ASEAN+3 governments and companies—comprising Southeast Asia, China, Japan, and South Korea—are increasingly tilting towards sustainable finance as one of the solutions to address climate objectives. The world requires climate finance of $9 trillion in 2030 while the Asia-Pacific needs around $2 trillion per annum to remain under the Paris Agreement umbrella. The challenge of mobilizing capital is a high agenda.

One of the active advocates trying to fill this gap is the Credit Guarantee and Investment Facility (CGIF), an Asian Development Bank (ADB) serviced trust fund. CGIF is of critical importance in rendering possible and safe more sustainable investments, especially in frontier markets and emerging markets where financing risk discourages interested investors. By providing credit guarantees on the issuance of green bonds, CGIF facilitates the mitigation of these risks and hence stimulates the development of local currency bond markets and encourages more investors to finance ESG projects.

Demand for sustainable infrastructure and clean energy projects is increasingly needed in the ASEAN+3 region. Mobilization of capital, however, is frequently hindered by credit issues and regulatory uncertainty. CGIF provides a solution through unconditional guarantees for both interest and principal repayment in the event of default. The guarantees provide backing to the credit worthiness of green bonds and are usually supplemented by investment-grade ratings, supported by CGIF's AA S&P credit rating.

The existence of CGIF-backed guarantees offers several benefits. The bond guaranteed acquires greater attractiveness for institutional investors, such as insurance companies and pension funds, which have a preference for investment-grade instruments. The existence of CGIF also instills confidence in the projects by the assurance that they will be subject to intense scrutiny and conformity to set standards of sustainability. Additionally, CGIF backing facilitates the establishment of benchmarks and catalyzes the development of sustainable bond markets in the domestic market, encouraging new issuers and investors to participate.

Numerous projects already capture CGIF's real impacts in green finance. In March 2025, it guaranteed Cambodia's first green project bond by SchneiTec Dynamic for a solar energy scheme. The scheme attracted local and foreign investors into a frontier market, which was a historic breakthrough in local green finance evolution. In the same vein, in January 2025, CGIF guaranteed its first blue bond issued by China Water Affairs to finance sustainable water infrastructure.

In 2024, the previous year, CGIF supported a string of sustainability-linked bonds (SLBs). These comprised Sabana Industrial REIT's SLB in Singapore, PT Steel Pipe Industry's Indonesian local currency-denominated SLB, and Thailand's first SLB in shipping by Precious Shipping Public Company. Such efforts are designed to support decarbonisation, drive jobs, and advance local economic development.

Apart from the extension of financial guarantees, CGIF is also involved in building a strong sustainable finance ecosystem. It participates in the Cambodian Sustainable Bond Accelerator Programme and collaborates with regional and international organizations, such as the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and GuarantCo. Such cooperation is intended to construct harmonized standards and frameworks to enhance the credibility and appeal of sustainable bonds.

In the future, CGIF will continue to grow its business by innovating its guarantees products and partnerships. It seeks to tap higher volumes of capital into green infrastructure, renewable energy, and climate-resilient projects. The growth is not only critical from an environmental point of view but also from the generation and improvement of economic opportunities as well as an increase in regional economy resilience.

With CGIF to attend the Sustainable Debt Asia 2025 conference in Singapore, it is still placing risk mitigation for sustainable finance in focus. Through enhancing investor confidence and facilitating market development, CGIF is at the forefront of the initiative towards transforming the financial system in the ASEAN+3 region towards attaining the objectives of sustainable development.

Source & Credits:
2025 Environmental Finance – Original article excerpted from KnowESG.