In Asia and the Pacific, the market meets its development match

Countries across the region are applying new approaches and drawing on new sources to finance the SDGs.

July 21, 2025

Craftsmen weaving baskets and mats inside a workshop filled with woven materials.

As the year 2030 approaches, much more investment needs to flow into people and planet to meet the Sustainable Development Goals (SDGs). The current estimated shortfall stands at $4.2 trillion a year; of that, the Asia-Pacific region accounts for an annual $1.5 trillion of additional funds needed. Regionally, no goal is on track to be achieved by 2030, and best estimates hold that the SDGs will not be achieved in Asia and the Pacific before 2062.

The good news is that there is more than enough money to reach our shared goals. With global wealth at $450 trillion, the issue is one of alignment, not availability. Recognizing this opportunity, governments in Asia and the Pacific have been meeting the alignment challenge head-on, drawing on an ever-growing menu of innovative financing mechanisms with the support of UNDP and partners.

Among the approaches showing promise in the region are:

Biodiversity credits. Biodiversity credits aim to capture the value of nature, not for its extractable resources, but for its integrity, richness, and resilience. These credits represent measurable, verifiable positive outcomes for biodiversity—whether by restoring a forest (uplift), protecting a vulnerable ecosystem from harm (avoided loss), or maintaining an intact habitat (maintenance). These credits can be traded, often to corporations seeking to meet sustainability goals or offset environmental impacts. Biodiversity credits can be challenging to standardize, as each ecosystem and species is unique. Unlike the carbon markets, nature’s diversity cannot be measured in a single unit, like carbon tonnes. Done right, however, biodiversity credits could channel private investment toward conservation.
Climate Finance Network. The Climate Finance Network (CFN), a flagship UNDP initiative supported by the Governments of Sweden and the United Kingdom, is catalyzing climate-smart investments across 17 countries in Asia and the Pacific. By bringing together finance ministries, regulators, and the private sector, CFN is helping unlock capital for climate action—from Indonesia’s pioneering Impact Fund to innovative partnerships that are accelerating SDG-aligned enterprises in Viet Nam, the Philippines, and beyond. In countries like Sri Lanka, India, Viet Nam, and the Philippines, CFN is laying the groundwork for long-term climate adaptation through national financing strategies that align with development priorities. At the heart of CFN’s work is strengthening governance and embedding climate considerations into public financial management. In the Pacific, where communities are on the frontlines of climate change, CFN supports the development of climate-resilient infrastructure through initiatives like the Gov4Res dashboard, which helps governments plan and track investments that reduce vulnerability and build resilience. This approach ensures that climate finance is not only mobilized but also effectively targeted to where it’s needed most. As a knowledge-driven network, CFN is shaping the future of sustainable finance by developing tools and guidance that set regional standards. One key milestone is the release of the Step-by-Step Guide for the Development of Sustainable Finance Taxonomies, which is helping countries design transparent frameworks for both public and private investments. CFN also provides technical support to countries revisiting or launching their own taxonomies, ensuring alignment with global best practices and local needs. CFN’s commitment to inclusive and transparent climate finance is evident in its support for climate-integrated budgeting and expenditure tracking. In 2024, CFN completed Gender-Responsive Climate Change Budget Integration Index (CCBII+) assessments in 13 countries, offering a unique baseline for measuring how well gender and climate are reflected in national budgets. The network also works closely with civil society, parliaments, and auditors in six countries to build capacity for budget oversight, ensuring that climate finance is accountable, equitable, and impactful.
SDG Investor Maps. A market intelligence tool developed by the UNDP Sustainable Finance Hub, SDG Investor Maps generates country-level data and insights about SDG-enabling investment opportunities, filling the gap between investing in SDGs and the business models that could provide impactful and investable opportunities. So far, 12 countries in the Asia-Pacific region have developed investor maps, showcasing a wide range of opportunities from sustainable housing in Mongolia to insurance for underserved sectors in Cambodia.

Below are further examples of how countries in the region are meeting the SDG financing alignment challenge.

Finance taxonomies in China

Aerial view of a winding river surrounded by lush green fields and trees. — Aerial view of wetlands, China

UNDP China

To enhance market understanding and promote sustainable finance, in 2019, UNDP launched an SDG Finance Taxonomy in China, which defines and categorizes financial activities, investments, and projects based on their alignment with the SDGs. Alongside UNDP’s global SDG Impact Standards, the taxonomy provides a common set of criteria for investors, financial institutions, and governments, which help ensure that investments into sustainability are linked to clearly measurable social and environmental outcomes, reducing greenwashing and increasing transparency.

In 2021, with UNDP’s support, these frameworks were applied by the New Development Bank (NDB) in the issuance of a 5 billion RMB SDG Bond in China’s inter-bank market to finance a sustainable recovery from COVID-19. Subscriptions to the bond exceeded 10 billion RMB, more than double the offering. This marked the first time that a multilateral bank applied UNDP’s SDG Impact Standards and tested them in practice.

With China being the largest source of green bonds globally (131.3 billion USD in issuance in 2023), UNDP China also collaborated with the National Association of Financial Market Institutional Investors (NAFMII) to launch China’s first social and sustainability bond pilot aimed at opening new opportunities for sustainable finance in the Chinese market beyond green bonds. As of 2024, a total of 259 million USD has been issued under this initiative.

Nature-related Financial Disclosures in Malaysia

A farmer wearing a straw hat kneels between rows of corn and green plants in a sunny field. — Building shared prosperity and a green economy though sustainable livelihoods and a healthy environment in villages of Malaysia

Credit: Yayasan Kajian dan Pembangunan Masyarakat (YKPM)

In Malaysia, UNDP partners with institutions like Bank Negara Malaysia and the Asian Development Bank to green value chains through initiatives like the Greening Value Chain Playbook, and pilot action for the Taskforce on Nature-related Financial Disclosures (TNFD), of which Malaysia is emerging as a leader.

In partnership with Bank Pembangunan Malaysia Berhad, UNDP is also partnering to provide impact advice and action for the Climate Finance Innovation Lab.

The country is advancing nature financing via groundbreaking initiatives such as Ecological Fiscal Transfers, which transfer national budget funds to the local level based on specific conservation investment needs, as well as pioneering efforts like the Tiger Landscape Investment Fund, which will drive the use of blended finance models to de-risk nature-positive investments.

Aligning SDG financing with public financing goals in Maldives

Calm waters reflect a palm tree island under a blue sky with soft clouds. — Credit: Ashwa Faheem / UNDP Maldives

As one of the world’s most climate-vulnerable countries, Maldives has been a pacesetter in innovative financing to address urgent development challenges. In 2023, the Maldives became the first small island developing state to endorse an Integrated National Financing Framework, a plan for how national public spending strategies will be financed and implemented, relying on a full range of public and private financing sources. Unsurprisingly, climate finance is a priority: Maldives is likely to require between $800 million and to 1.5 billion per year to support mitigation and adaptation actions that will address climate change.

The country has also signed on to benefit from the Global Fund for Coral Reefs (GFCR), which uses US$10 million to unlock $40 million of additional private equity . This environmental conservation programme centers on the viability of financial security instruments such as guarantees, loans, and bio-credits. It also aids carbon market entry at fair prices. The GFCR represents a beacon for new approaches to attract private investors and complement public finance.

UNDP has been working with the Government of Maldives to tackle national budget challenges while aligning government and SDG finance with public finance goals and standards. This includes reviewing debt arrangements for both public and private sectors to identify further opportunities for joint public financing ventures.

The goal? To leverage Maldives’s unbeatable natural resources to build an economy that thrives from the protection and preservation of this wonderland of a nation.

Global Shield against Climate Risks in Pakistan

Pakistan, which is ranked among the ten most vulnerable countries to climate-induced disasters, has officially signed on as a pathfinder country of the Global Shield against Climate Risks. This joint initiative of the G7 and the V20 Finance Ministers offers a systematic, coherent, and sustained approach to financial protection to ensure that when disasters strike, funds are swiftly channelled to those most in need. With implementation support from the United Nations Development Programme (UNDP), the Global Shield process in Pakistan prioritizes expanding financial protection for critical infrastructure, making climate risk insurance accessible for smallholder farmers, protecting livelihoods through shock-responsive social protection, and integrating risk analytics in Pakistan’s national decision-making process to improve disaster preparedness and response.

At the same time, the country has launched an investment plan detailing how its Paris-aligned climate action commitments can be funded. Options explored in the plan include establishing a green taxonomy, making a green investor forum, and integrating carbon markets into the country’s domestic and international financing to ensure improved finance mobilization.

Smart taxation and blue investment opportunities in Sri Lanka

In the wake of the 2022 socioeconomic challenges, the Government of Sri Lanka initiated a series of tax reforms in Sri Lanka, renewing broad interest in the tax space. To promote better understanding of taxation among Sri Lankan citizens, UNDP created What the Tax?, a video podcast series that seeks to connect the dots between public revenues and people’s well-being. Host Hakshala David, a UNDP economist focused on innovative financing, invites experts and colleagues in development financing to break down the basics of taxation. Episodes address topics such as leveraging taxation to meet the SDGs, creating a gender-inclusive tax system that can help expand options for women and girls, and exploring digital innovations to improve tax collection and transparency.

Beyond the podcast , Sri Lanka has achieved a major milestone for investment in the coastal and maritime sector. A new Blue Investment Opportunity Mapping Tool (BIOM) has been developed to equip local and foreign investors with information on blue investment opportunities, based on reliable spatial data. By offering clear insights into marine resource availability, infrastructure needs, and conservation priorities, the BIOM tool unlocks investment opportunities across marine tourism, conservation financing, the boat-building industry, renewable energy, including offshore wind and solar, and other marine industries.

Turning waste into investment in Thailand

Three volunteers in blue shirts collect trash on a beach, with others working in the background. — Photo: A beach cleanup event marked a major milestone in the project’s launch, with local leaders, residents, and partners uniting to combat plastic pollution. 18 May 2025, Phetchaburi Province, Thailand

UNDP Thailand

UNDP’s Biodiversity Finance Initiative (UNDP-BIOFIN), in collaboration with the Raks Thai Foundation and Krungthai Bank, has launched “From-Trash-to-Treasure: A Community-Led Waste Bank” in Phetchaburi Province. This innovative initiative transforms how local communities tackle waste, especially plastic pollution, through finance-based solutions and active community engagement.

At the heart of this effort is the Laem Phak Bia Community Waste Bank, which is designed to mobilize community participation in recycling while creating financial and environmental incentives. It provides residents with an opportunity to sell recyclable materials, with proceeds directed into a Community Welfare and Environmental Fund. Designed by Krungthai Bank, this model ensures that environmental action improves the quality of life for residents while reducing pollution.

With the Raks Thai Foundation’s support, the project promotes better segregation of household and marine waste, keeping plastic and other debris out of fragile coastal ecosystems. By preventing trash from entering marine ecosystems, the project protects sensitive coastal environments and preserves regional biodiversity, aligning with the broader goals of UNDP-BIOFIN’s sustainable finance solutions.

One of the initiative’s standout features is its introduction of a nature-positive investment model. By aligning economic gains with environmental conservation, the project ensures that sustainable solutions are both achievable and impactful over the long term. Community members are inspired to become custodians of the environment, integrating conservation into everyday life.