbekistan for state-backed investments (Table 1.6). While categories vary from taxonomy to taxonomy, most offer broad coverage of high-impact sectors, including energy, transport and industry. The explicit integration of climate adaptation and resilience criteria in these taxonomies remains limited, reducing their effectiveness in steering finance toward climate-resilient infrastructure systems.
Among SIPA countries, Central Asian countries have adopted binary taxonomies, while Southeast Asian countries have preferred non-binary models. Binary taxonomies classify activities simply as either green (environmentally sustainable) or not green; they are designed primarily to channel capital exclusively into low- or zero-emission solutions. Non-binary taxonomies, in contrast, introduce additional intermediate categories to capture activities that are not yet fully sustainable but are on a pathway toward alignment. This allows for a more gradual transition of capital flows, especially in carbon-intensive economies where the immediate leap to zero-emission technologies is not feasible. Embedding resilience-oriented categories similarly allows for more granularity, helping direct private capital toward projects that strengthen economic and infrastructural resilience alongside decarbonisation.
Several SIPA countries classify certain fossil fuel projects as “transition” activities in their taxonomies, blurring the boundary between high-carbon and sustainable investments. The taxonomies of Indonesia, Kazakhstan and Thailand classify certain natural gas-fired electricity generation projects as a transition (“amber”) activity, qualifying them for transition-labelled or taxonomy-aligned domestic financing. While Mongolia’s taxonomy does not have an explicit transition category, it classifies projects that substitute coal with natural gas and other fuels with lower emissions as “low-pollution energy”, one of its green categories. Indonesia’s taxonomy even allows some new captive coal-fired power plants (i.e., power plants built by industries to power their own operations rather than feeding into the public grid) to be labelled as transitional if they commit to emission reductions and eventual shutdown. This loophole has given at least one captive coal plant access to indirect finance via the World Bank Group, raising concern about weakening climate ambition and greenwashing risks (Recourse, Trend Asia and International Development International, 2024[57]). Including fossil fuel activities in transition categories carries significant risks: it can lock in high-carbon infrastructure, divert capital away from genuinely low‑carbon technologies and expose financiers to reputational, regulatory, and stranded-asset risks if these projects fail to decarbonise on schedule.
Source: Author’s elaboration.
Explicit gender considerations remain limited in SIPA country taxonomies. Indonesia, Kazakhstan, the Philippines and Thailand do not embed gender criteria or safeguards in their published taxonomies. Uzbekistan’s taxonomy acknowledges social equity and justice under its environmental and green economy frameworks but does not currently include gender equality as an explicit objective or include strong gender-differentiated outcome indicators. Mongolia is an exception: its SDG Finance Taxonomy incorporates gender-related key performance indicators, providing a nascent mechanism to track gender impacts. Across the board, however, green are largely gender-blind, presenting a missed opportunity for aligning sustainable finance tools with inclusive development goals.
Efforts to harmonise definitions and taxonomies have emerged in both regions. In Southeast Asia, the ASEAN Taxonomy has been developed as a regional reference point to promote consistency among member states’ national taxonomies while ensuring interoperability with global frameworks (Box 1.7). In Central Asia, which lacks an institutionalised regional co-operation organisation comparable to ASEAN, harmonisation efforts are being driven at the national level. Domestic institutions, including the Astana International Finance Centre (AIFC) and the Mongolian Sustainable Finance Association (MSFA), have provided technical guidance for the development of Kazakhstan’s and Mongolia’s taxonomies development, while international development partners, including the Institute of Finance and Sustainability (formerly the Tsinghua University Centre for Finance and Development), the International Finance Corporation (IFC) and the World Bank have provided support to Mongolia and Uzbekistan. These institutions have encouraged alignment with the EU Taxonomy for Sustainable Developments (e.g. World Bank Guidance Note for Uzbekistan; IFC’s support documents for Mongolia) and the ASEAN Taxonomy for Sustainable Finance (e.g. AIFC support for Kazakhstan). Interoperability of taxonomies and their harmonisation with emerging international standards are critical to prevent undermining global climate objectives and eroding trust in sustainable finance markets. Aligning national frameworks with internationally recognised principles and science-based thresholds helps ensure that taxonomy-labelled investments genuinely contribute to decarbonisation and resilience outcomes, while enabling investors to compare opportunities across jurisdictions on a like-for-like basis. This is especially important for attracting cross-border capital, as institutional investors often rely on consistent classification systems to manage risk and assess portfolio alignment with climate goals. Divergent definitions of what qualifies as “green” or “transition” create uncertainty for investors and can erode trust in sustainable finance markets (OECD, 2020[58]).
The ASEAN Taxonomy for Sustainable Finance serves as a region-wide reference framework to guide sustainable finance flows across the ten ASEAN member states. It is developed and maintained by the ASEAN Taxonomy Board (ATB), which brings together representatives from ASEAN finance ministries and central banks as well as capital market and insurance regulators, with technical support from multilateral partners such as ADB and the World Bank. Its objective is to provide a common classification system for environmentally sustainable economic activities, while allowing member states flexibility to reflect their national contexts and transition pathways.
The taxonomy is structured in two interlinked parts. The Foundation Framework sets out guiding principles, environmental objectives, and cross-cutting requirements such as Do No Significant Harm (DNSH) and Minimum Social Safeguards (MSS), which apply to all sectors. Among its environmental objectives, the framework explicitly recognises adaptation to climate change and resilience-building as core priorities alongside mitigation, ensuring that finance supports both emission reductions and enhanced adaptive capacity. The Plus Standard adds detailed, sector-specific technical screening criteria (TSC) to determine the environmental performance of activities. Activities assessed under the Plus Standard are assigned to one of five tiers under a traffic-light system: Tier 1–2 (green), Tier 3–4 (amber/transition), and Tier 5 (red), based on their alignment with a 1.5°C pathway and the credibility of their decarbonisation plans.
ASEAN member states are using the taxonomy as a regional anchor for developing or refining their own national taxonomies. It is intended to ensure interoperability between national frameworks and international markets, reduce fragmentation across jurisdictions and enhance the credibility of sustainable finance labels in the region. The taxonomies of Indonesia, the Philippines and Thailand follow the logic and, in many cases, definitions of the ASEAN Taxonomy, and each version of the ASEAN taxonomy builds on advances made at the national level.
Beyond national and regional efforts, several international harmonisation initiatives aim to improve interoperability between taxonomies and reduce market fragmentation. A key example is the Common Ground Taxonomy (CGT), jointly developed by the International Platform on Sustainable Finance (IPSF) and the People’s Bank of China, which maps areas of technical alignment between the EU and China taxonomies and serves as a reference for other jurisdictions designing their own frameworks. The G20 Sustainable Finance Working Group has also issued High-Level Principles for Developing Taxonomies, encouraging jurisdictions to embed science-based thresholds, Do No Significant Harm criteria and social safeguards in ways that are comparable across borders. In addition, multilateral development banks and standard-setters such as the International Financial Reporting Standards (IFRS) Foundation and the Network for Greening the Financial System (NGFS) are promoting greater coherence between taxonomies and disclosure frameworks, with the aim of enabling cross-border capital flows and lowering transaction costs for sustainable investment.
Sustainable and green finance instruments
Since green bonds are particularly well-suited to financing and refinancing sustainable infrastructure. green bond issuance is accelerating across emerging markets, with emerging-economy issuers now accounting for a growing share of global supply. Emerging-market green bond issuance reached USD 125 billion in 2024, representing 23% of total global issuance – more than double their 10% share in 2018 (Figure 1.10). While developed markets still dominate volumes, growth in emerging Asia has been especially strong: issuance from emerging Asia (excluding China) grew by 37% in 2024, outpacing the global market’s 8% expansion (IFC and Amundi, 2025[61]). Green bonds match large, long-dated capital needs with use-of-proceeds transparency that investors can use in due diligence screening. While hardly a panacea, green bonds’ ring-fenced proceeds, external reviews and post-issuance reporting help sovereigns and corporate issuers lower information asymmetries, broaden the investor base and refinance pipelines of eligible assets more efficiently than ad-hoc project finance (OECD, 2023[62]).
Annual issuances 2020-2024, in billion USD (left) and cumulative issuance from 2012-2024 in billion USD (right)
Source: (IFC and Amundi, 2025[61]).
Within Asia, Southeast Asian economies are at the forefront of this trend. ASEAN countries collectively issued USD 15 billion in green bonds in 2024, up from USD 11 billion in 2023, driven mainly by financial institutions and energy-related corporates tapping international and local-currency markets. Looking beyond strictly green bonds to a wider variety of financial instruments, ASEAN’s green finance landscape has expanded rapidly: it has achieved a cumulative issuance of green, social, sustainability and sustainability-linked (GSSS) bonds and loans surpassing USD 90 billion by 2023. While Singapore and Malaysia remain the most active markets, several other member states are increasingly tapping sustainable finance instruments, supported by national taxonomies and ASEAN-wide initiatives. Notably, sovereign issuances, such as those by Indonesia, the Philippines and Thailand, have helped establish benchmarks and catalyse private participation. This diversification of instruments and issuers signals a maturing regional market that is beginning to channel capital more systematically towards low-carbon infrastructure and sustainable sectoral development (Centre for Strategic and International Studies (CSIS) Indonesia, 2025[63]). In contrast, Central Asian markets remain at a much earlier stage, with only a handful of sovereign and financial-sector green bonds issued to date (notably by Uzbekistan) and limited corporate participation. This reflects shallower domestic capital markets and a continuing reliance on multilateral development finance to catalyse transactions (IFC and Amundi, 2025[61]). In these countries, resilience-oriented financing remains particularly limited, underscoring the need for clearer adaptation criteria and project pipelines that better address climate risks to infrastructure.
All SIPA countries have also begun to include gender objectives into their bond issuances, either as stand-alone gender bonds or as part of wider sustainability bonds. Indonesia’s Orange Bonds and Sukuk Frameworks reflect emerging efforts to incorporate gender considerations, while Thailand’s Sustainable Bond Guide and recent gender-inclusive issuances demonstrate similar progress. The Philippines and Mongolia have each launched gender bonds targeting women entrepreneurs, and Uzbekistan’s SDG bond reports show proceeds supporting women’s employment, health and housing. Kazakhstan has also pioneered gender bonds through both ADB and local issuers, with detailed tracking of women beneficiaries.
The development of clear national taxonomies and green bond guidelines has helped support the emergence of green bonds. To continue building on the momentum, the alignment of planning and evaluation processes with climate and development goals could help build project pipelines of bankable sustainable infrastructure projects, while regulatory reforms and efforts to deepen capital markets could help stimulate further issuances by a wider variety of actors. Strengthening disclosure and post-issuance reporting, alongside using credit enhancement and blended finance tools to de-risk early transactions, can also help crowd in investors and reduce the cost of capital, making green bonds a more viable and scalable channel for funding sustainable infrastructure in these markets.
Responsible business conduct framework
Responsible Business Conduct (RBC) is a critical enabler of sustainable infrastructure development. Infrastructure projects shape economic growth, social well-being and environmental outcomes for decades, making the integration of RBC essential to ensure that investments deliver long-term benefits while minimising risks. By embedding principles of transparency, accountability, respect for human rights and environmental stewardship, RBC helps governments and businesses avoid costly disputes, delays, and reputational damage, while building trust with local communities and investors.
In Central and Southeast Asian countries, strengthening RBC practices is particularly important given the scale of upcoming infrastructure investment needs and the potential social and environmental impacts of such projects. In Kazakhstan, Mongolia and Uzbekistan, progress has been made in developing legal frameworks for environmental assessments, land rights, and public participation, but implementation gaps persist. Institutions responsible for monitoring and enforcement often face limited capacity and mechanisms for stakeholder engagement and grievance redress remain underdeveloped. This results in inconsistent application of RBC principles across regions and projects, and in some cases, communities are left without adequate recourse when affected by infrastructure developments. Strengthening institutional capacity, ensuring that procurement processes embed RBC requirements, and improving transparency and accountability in project oversight will be key to realising the benefits of sustainable infrastructure in these countries (OECD, 2025[64]). In Southeast Asia, similar challenges are evident, albeit in different institutional contexts. Indonesia has comprehensive legislation on environmental and social safeguards, yet enforcement remains uneven, with issues such as overlapping permits, land tenure disputes and corruption hampering effective implementation (OECD, 2024[65]). Thailand has established institutions and regulatory processes that support RBC, but practices vary across provinces and meaningful participation by communities and recognition of indigenous rights require further reinforcement (OECD, 2024[66]). It is recommended to strengthen governance frameworks for infrastructure projects by promoting the application of RBC principles in public investment, complemented by enhanced stakeholder engagement processes, particularly for vulnerable groups, to improve transparency, reduce conflicts and build public trust. The Philippines has strong legal provisions for consultation and environmental protection, but institutional overlaps and weak monitoring undermine their effectiveness, particularly in regions with contested land tenure or high population density (OECD, 2024[67]).
Looking ahead, the six SIPA countries share common priorities for advancing RBC in infrastructure. Enforcement and institutional capacity must be reinforced, especially at the local level where many projects are implemented. Greater harmonisation of regulatory frameworks is needed to reduce overlaps and ensure that safeguards are applied consistently, while strengthening disclosure requirements and participation mechanisms will help build trust and avoid conflict with affected communities. Embedding RBC into all stages of infrastructure planning and delivery – from procurement and financing to construction and operation – can help align incentives for both public and private actors. By doing so, countries can mobilise investment towards infrastructure that is not only economically viable, but also socially inclusive and environmentally sustainable.
Central and Southeast Asia are at a pivotal juncture in shaping the future of their infrastructure systems. Both regions face immense investment needs, but the additional costs of aligning infrastructure pipelines with sustainability objectives are relatively modest compared to the risks of continuing along business-as-usual pathways. Choices made today will determine whether infrastructure becomes a driver of competitiveness, inclusiveness and resilience, or whether it locks countries into high‑carbon, resource-intensive models that undermine long-term prosperity. The Sustainable Infrastructure Programme in Asia (SIPA) highlights how co-ordinated reforms across governance, sectoral frameworks, finance, and responsible business conduct can accelerate the shift from fragmented projects to systemic, sustainable pathways.
The evidence underscores the centrality of energy-related infrastructure in particular. Due to their long lifespans and capital intensity, decisions on power plants, industrial facilities and transport networks will shape emissions and resilience trajectories for decades. Yet, current pipelines in both regions reveal significant misalignments, with coal and other carbon-intensive projects still prominent and adaptation too seldomly considered. At the same time, the expansion of green finance taxonomies, growing issuance of sustainable bonds and early adoption of carbon pricing and green procurement tools show that enabling conditions are beginning to emerge. Integrating climate resilience criteria into project appraisal and investment planning, embedding stronger safeguards for Responsible Business Conduct (RBC), enhancing transparency and participation, and reinforcing institutional capacity will be critical to ensure that investments contribute to sustainable development and enjoy social legitimacy.
SIPA countries vary in progress on strategic planning frameworks and evaluation tools. Across SIPA countries, initial assessments point to Indonesia, Kazakhstan and Thailand being relatively well-advanced: each has adopted a long-term decarbonisation strategy (LT-LEDS), is moving toward more ambitious NDCs, has announced commitments to transition away from coal and is beginning to mainstream modelling, strategic foresight, and policy-/asset-level sustainability tools in planning. Uzbekistan has set a net-zero goal and is developing its LT-LEDS, while the Philippines shows comparatively strong foresight capacity and long-term infrastructure governance but has been slower to formalise UNFCCC commitments and to publish a comprehensive long-term decarbonisation plan. Mongolia is preparing its Long-Term Vision 2050 development plan that can anchor future planning upgrades but, at present, lags behind its peers on further developments to the strategic planning framework.
Most SIPA countries are at an early stage of aligning sectoral frameworks with sustainability goals. On energy, transport and industry frameworks, Kazakhstan is particularly advanced, while Indonesia, the Philippines, Thailand and Uzbekistan have taken notable steps to create enabling sectoral conditions for decarbonisation (e.g. power-market reforms, renewable auctions, efficiency standards, cleaner mobility programmes), though implementation gaps remain. Overall, sectoral frameworks would benefit from stronger integration of climate resilience objectives, for instance, by embedding adaptation standards into infrastructure codes, energy system planning, and logistics network design. Mongolia is earlier in the journey, with foundational sectoral policies still being built out. Legacy fossil-fuel subsidies continue to distort signals in Indonesia, Kazakhstan and Uzbekistan, yet reform momentum is picking up, reflected in proposed tariff restructuring, targeted social protection to cushion reforms and reforms that better align end-user prices with climate and fiscal objectives.
Green-finance ecosystems are nascent but emerging across all SIPA countries. All now have green and sustainable taxonomies, initial green bond activity is visible and market infrastructure is gradually improving. In particular, Uzbekistan has demonstrated notable recent progress, while Indonesia, Kazakhstan and Thailand have somewhat more mature issuance records. All countries are advancing on Responsible Business Conduct (RBC), but opportunities remain to embed RBC principles in planning and procurement (Indonesia, Thailand), strengthen safeguards (the Philippines) and strengthen enforcement, especially among SOEs and large contractors (Kazakhstan, Mongolia, Uzbekistan). Better integrating resilience into public investment management systems and green taxonomy implementation could help ensure that climate resilience becomes an operational criterion, not just a policy aspiration.
Looking forward, further work is needed to deepen reforms and strengthen implementation. In Central Asia, the priority is to move from high-level strategies to operational frameworks that can guide investment decisions in practice. This will require building institutional capacity for long-term planning and evaluation, accelerating energy and transport sector reforms, phasing out fossil-fuel subsidies, and creating the conditions for private capital to play a greater role. Strengthening national and regional systems for climate-risk governance will also be key to ensuring that infrastructure built today remains viable and reliable under changing climate conditions. In Southeast Asia, where frameworks are more advanced, the focus should shift to enforcement and coherence, ensuring that ambitious climate and development commitments translate into consistent project pipelines, closing loopholes that allow high‑carbon and low-resilience investments to continue and scaling innovative finance to match the region’s large infrastructure gap.
Finally, regional co-operation can amplify national efforts. ASEAN provides a strong platform for peer learning and harmonisation in Southeast Asia, while Central Asia would benefit from more structured regional mechanisms to improve connectivity, align taxonomies, and share best practices on infrastructure governance and finance. Across both regions, continued engagement with international partners like the OECD and the other implementing partners of SIPA can support governments in building investment-ready pipelines, integrating climate resilience and inclusiveness into infrastructure planning, and fostering the enabling environments needed to crowd in sustainable finance at scale.
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← 1. Despite the strong attention that the concept of sustainable infrastructure has received in the past decade, there is no strict, agreed definition of what sustainable infrastructure is. The OECD generally uses a definition by which “infrastructure is sustainable if, throughout its life cycle, it provides social, economic and environmental benefits” (OECD, 2021[10]). In this report, emphasis is put on infrastructure aligning with sustainable environmental outcomes, although sustainable objectives defined under the United Nations’ Sustainable Development Goals are also considered.