Speaking Wednesday at the 6th World Islamic Economic Forum in Kuala Lumpur, Najib said Malaysia was ready to spearhead such an initiative.
"There is tremendous potential in the development of alternative energy resources," he said.
Given the importance of energy security, the prime minister said, a green agenda should be central to policy making.
"The current reality is that we all stand accused of doing too little too late," said Najib. "We need to do more to develop alternative energy sources that address growing requirements and prevent further degradation of the environment."
While Najib did not provide details about the clean energy development bank he proposed, he said he hoped it would be discussed Thursday, the final day of two-day "Gearing for Economic Resurgence" meeting.
About 2,000 government and business leaders from 67 countries attended the forum, including Indonesian President Susilo Bambang Yudhoyono, Maldivian President Mohamed Nasheed, Bangladeshi Prime Minister Sheikh Hasina and first vice-president of Iran Mohammad Resa Rahimi, the Malay Mail newspaper reported.
Najib called for more inter-governmental collaboration to formulate policies and initiate programs that promote renewable energy options such as biofuels.
"The Middle East has their petrodollars," The National Newspaper quoted Indonesian President Susilo Bambang Yudhoyono as saying. "Indonesia has its vast natural resources. All of us have resources to contribute. We can pull these together and achieve synergy and prosper together," Susilo said.
At the United Nations Climate Change Conference in Copenhagen last December, Najib announced that Malaysia had agreed to reduce its carbon dioxide emissions by up to 40 percent by 2020 compared with 2005 levels, subject to assistance from developed countries in the form of technology transfer and adequate financing.
Malaysia now relies on natural gas to generate 60 percent of its electricity; coal accounts for 24 percent, with the remaining mostly hydro and biomass power.
During Wednesday's forum, the Malaysian prime minister cited his country's green initiatives, including the establishment of a Ministry of Energy, Green Technology and Water dedicated to addressing environmental issues as well as national biotechnology and biofuel policies.
Malaysia's Energy, Green Technology and Water Minister Peter Chin said in a report last December that seven countries -- Germany, France, Britain, Italy, South Korea, Japan and China -- had expressed interest in helping Malaysia develop green technology.