Asia’s largest power utilities are under growing pressure from investors to strengthen emissions reduction strategies, realign capital spending and address mounting climate risks, according to the latest progress update from the Asia Investor Group on Climate Change (AIGCC).
The findings come from AIGCC’s US$13 trillion Asian Utilities Engagement Program (AUEP), which assessed eight systemically important utilities across governance, decarbonisation strategy, physical resilience, public policy and just transition planning. While companies have made incremental progress, investors warn that structural gaps remain that could expose businesses — and wider Asian economies — to material financial, operational and reputational risks.
The report notes that board-level oversight of climate issues is now common across all assessed utilities, and several companies have begun linking executive remuneration to climate performance. However, none of the companies’ supervisory boards include explicit expertise in climate change or low-carbon transition planning.
Investors argue that without deep transition expertise at board level, companies may struggle to manage complex risks linked to coal phase-down, capital reallocation and evolving policy frameworks.
Most utilities have articulated decarbonisation strategies and identified renewable expansion, fuel switching and coal reduction as key levers. However, investors are increasingly focused on whether capital allocation matches ambition.
While some firms have disclosed near- and long-term renewable investments, the report finds inconsistent disclosure on associated spending and emissions impacts. Investors are seeking clearer evidence that capital is materially shifting away from high-emitting assets and aligning with published emissions targets.
Without credible capital reallocation, utilities risk stranded assets and heightened transition exposure as climate policies tighten.
A major weakness across all eight companies is the absence of meaningful action on value-chain emissions. None have promoted greenhouse gas reductions across their value chains, and only one company has established emissions-reduction requirements or targets for suppliers or downstream partners.
Investors continue to call for transparent Scope 1, 2 and 3 emissions trajectories, asset-level retirement timelines and defined short- and medium-term targets to assess alignment with net-zero pathways.
Asian utilities operate in regions increasingly exposed to extreme heat, flooding and precipitation events. Although most companies disclose some form of climate risk assessment, only one — CLP Holdings — has conducted comprehensive site-level and operational physical risk assessments.
Crucially, no company has disclosed capital or operational expenditure dedicated to climate adaptation. AIGCC warns that without resilience measures, physical risks could lead to an annual 6.6-7.3 per cent drop in average company earnings.
The assessment identifies just transition planning as the weakest-performing category. While some companies engage stakeholders and maintain social dialogue, none have disclosed time-bound, measurable indicators to manage workforce or community impacts arising from coal phase-outs and business model shifts.
Investors caution that unmanaged social risks could delay or derail transition efforts and increase political and reputational pressures.
Beyond company-level engagement, AUEP has also stepped-up dialogue with policymakers in Japan, Indonesia and Malaysia to strengthen enabling frameworks for renewable deployment, grid expansion and transition finance.
In Japan, engagement with the Ministry of Economy, Trade and Industry has contributed to improvements in the updated Electric Power Sector Transition Roadmap, including clearer links between decarbonisation targets, financing mechanisms and grid planning.
As the program enters its fifth year, AIGCC plans to deepen engagement with listed, non-listed and state-owned utilities, while supporting broader efforts to mobilise institutional capital for renewable energy and grid investments.
Investors are sending a clear signal: companies must move beyond high-level net-zero pledges to deliver credible, time-bound transition plans backed by capital allocation strategies. With just five years remaining to the critical 2030 milestone, the pace of execution, not ambition alone, will determine whether Asia’s power sector can align with national climate commitments while safeguarding long-term economic stability.