Poman Lo is Founder of the Institute of Sustainability and Technology, Vice Chair of the Century City Holdings, Managing Director of Regal Hotels Group, and Adjunct Professor at the Faculty of Business and Economics of the University of Hong Kong.

Asia is at a critical juncture where the potential for innovation and sustainable development intersects with pressing issues like poverty, climate change, and growing inequality. To tackle these challenges effectively, we must channel catalytic capital into projects that not only address these issues in the short term but also ensure a sustainable use of time and resources. In recent years, we witnessed an increase in impact investing around the world, providing a compelling means to achieve both profit and positive social or environmental impact. Driven by changing investment preferences, particularly among the next generation, there is now sufficient evidence of commercial returns from such investments.

The author delivering a welcome address at the inaugural One Earth Summit

And yet, despite its potential, impact investing remains comparatively nascent. Asia accounts for only 16 percent of global impact investment assets under management, compared to 28 percent in the United States and Canada. Investors here face barriers such as limited awareness, fragmented impact measurement and management (IMM) standards, and underdeveloped regulatory frameworks.

To unlock Asia’s full potential, it is imperative to address the structural and systemic challenges unique to the region and mobilize a concerted effort through Private-Public-Philanthropic Partnerships (PPPP). Over the last six months, I embarked on a quest to interview investors in Asia to understand why impact investing is lagging behind and what we can do about it. Some of the findings are presented in the following paragraphs.

Traditional investors—especially family businesses with rather conservative investment philosophies—often struggle to engage in impact investing due to a lack of consolidated resources on IMM and the absence of universally accepted solutions. This can lead to a ‘reality-perception gap,’ whereby impact investing is misconceived as a form of philanthropy, dissuading investors who might not see the potential for financial returns alongside social and environmental impact. Furthermore, the level of financial and investment literacy among capital providers varies across countries, preventing the necessary capital flow into impactful projects. Together, this skepticism creates the need for a unified language and mutual understanding of impact investing practices.

While there is no shortage of environmental awareness or positive attitudes, investments in sustainable projects are seldom seen as “investments.” The lack of conviction in impact investing is blocking progress. However, the belief in ‘doing well by doing good’ is the fuel for innovation and the key to transforming our economy. Embracing impact at the core of business models can lead to profits growing in parallel with impact. Many traditional investors and family offices make a distinction between philanthropy and conventional investments, not expecting impact projects to generate a return on investment. There is certainly no shortage of philanthropic spending. For example, the Temasek Foundation in Singapore mobilized over $1 billion for sustainable causes. This leads to missed opportunities where impact investments could generate both impact and return. Bridging this gap and educating traditional investors about the potential and benefits of impact investing is crucial. Achieving widespread acceptance of catalytic capital among investors in Asia will take time, but it is essential to move the needle from alternative investments to mainstream.

Most impact investing frameworks have been developed in the West, where economic development is advanced. While effective in their respective contexts, these frameworks often fall short when applied in Asia due to differences in economic, social, and regulatory environments. Western IMM has evolved in settings where certain assumptions about infrastructure, data availability, and regulatory support hold true. However, these assumptions do not always apply in Asia, where the landscape is marked by varying stages of economic development, diverse cultural contexts, and differing regulatory frameworks. Additionally, the lack of reliable data and established benchmarks in many Asian markets complicates the adoption of these frameworks.

Additionally, many investors encounter a disconnect between policy and practice. While most Asian countries claim the need for sustainable development, unfavorable and uncertain regulatory environments often stand in the way. Volatile political and regulatory environments in some Asian countries create higher risks for investors, making it challenging for stakeholders to engage in impact investing. For instance, Indonesia’s complex regulatory framework significantly impacts the ability of investors and companies to fulfill their financial and impact commitments. Regulatory unfamiliarity with impact investing can lead to inefficient and restrictive policies or even a complete absence of supportive policies, highlighting a clear need for capacity building and executive education. Private sector investors and businesses are best suited to inform policymakers, as can be seen in other regions, e.g., by the German Federal Initiative of Impact Investing.

 

Sector-Specific Opportunities in Impact Investing

But why do we need all this? Why can’t we continue with business as usual? I am a strong believer that we can do well by doing good. And I will make the case that we don’t have to sacrifice profits. In fact, I am certain that the next wave of unicorns will be climate tech startups. But don’t just take my word for it. Below are just a few of the many sectors ripe for transformation in Asia.

With only five and a half years left until 2030—a critical milestone for many organizations and countries—there is an urgent need for action. Several companies have set ambitious 2030 decarbonization goals, underscoring their commitment to sustainable energy transition. For example, Tata Power aims to have 70 percent of its total capacity from renewable sources by 2030. IKEA has committed to becoming climate-positive by 2030, focusing on reducing more greenhouse gas emissions than the IKEA value chain emits. CLP Holdings has set a target to phase out coal-fired generation assets and significantly increase its renewable energy portfolio by 2030. These examples highlight the region’s momentum towards a low-carbon future.

Asia’s vast potential for renewable energy makes it a prime area for impact investing. As of 2024, China’s solar energy market is the largest in the world, with a projected installed solar photovoltaic capacity reaching approximately 700 GW by the end of the year and expected to surpass 1,000 GW (1 TW) by 2026. The region’s growing energy demands, coupled with environmental concerns, create a compelling case for investments in clean energy projects. Solar energy, in particular, holds immense promise. India, for example, has become a global leader in solar energy deployment, with numerous large-scale solar farms contributing to the national grid. Impact investors can support similar projects, facilitating the transition to renewable energy sources and reducing dependence on fossil fuels.

Wind energy is another sector ripe for impact investing. Vietnam’s coastal regions offer ideal conditions for wind farms, and investments in this area can significantly boost the country’s renewable energy capacity. Additionally, smaller-scale renewable projects, such as community-based microgrids, can provide sustainable energy solutions to off-grid rural areas. These projects not only contribute to environmental sustainability but also create local jobs and stimulate economic growth.

Moreover, impact investors can explore opportunities in energy efficiency technologies and sustainable infrastructure. By funding innovations that reduce energy consumption and improve grid resilience, investors can enhance the overall efficiency and reliability of energy systems in Asia. Such investments align with broader goals of reducing greenhouse gas emissions and combating climate change.

Another example of a successful PPPP in the energy transition is China’s push towards electric vehicles (EVs) and battery production. By mandating that 40 percent of all vehicles sold by 2030 must be electric, China has significantly accelerated the adoption of EVs. This policy has not only reduced urban air pollution and greenhouse gas emissions but also spurred global advancements in EV and battery technology, driving down costs. The extensive collaboration between government entities, private companies, and consumers has resulted in substantial benefits, including cleaner air, improved public health, and enhanced national energy security.

Lastly, Antora Energy has developed a modular thermal battery capable of outputting zero-emissions heat and power. This technology targets the decarbonization of manufacturing, the largest source of global emissions. With support from Breakthrough Energy Ventures, Antora launched its first commercial-scale thermal battery and opened a manufacturing facility in California, setting the stage for global impact. Similarly, companies like Brimstone are revolutionizing the cement industry by developing processes to produce Portland cement from calcium silicate rocks, eliminating the embedded CO₂ typically released from limestone.

In summary, the energy transition is inevitable. Whether through regulatory measures such as tariffs on brown products or an Asian adaptation of the Inflation Reduction Act or the EU Green Deal, there is a very likely trend in support of impact investing.

Another area of high potential is property technology. PropTech and sustainable living solutions present significant opportunities for impact investing. Decarbonizing our buildings and cities is crucial to achieving sustainability goals. Investing in technologies that maximize energy efficiency in buildings can drastically reduce greenhouse gas emissions. Smart building management systems, which use sensors and IoT technology to optimize lighting, heating, ventilation, and air conditioning (HVAC) systems based on real-time occupancy and usage data, significantly reduce energy consumption and operational costs. Additionally, integrating renewable energy sources such as solar panels and wind turbines into building designs further enhances energy efficiency and sustainability.

Energy-saving solutions, such as advanced insulation materials that reduce heating and cooling demands, high-efficiency HVAC systems, and smart thermostats that learn user preferences and adjust settings automatically, are essential for improving building performance. Innovations in new materials, such as green steel and cement, are also crucial for sustainable construction practices. Emission-free transportation and sustainable manufacturing and supply chains are other critical areas for investment.

One company making significant strides in this sector is AQT. Specializing in patented Micro Electrostatic Purification technology, AQT eliminates ozone generation and secondary pollution while saving over 60 percent in energy for air conditioning and offering air disinfection. Unlike traditional air purifiers, their technology does not require filter replacements. Highly popular during the pandemic, AQT’s technology has been applied to residential and commercial buildings, kitchen fumes, and tunnels.

Investing in PropTech and sustainable living solutions aligns with broader goals of environmental sustainability and offers profitable opportunities. By supporting these technologies, impact investors can contribute to the development of nature-positive cities and foster a greener future.

Impact investing can play a pivotal role in transforming healthcare access across Asia, particularly in underserved rural areas. One of the most promising avenues is the investment in telemedicine. By leveraging digital technologies, telemedicine can bridge the gap between urban medical expertise and rural patients, offering consultations, diagnoses, and even treatment plans remotely. This not only improves healthcare accessibility but also reduces the burden on overstrained urban healthcare facilities.

Mobile health clinics present another impactful investment opportunity. These clinics can travel to remote areas, providing essential healthcare services such as vaccinations, maternal care, and disease screening. Investments in such initiatives can lead to significant improvements in health outcomes, reducing mortality rates and improving the overall quality of life.

UOB Venture Management’s Asia Impact Investment Fund provides a noteworthy example of impact investing in healthcare. The fund, which focuses on sectors like education, healthcare, and clean energy, aims to achieve both financial returns and positive social impacts. One of its investments is Halodoc, a healthcare technology company in Indonesia. Halodoc connects patients from underdeveloped regions to over 20,000 licensed doctors via a mobile app, significantly enhancing healthcare accessibility and improving patient outcomes in rural areas.

Furthermore, with the rising middle class in Asia, particularly in China, India, Vietnam, and the Philippines, there is an increased demand for outpatient services, elder care centers, and hospitals. Asia accounts for 90 percent of the 2.4 billion new members of the middle class entering the global economy. These sectors offer promising impact-centric yet profitable investment opportunities. By supporting healthcare startups and social enterprises, investors can help scale solutions that address critical healthcare challenges, ensuring sustainable and equitable access to medical care.

 

Building A Supporting Ecosystem for Impact Investing

The future of impact investing in Asia hinges on collective efforts to build a robust ecosystem that supports and scales impact investment. This could be achieved by creating regional hubs and networks dedicated to impact investing. For instance, establishing impact investing forums in major cities like Hong Kong, Singapore, and Tokyo can foster knowledge exchange and collaboration. Additionally, launching accelerator programs specifically for social and environmental enterprises can provide the necessary mentorship and funding to scale innovative solutions. Partnerships with universities and research institutions in Asia can also enhance the region’s knowledge base and promote the development of region-specific impact measurement frameworks.

Impact investing is increasingly being globally recognized as a legitimate and vital practice. Within Asia, it can serve as a crucial mechanism to bridge the financing gap needed to achieve the UN Sustainable Development Goals (SDGs). As we strive to move impact investing into the mainstream, it is essential for the Asian investment community to define its identity clearly. This will help reduce the intangible barriers caused by confusion and misconceptions, considering the region’s diversity and unique challenges.

Developing a distinct Asian identity for impact investing—rather than merely adapting a Western dogma—will require concrete actions and stewardship from all stakeholders. Making the best use of existing resources, shifting mindsets, reducing market inefficiencies, and fostering greater collaboration among private, public, and philanthropic sectors are essential steps. I envision a future where considering broader social and environmental impacts alongside financial returns becomes the norm, particularly significant given Asia’s rapid economic growth and its implications for the region’s economies and people.

Impact investors can enhance the visibility and understanding of impact investing by leveraging existing networks to promote knowledge sharing, directing newcomers to relevant ecosystem builders, and accelerating partnerships between experienced and new investors. Advocacy efforts are crucial to increase awareness and dispel myths and misconceptions about impact investing. By reporting impact performance and driving IMM solutions collaboratively, investors can highlight the potential for commercial returns and influence a mindset shift within their organizations.

Part of that ecosystem should also include capacity-building. Impact investors can make a significant difference by funding programs that provide quality education and vocational training. These initiatives equip individuals with the skills needed to thrive in a rapidly evolving job market, fostering economic mobility, and reducing inequality. One area of focus could be the development of affordable and accessible educational technologies. Online learning platforms and mobile education apps can reach underserved populations, offering courses in various subjects and skills. Impact investments in these technologies can democratize education, providing opportunities for lifelong learning and continuous skill development.

Asia accounts for over half of the world’s population, 76 percent of the world’s STEM graduates, and has 12 times more millennials than the United States. This young workforce will undoubtedly drive tech development, making investments in education and skills development particularly impactful. By focusing on these areas, impact investors can help prepare a new generation of workers equipped with the necessary skills for the future.

Furthermore, proactive matchmaking of untapped capital to meet investment needs can smooth the flow of capital and address deficits across the continuum of capital. Building a supportive ecosystem is vital for scaling impact investing in Asia. Investing in internal capabilities or ecosystem builders, supporting new and existing organizations, and lobbying for a conducive regulatory environment are key strategies. Serving as a go-to source for information, collaborating with prominent platforms, and establishing a centralized knowledge base will help disseminate shared knowledge and provide region-specific thought leadership.

 

Hong Kong as a Future Hub for Impact Investing

With all this potential laid out, the next question becomes: where shall this impact revolution start? There are several strong candidates, from Tokyo, Seoul, and Shanghai—as large financial metropolises backed by significant GDP—to one of the twin cities: Singapore and Hong Kong.

Hong Kong has the potential to become a leading hub for impact investing in Asia. Its strategic location, sophisticated financial infrastructure, and access to both Eastern and Western markets uniquely position it to facilitate PPPP and serve as a bridge, facilitating cross-border investments and collaborations crucial for impact investing.

The city has been at the forefront of financial innovation in Asia for decades. It was one of the first regions in the world to introduce tokenized green bonds, showcasing its commitment to sustainable finance. Tokenized green bonds leverage blockchain technology to enhance transparency, reduce transaction costs, and increase accessibility for a broader range of investors. This innovation not only boosts investor confidence but also sets a precedent for other financial centers to follow.

Moreover, the Hong Kong government has shown a proactive stance in promoting sustainable finance. Initiatives such as the Green and Sustainable Finance Grant Scheme provide subsidies to cover bond issuance expenses, encouraging more companies to issue green bonds. The city’s regulatory bodies are also working towards creating a conducive environment for impact investing by developing clear guidelines and standards for measuring and reporting social and environmental impacts.

Hong Kong is uniquely positioned to maximize synergies with Greater Bay Area cities, playing a strategic gateway role as a regional green finance hub for sustainable investments. The city aims to reach carbon neutrality by 2050 and has been number one in Asia for green and sustainable debt, issuing more than $56 billion in 2021, which is four times the amount issued in 2022. Notably, it was the first Asian government to issue 30-year green bonds in U.S. dollars. Building a green technology ecosystem to attract top-notch enterprises and startups to set up their operations is another strategic focus. This ecosystem will foster innovation and enhance Hong Kong’s role as a center for sustainable finance.

Hong Kong has already seen success in impact investing through various projects and initiatives. A group of prominent family offices and business owners have established the One Earth Alliance (OEA), a collaborative platform to promote impact investing across Asia.

The OEA focuses on several key areas. In the realm of knowledge exchange, the OEA is dedicated to creating a robust platform for sharing sustainability practices and technologies. This involves organizing summits, fireside chats, and workshops aimed at fostering cross-industry collaboration and idea incubation. By facilitating these interactions, the OEA helps to disseminate best practices and cutting-edge technologies, ensuring that all members are equipped with the latest knowledge and tools to drive impactful investments.

The OEA emphasizes co-investments, actively sharing investment opportunities among its members and offering due diligence services and insights to support informed decisionmaking. This collaborative approach not only broadens the pool of available capital for sustainable projects but also leverages the collective expertise of the alliance to identify and scale promising technologies. By supporting members in scaling technologies within its ecosystem, the OEA ensures that impactful innovations receive the necessary financial and strategic backing to grow. This collaborative investment strategy is highlighted in the alliance’s panel discussions, where members can explore synergies and co-investment opportunities.

The OEA is committed to capacity building and research. This includes a pledge to educate a significant percentage of leadership and workforce in sustainability practices, setting tangible targets for all members to achieve. By prioritizing education, the OEA ensures that its members are not only aware of sustainable practices but are also capable of implementing them effectively within their organizations. Furthermore, the alliance encourages and funds interdisciplinary research through philanthropy, emphasizing the importance of academic and practical research in advancing sustainable development. This focus on research is a key aspect of the alliance’s final sessions, where members discuss and plan for ongoing and future research initiatives.

The Family Business Network, a key driver in Europe, is now a partner of the alliance, bringing Western expertise and networks into Asia. This partnership enhances the OEA’s ability to leverage diverse perspectives and resources to drive sustainable development. Together, members of the alliance are determined to promote knowledge sharing, capacity building, and deal sharing to amplify sustainable development in Asia. With strong anchor partners, including the United Nations and World Economic Forum, the alliance exemplifies how diverse stakeholders can leverage mutual interests and cross-sector partnerships to kickstart the impact revolution in Asia. By pooling resources, knowledge, and networks, the alliance ensures that investments are not only financially viable but also generate meaningful social and environmental impact.

In summary, with its strategic location, advanced financial infrastructure, innovative financial instruments, supportive regulatory environment, and strong collaborative networks of family businesses and large corporations, Hong Kong is well-positioned to become a leading hub for impact investing in Asia. By utilizing these strengths, Hong Kong can attract global impact investors, mobilize significant capital for sustainable development, and drive positive social and environmental change across the region. The city’s proactive approach and successful track record in sustainable finance further reinforce its potential as a center for impact investing, setting an example for other financial centers to emulate.

 

Consensus Building & Education

The future of impact investing in Asia hinges on collective efforts to build a robust ecosystem that supports and scales impact investments. Building consensus and educating stakeholders is critical. Ecosystem builders should facilitate conversations around common principles that define impact investing and involve new partners, such as development consultants and auditors, to provide insights and credibility. By playing an active educator role, these entities can share best practices for impact measurement, management, and reporting, thereby fostering a well-informed and cohesive impact-investing community in Asia. By defining its identity and addressing the unique challenges of the region, Asia can unlock its full potential and create a sustainable and inclusive future for all.

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