Fossil Fuel Divestment Scorecard: Japan “Dirtiest” Financier

A new report by a coalition of Southeast Asian organisations reveals that Southeast Asia remains a hotspot for fossil fuel financiers, including major local and foreign banks, and urges divestment to prevent exacerbating the problems associated with coal and gas expansion plans. The report, which identifies domestic and foreign financial institutions that finance fossil fuel projects directly or indirectly, reveals that all the assessed banks have committed to aligning with or contributing to the Paris Agreement’s goal of limiting global warming below 1.5°C.

However, acting against their pledges has far-reaching consequences for many Southeast Asian nations, including fiscal challenges for local economies, high electricity costs, worsened energy security and significant environmental impacts. 

2025 Southeast Asia Fossil Fuel Divestment Scorecard: Foreign Banks Provided Over 65% of the Financing for the Region’s Coal and Gas Expansion

Ahead of the 46th Association of Southeast Asian Nations (ASEAN) Summit, a group of civil society organisations released a report tracking the origin and the amount of fossil fuel financing provided to Southeast Asian nations since the Paris Agreement. 

In total, fossil fuel projects received USD 45.2 billion between 2016 and 2024, with 71.9% of the funding directed toward coal projects. Over 65% of the fossil financing came from international banks. 

Coal project financing, which totalled USD 32.48 billion, went exclusively to the three countries with the largest commissioned coal capacity since 2016: the Philippines, Indonesia and Vietnam.

Project financing for downstream gas reached a total of USD 12.69 billion. Around half of it went to Thailand, which commissioned the most gas capacity since the Paris Agreement. The rest went to the Philippines, Malaysia, Indonesia, Singapore and Vietnam. 

Between 2018 and 2022, Southeast Asian banks were the primary project financiers of gas projects. However, in 2023 and 2024, foreign banks granted the most financing for the fossil fuel.

Foreign banks from at least 13 countries have supported the expansion of coal and gas in Southeast Asia. Among them, Japanese financiers have contributed the most, with over 30% of the total financing. Next in line are Citigroup and the European ING, UBS and Standard Chartered. 

Domestic Banks Also Played a Prominent Role

On the domestic stage, financial institutions that financed the most downstream coal were from nations that have deployed significant operational capacity since the Paris Agreement. Examples include Indonesia, Vietnam, the Philippines and Malaysia.  

Regarding gas deployment, banks from Thailand and Malaysia, such as Malayan Banking and CIMB, have funded the most capacity since the Paris Agreement.

“At the same time that a changing climate is already threatening agriculture and food security, dramatically increasing health risks and putting millions of lives at risk in Southeast Asia, banks keep pouring billions into fossil fuels instead of acting urgently and decisively on protecting present and future generations from climate chaos,” said Diogo Silva, banks and climate campaign lead at BankTrack, one of the organisations behind the report.

With their findings, the report’s authors urge domestic and international banks to halt financing coal and gas projects. 

Japan the Region’s Leading Foreign Fossil Fuel Financier, JBIC the ‘Dirtiest’ Bank

Due to its continuous financing of coal and gas power plants in Southeast Asia and the lack of policies to halt it, the report’s authors identified the Japanese Bank for International Cooperation (JBIC) as the “dirtiest” foreign financier.

According to the report, JBIC’s significant financing of fossil fuel expansion, which outpaced that of international and Southeast Asian banks, clearly reflects Japan’s strategy to secure its energy and economic interests and keep Japanese coal and LNG companies afloat amid dwindling domestic demand and as part of its vested interests to promote fossil fuel-based technologies. For example, a month after Japan committed to stop financing unabated coal projects abroad by the end of 2021, JBIC announced plans to continue supporting overseas coal projects with CCS or ammonia co-firing — expensive technologies that Japan has been touting as clean energy or transitional fuels in the AZEC.

“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 the Center for Energy, Ecology and Development (CEED) and convenor of Energy Shift Southeast Asia. “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.” 

Japan’s fossil fuel-favouring foreign policies have already made it subject to criticism from market experts, environmental groups and even other G7 nations. Currently, all the G7 members except Japan have either phased out coal or have a domestic deadline in place. 

“Japanese banks have been involved in various coal and gas power projects in ASEAN on an unprecedented scale,” says Bhima Yudhistira, executive director of the Center of Economic and Law Studies (CELIOS), one of the organisations behind the report. “This increase has become a way for banks to continue to reap profits without realising that coal and gas financing lock-in complicates the development of renewable energy and makes many countries face long-term energy insecurity.”

In addition to Japan, Chinese and South Korean banks have proven to be the biggest backers of coal projects across Southeast Asia, with the majority lacking phaseout policies. The Asian Development Bank is identified as one of the notable gas financiers in the region.

Fossil Fuel Divestment Crucial as Banks Are Keeping Southeast Asia Hooked on Coal and Gas

The fossil fuel divestment scorecard, published by CEED and a group of other Southeast Asian organisations, is the first of its kind, a comprehensive assessment that evaluates the climate policies and fossil fuel financing practices of 35 major banks. Of these, just 14 have some restrictions for companies with coal-related activities, with the most restrictive being the Government Savings Bank Thailand.

The authors highlight a persistent gap between the sustainability rhetoric of banks and their continued investments in fossil fuels. For example, they note that despite pledging a coal phaseout, institutions such as Sumitomo Mitsui Banking Corporation (SMBC), Mizuho and Mitsubishi UFJ Financial Group (MUFG) recently withdrew from the UN-backed Net-Zero Banking Alliance, raising further doubts about their climate commitments. These institutions also remain open to financing projects as long as they incorporate CCS or other low-carbon technologies. The report also finds that some financiers from South Korea and China even failed to act on their own policies prohibiting overseas coal financing in the region.

“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,” urges Arances.

The report’s authors also advise financial institutions that are still financing fossil fuels to set and disclose a 1.5°C-aligned timeline and measurable short-, medium- and long-term targets. They should also expedite the process of early coal plant retirement and oppose false fossil fuel-based solutions.

Considering the significant responsibility they bear in global climate action, banks need to tighten their divestment policies, ensuring that no financing goes to new and existing coal plants, including all companies listed on the Global Coal Exit List.

Financing for new fossil gas power plant projects should be provided only in accordance with stringent restrictions and environmental and social safeguards, proving these projects are a necessary bridge for a country’s transition aligned with the 1.5°C goal.

The report’s authors also urge foreign financial institutions, which have historically pushed the region into coal dependency and now promote gas expansion and other false solutions like ammonia co-firing and CCS, to immediately divest from fossil fuel developers in Southeast Asia. They also urge banks to rechannel financing and investments to support ASEAN countries’ climate action and pay for climate adaptation, the loss and damage caused by the impacts of climate disasters and a just transition toward renewable energy and climate-resilient societies.

ASEAN Governments Must Stop Prioritising Fossil Fuel Expansion to fight Climate Change

It is evident that the fossil fuel expansion taking place across Southeast Asia isn’t forced on governments externally by foreign banks. ASEAN governments must also take some of the blame.

For example, despite recognising the importance of climate action and pledging to protect the most vulnerable and frontline communities, in the final statement of the 46th ASEAN Summit, leaders ultimately committed to keeping fossil fuels as the primary source of energy all the way to 2050. 

Furthermore, the ASEAN Taxonomy for Sustainable Finance, which serves as a parallel or reference for other central banks in formulating their respective taxonomies, doesn’t have a specific provision regarding natural gas and even considers it a transitional fuel. So is the case with the taxonomies of many Southeast Asian countries, which, despite some restrictions, still permit natural gas expansion.

Additionally, Southeast Asia plans to expand its coal fleet by at least 42.8 GW. There are also 135.6 GW of gas plants and 97.6 million tonnes per annum of export and import terminals in development.

This means Southeast Asia is welcoming fossil fuel expansion at a time when the region is facing mounting climate disasters, increased energy security risks and high power costs. What’s more, it contradicts the efforts to achieve the ASEAN Community Vision 2025 goals of sustainability, food security and resilient, inclusive growth — a perplexing situation that only Southeast Asian governments can explain.

“ASEAN ambitions must now be matched by absolute action, and the time to act is now,” says Arances. “Anything less will entrench the region in a cycle of escalating disasters, broken promises and irreversible environmental destruction.”