Climate and Environmental Governance: Why Asia’s investors are calling for climate action from boardrooms

This article first appeared in Forum, The Edge Malaysia Weekly on January 5, 2026 - January 11, 2026

Climate change is already causing severe disruption across Asia, and this is expected to intensify. Our research finds that 14% of Asia’s gross domestic product (GDP) is at risk by 2050 due to climate impacts.

Companies are exposed to physical impacts of climate change, such as heatwaves, floods, storms and droughts. All of these can undermine productivity, damage infrastructure and crops, threaten critical supplies of energy and water, and disrupt supply chains, leading to economic losses.

At the same time, there are “transition risks” to contend with. As markets respond, companies that fail to act are faced with higher costs of capital, increased insurance premiums and reduced market share.

It is clear that climate change presents a significant financial risk to companies. Meanwhile, companies transitioning to low-carbon business models can harness economic opportunities.

Corporate board members are critical in addressing climate risk

Investors are also integrating climate into their corporate governance practices. For example, in our research into 10 of Malaysia’s most significant institutional investors, with RM2.56 trillion (US$575 billion) in collective assets under management, the Asia Investor Group on Climate Change (AIGCC) found that 50% of them are integrating climate into their corporate governance oversight.

Investors are willing and ready to allocate their capital behind climate solutions, and these are opportunities for companies to be first movers in this space. At the same time, investors also want to see their portfolio companies actively managing mounting exposure to climate and nature-related risks that threaten long-term value.

This is where corporate boards become essential. As stewards accountable to investors, board directors must ensure their companies are capitalising on opportunities in the climate transition as well as effectively managing climate risks.

We can already see progress but it is not always consistent. Recent results that assess the world’s highest emitting companies show mixed progress globally. These findings come from Climate Action 100+, the world’s largest investor engagement initiative focused on addressing climate change.

Focusing on Asia, companies in this region showed improvement in corporate governance, with 86% of companies having shown evidence of board oversight on climate and 19% demonstrating a high level of commitment by linking executive remuneration to climate performance.

Evidence on board-level commitment and action often help to inform investors on their engagement with portfolio companies for their ability to fully integrate climate into business strategies.

So, are board members in Malaysia prepared to respond to the increasingly sophisticated nature of investor expectations?

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