Why the battle for net-zero may be won or lost by corporate Asia

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Paul Marriott, President, Asia-Pacific, Japan, SAP Asia Pte Ltd, Neeraj Aggarwal, Regional Chair, Asia-Pacific, Boston Consulting Group

• Asia now hosts more than half of the world’s population and is responsible for more than half of global primary energy consumption.
• Asia’s energy consumption has afforded it accelerated economic growth and a significant emissions burden compounded by the region’s position in the global supply chain.
• A new white paper explores how businesses mitigate the risks from Asia’s role in the climate crisis and the hidden opportunities in their value chains.

The battle for net-zero will be won or lost in Asia, as this dynamic region continues to act as the engine for global economic growth.

The World Economic Forum’s white paper – Accelerating Asia’s Advantage: Your Guide to Corporate Climate Action – created in collaboration with the Boston Consulting Group (BCG) and SAP, explores this critical imperative for change and the remarkable business benefits that could be unlocked across the region.

Asia is home to more than half the world’s population. It is now responsible for more than half of global primary energy consumption. This demographic shift over the last three decades is significant as the region has catalyzed economic ambitions into accelerating growth. Such energized growth has not come without challenges, as Asia’s emissions burden has soared alongside its economic fortunes. The region is now the leading contributor to annual greenhouse gas emissions, with a 51% share in global carbon emissions.

Economic growth and unchecked emissions

Asia’s energy demand paints a telling picture of regional expansion over recent decades. The region’s share of primary energy consumption grew from 28.8% in 1991 to 53.5% by 2021. Asia’s share of global power demand expanded from 18% in 1990 to a projected 51% by 2025. Asia is a region whose power is, quite literally, on the rise.

The region’s pivotal role in global supply chains is also testimony to the complex economic balance Asia faces, creating a complex web of interregional embedded emissions. As a result, it finds itself at the centre of the climate crisis – the most vital engine of global economic growth and the region most vulnerable to the impacts of unchecked emissions growth.

Asia Pacific is responsible for around 50% of the world’s greenhouse gas emissions. Image: World Economic Forum

The world is already struggling to align with the necessary changes to achieve the vital 1.5 degrees Celsius Paris Agreement pathway, a fact starkly laid out in the Intergovernmental Panel on Climate Change’s Sixth Assessment Report. The implications for Asia on our current trajectory are extreme, with research revealing that a severe increase of 3.2 degrees Celsius would deliver a 26% dip in the continent’s gross domestic product (GDP). Southeast Asia fares even more poorly, with an expected hit of 37% to GDP. These economic impacts stand alongside far-reaching social and health considerations.

Solving this climate challenge poses a particularly complex problem for Asia. The region is diverse, and delivering a just energy transition that balances security, affordability and sustainability means no one-size-fits-all solution can be rolled out across all 48 countries.

Regional shifts in Asia will be responsible for more than half of the emissions reductions needed to achieve the International Energy Agency’s Sustainable Development Scenario by 2050 but the opportunity is commensurate with that challenge.

Asia is projected to unlock 43% ($4.3 trillion) of the $10.1 trillion revenue opportunity available by 2030 from activities like the expansion of renewable power, energy efficiency in buildings, transportation and agriculture and greater circularity in producing industries. The story of job growth is equally compelling, with more than half (58%) of the 395 million jobs required to service those opportunities in Asia.

Big business, big responsibilities

Companies are essential in realizing this opportunity and tackling overarching climate risks. They must implement processes to adapt to a warming world while mitigating the impacts of an expanding climate crisis.

The direction of travel is already apparent. The Science Based Targets initiative (SBTi) reveals that 2019 net-zero pledges covered just 16% of the global economy. As we look at the landscape today, that figure has reached 90%, reflecting a powerful transformation in global attitudes to addressing climate change.

Like the nuanced challenges faced by nations across the region, no single response is sufficient to address the complex challenges corporations face holistically. Companies must define and implement adaptation and mitigation strategies formed around best-practice experience and a deep understanding of corporate climate action.

In Asia, these implementations will face an even greater challenge, as they will need to be effectively delivered while ensuring a just energy transition, which embeds fair and inclusive action that engages communities across the region.

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How is the World Economic Forum fighting the climate crisis?

The World Economic Forum’s Centre for Nature and Climate accelerates action on climate change and environmental sustainability, food systems, the circular economy and value chains, and the future of international development.

• Through the Global Plastic Action Partnership, the Forum is bringing together government, business and civil society to shape a more sustainable world by eradicating plastic pollution.
• Global companies are collaborating through the Forum’s 1t.org initiative to support 1 trillion trees by 2030, with over 30 companies having already committed to conserve, restore and grow more than 3.6 billion trees in over 60 countries.
• Through a partnership with the US Special Presidential Envoy for Climate John Kerry and over 50 global businesses, the Forum is encouraging companies to join the First Movers Coalition and invest in innovative green technologies to enable net-zero emissions by 2050.
• The Forum is bringing global leaders together to reduce the environmental impact of value chains and make the $4.5 trillion circular economy opportunity a reality. The African Circular Economy Alliance is funding circular economy entrepreneurs and circular economy activities in Rwanda, Nigeria and South Africa, while the Circular Electronics in China project is helping companies reduce and recycle 50% of e-waste by 2025.
• Since launching in 2020, the Forum’s open innovation platform UpLink has welcomed over 40,000 users who are working on more than 30 challenges crowdsourcing solutions to the climate crisis.
• More than 1000 partners from the private sector, government and civil society are working together through the 2030 Water Resources Group to ensure availability and sustainable management of water and sanitation for all by 2030. The group has facilitated close to $1 billion of financing for water-related programmes.

Contact us for more information on how to get involved.

The white paper recognizes these complex challenges and presents a new “corporate action framework,” which outlines short, medium and long-term best practices to steer a strategic journey for companies regardless of industry or size.

The Framework incorporates the need for immediate action that prioritizes organizational climate action. It seeks to enable transformation by mobilizing an organization and supporting ecosystem-to-action change. Finally, it looks to unlock new growth in existing and emerging value chains, empowering corporations across Asia to capture their share of the multibillion-dollar value unlocked by this vital transition.

The corporate climate action framework. Image: World economic Forum

The new report also provides clear case studies of Asian businesses driving tangible climate outcomes across critical industries, including real estate, energy, transport, and agriculture.

The report, and the evidence, are clear – unmitigated climate change is the biggest threat of our generation to our companies, communities and countries. Corporate inaction on climate has a negative business impact, while timely corporate climate action will yield tremendous growth opportunities. It’s time for Asian corporate leaders to make bold changes for the good of their businesses and the region.