Unlocking green capex for transition technologies

Businesses today have access to a wide range of transition technologies that can help to lower their carbon emissions. From rooftop solar panels and electric vehicles to cutting-edge resource management software, low-carbon solutions are available to support more efficient, less carbon-intensive operations.

But switching to greener materials or new, more efficient machinery requires capital investment. A third party analysis estimates that the transition to a 1.5ºC-aligned scenario will require capital expenditure of around USD78 trillion in Asia Pacific, including USD19 trillion from 2022-2030.¹ How are businesses in Asia Pacific rising to the capex challenge?

Globally, businesses are finding that investments in transition technology can be positive for their bottom lines. In a recent BCG survey of nearly 2,000 companies, a quarter reported annual decarbonisation benefits worth at least 7% of revenues, compared to only 9% who said they had seen no commercial benefit.²

That attitude is becoming more prevalent in Asia, too.

“In Asia Pacific, businesses are increasingly embracing the commercial case for transition investments,” said Sunil Veetil, Regional Head of Commercial Banking Sustainability, Asia Pacific, at HSBC. “We are seeing more evidence across our client base that decarbonisation is good for business.”

In some industries, less carbon-intensive products and services can command a premium price. Green buildings, for example, typically fetch a higher rental income per square foot than less efficient or lower-rated spaces. According to property consultants JLL, in the Asia Pacific commercial real estate market, green-certified, class A offices command an average rental premium of 9.9%.³ This premium could increase in the future as developers struggle to keep up: JLL projects that 59% of demand for high-quality green workspaces in major cities in Asia Pacific will be unmet by 2030.

Even if the investment case is clear, many businesses need to look beyond their internal resources to fund their transition. Funding for green capex can come from multiple sources, including government grants, subsidies, tax breaks, commercial loans and capital markets.

Across Asia Pacific, many governments provide powerful incentives to encourage businesses to contribute to national decarbonisation goals. Singapore, for example, expanded its Energy Efficiency Grant in 2024 to help businesses in more sectors improve their environmental performance by co-funding investments in energy-efficient equipment.⁴ Hong Kong, similarly, has offered subsidies for low-carbon commercial transport since 2011.⁵

We provide a range of products and services to support green capex, including green loans, sustainability-linked finance and sustainability improvement loans.

Green loans are available to support specific decarbonisation initiatives, such as investments in low-carbon transport or renewable energy installations.

For example, Indo-rama Synthetics in Indonesia turned to us for a USD20 million green term loan to install new energy-efficient machineries and technology.⁶ Also in Indonesia, Bluebird Taxis incorporated a green loan from us in its 2023 financing for fleet expansion, supporting its acquisition of new electric vehicles (EVs).⁷

In Malaysia, businesses can also access Islamic financing for green developments. EXSIM Malaysia used green Islamic financing from HSBC Amanah to help finance a green-certified residential complex in the city of Ipoh.⁸

Sustainability-linked loans can also help businesses align their funding with green goals, such as improvements in energy efficiency. In Bangladesh, for example, manufacturer Walton Hi-Tech worked with us to identify material sustainability issues and set ambitious targets to reduce emissions and water consumption in the company’s operations. To support its transition, we converted financing facilities totalling around USD70 million into a sustainability-linked loan that offers a financial incentive if the company reaches those targets, a process that will be checked and validated by a third party.⁹

We are also rolling out a new sustainable financing solution for smaller businesses in Asia Pacific who may not yet have the resources in place to monitor and report their performance on environmental metrics.

Sustainability Improvement Loans connect the cost of borrowing to annual sustainability assessments from EcoVadis, one of the world’s largest providers of business sustainability intelligence and ratings. Those whose scores improve benefit from a reduced interest rate, while interest margins increase if the borrowers’ scores decline. We launched the product in selected markets in Asia Pacific in 2024, sealing the first deal with Opal Cosmetics in Hong Kong.¹⁰

Many businesses in Asia Pacific have made strong progress towards their decarbonisation objectives, but there is much more to do to bring the region in line with a net zero future.

For businesses looking to take the first step, BCG notes that foundational actions are closely linked to the ability to capture value from decarbonisation. Companies that are comprehensively measuring their emissions, for example, are 1.6 times more likely to experience significant decarbonisation benefits, according to the latest survey.¹¹

We are helping clients in Asia Pacific accelerate their transition – wherever they may be on their transition journey.

Today we finance a number of industries that significantly contribute to greenhouse gas emissions. We have a strategy to help our customers to reduce their emissions and to reduce our own. For more information visit www.hsbc.com/sustainability.