Japan Tops Fossil Fuel Financiers in Southeast Asia

A sweeping new report has unveiled the extent of fossil fuel financing in Southeast Asia, revealing that over USD 45 billion (about PHP 2.64 trillion) flowed into coal and gas projects between 2016 and 2024, with Japanese institutions topping the list of the region’s biggest foreign financiers.

The 2025 Southeast Asia Fossil Fuel Divestment Scorecard, jointly released by six civil society groups including the Center for Energy, Ecology and Development (CEED) and the Center of Economic and Law Studies (CELIOS), identified the Japan Bank for International Cooperation (JBIC) as the “dirtiest” foreign bank, having funded nearly one-third of the total financing from abroad.

According to the scorecard, 65.1% of fossil fuel financing in the region came from foreign banks, with USD 45.167 billion directed at downstream coal and gas infrastructure. Of this amount, 71.9% was spent on coal-related projects, which have increasingly come under scrutiny amid global climate targets.

“Japanese banks, especially JBIC, are enabling the continued buildout of coal and gas infrastructure in Southeast Asia, putting climate goals and local communities at risk,” said Gerry Arances, executive director of CEED. “It’s time for these institutions to match their promises with real actions by ending fossil fuel financing and supporting a just transition to renewable energy.”

JBIC’s dominance stems from its aggressive investment in both coal and gas plants, outspending even regional banks. The agency lacks a clear timeline for phasing out such investments and exempts “unabated coal” from its exclusion policy—gaps that environmental groups say undermine Japan’s commitments under the G7 and the Paris Agreement.

The divestment scorecard ranks 35 financial institutions based on their climate policies and fossil fuel funding. It exposes deep inconsistencies between banks’ climate pledges and their ongoing support for fossil fuels. Japanese megabanks SMBC, Mizuho, and MUFG, which had pledged to phase out coal by 2040, recently exited the Net-Zero Banking Alliance, casting doubt on their commitment to climate action.

“Japanese banks have been involved in various coal and gas power projects in ASEAN on an unprecedented scale,” said Bhima Yudhistira, CELIOS executive director. “This increase has become a way for banks to continue to reap profits without realizing that coal and gas financing lock-in complicates the development of renewable energy.”

Regional Implications

The publication of the scorecard coincides with Malaysia’s chairing of the 2025 ASEAN Summit, a pivotal moment for climate policy in the region. With the Philippines set to assume the chairmanship next, both countries are under pressure to align financial flows with climate resilience and food security.

The scorecard shows that banks from Japan, China, and South Korea remain the largest backers of coal plants in Southeast Asia, owing largely to the lack of robust exclusion policies. Among domestic banks, those in Indonesia, Vietnam, the Philippines, and Malaysia rank highest in downstream coal financing, reflecting the addition of massive operational capacity since the 2016 Paris Agreement.

Malaysia’s Malayan Banking and CIMB were also flagged for their massive support of gas infrastructure, making them two of the region’s dirtiest domestic financiers. Both banks were instrumental in funding gas projects not only in Malaysia, but also in Thailand and Singapore.

“Financial institutions, both international and domestic, must halt new fossil fuel investments and redirect finance toward renewable energy at the scale demanded by the climate crisis,” Arances said. “Anything less will entrench the region in a cycle of escalating disasters, broken promises, and irreversible environmental destruction.”

PHL: Turning Point or Temporary Pause?

The Philippines saw no fossil fuel financing in 2024, a first since 2016. This coincided with a record-high PHP 89 billion (USD 1.6 billion) investment by Philippine banks in renewable energy in 2023, hinting at a possible shift in investment priorities.

However, CEED warns that this trend is fragile. Financing for gas resumed in early 2025 following the passage of the Philippine Downstream Natural Gas Industry Development Act. This includes financial backing for projects by Meralco and First Philippine Holdings.

Despite the national government’s failure to declare a coal phaseout, nine major Philippine banks, including BDO and BPI, have instituted no-coal policies or commitments to limit coal loan exposure.

Scope of the Scorecard

The scorecard evaluates banks on multiple dimensions, including their divestment policies, sustainability frameworks, and actual financing activities. Each institution received scores based on a weighted methodology that prioritized financial exposure while factoring in policy effectiveness and loopholes.

JBIC led both coal and gas rankings due to its high financing scores and weak divestment criteria. While some Japanese banks have adopted exclusion policies, they continue to finance plants using “low-carbon” technologies like ammonia co-firing, which experts say are insufficient to meet the 1.5°C goal.

UBS, Standard Chartered, Citigroup, and ING were also among the top foreign financiers of gas projects. Notably, the Asian Development Bank (ADB)—despite having policies limiting gas funding—remained one of the largest supporters of gas infrastructure in the region, including plants in Thailand and the Philippines.

“Banks are still financing the climate crisis while underestimating the impact on financial risk and threatening people’s quality of life,” said Bhima Yudhistira. “This scorecard is a form of assessment of the poor practices of financial institutions and we will continue to monitor every policy.”

CSG Calls

Civil society groups (CSG) are urging banks to not only phase out direct fossil fuel project financing but also cut indirect support via underwriting and corporate loans. They recommend adopting the Ten Guiding Principles for Financing Coal Retirement Mechanisms to ensure that renewables, not gas or other “transition fuels,” are prioritized.

The report warns that Southeast Asia’s continued dependence on coal and gas risks locking in emissions, infrastructure, and capital into energy systems incompatible with climate goals. Moreover, fossil fuel projects continue to damage marine ecosystems and food sources, especially in coastal communities.

Climate finance must now shift decisively toward renewable energy, according to CEED. The region’s ambition of adding 397.8 GW in renewables requires an estimated USD 190 billion annually by 2035, yet fossil fuels still attract nearly triple the funding that went to renewables since 2016.

With ASEAN nations facing escalating climate threats, financial institutions play a pivotal role in shaping the region’s energy future. As climate impacts intensify, civil society groups say the need for urgent, transformative change in finance has never been clearer.

“Southeast Asia is at a crossroads for energy,” said Aditi Sen of the Rainforest Action Network. “This report shines a light on how many global banks are continuing to pour money into coal and gas expansion in the region and are perpetuating a vicious cycle of climate chaos.”