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In April 2023, the World Economic Forum, in collaboration with SAP and Boston Consulting Group (BCG), published a new white paper – Accelerating Asia’s Advantage: A Guide to Corporate Climate Action – detailing the impact of climate change on Asia, and the opportunities and best practices for businesses in the region.
Following are the key takeaways from the report.
What’s Happening in Asia?
As a region, Asia represents both the biggest impact on global emissions as well as potentially bearing the most significant challenges.
Asia contributes 51% of global greenhouse gas (GHG) emissions, with China, India, Japan, Indonesia, and South Korea cumulatively accounting for 43% of the overall total alone. That has enormous impact on the rest of the world. The global supply chain relies strongly on Asian economies like China, Indonesia, South Korea, Japan, and Malaysia, resulting in a significant interregional flow of embedded carbon emissions.
A report by the World Meteorological Organization (WMO) stated that there is a 50% chance of temporarily breaching the 1.5°C global temperature threshold in the next five years. Developed countries like the United States and Australia have already implemented much-needed legislation to boost sustainable outcomes, while China, the world’s biggest carbon emitter, has recorded a decrease in carbon emissions in recent months. Despite these positive strides, a lot needs to be done, and it needs to be done quickly.
In Asia, existing policies and corporate responses are not proportional to the threat the region faces. Asia is home to some of the world’s fastest-growing and most diverse economies, resulting in an increasing demand for lower-cost energy. Yet it is predicted that a severe increase in global temperature of 3.2°C would see a reduction of Asia’s GDP by 26% by 2050 – the second most at risk region in the world.
Even at a 1.5 °C temperature increase, Asia is still expected to experience yearly coastal flooding impacting 60 million people, long-term degradation to 70% of coral reefs through bleaching, around 5% lower crop yields, and 1.8 times increase in heatwaves.
How Can Asia Adapt to and Mitigate the Effects of Climate Change?
It is important that Asian countries as a unit acknowledge that the world will continue to warm even if we achieve many of our climate goals. The goal then becomes to adapt to a warmer world, while continuing to mitigate the effects of climate change.
Adaptation does not mean accepting defeat when it comes to mitigating climate change. Instead, combining adaptation and mitigation offers both the ability to better deal with future risks while driving emissions down. That means it’s critical to continue investing in energy infrastructure, decarbonizing supply chains, slowing GHG emissions, and removing existing GHGs from the atmosphere.
The drive to adapt and mitigate climate change should not be seen as a cost for businesses to bear. It is an opportunity.
There are significant new opportunities available for Asian businesses to benefit from climate action. Globally, revenues of up to USD$10.1 trillion is on offer from climate-focused business activities. Of that opportunity, Asia could realize a 43% share of total global opportunity, totaling USD$4.3 trillion from ideas like the expansion of nature-positive renewables, energy-efficient buildings, organic food and beverages, waste management, and reducing food and water loss in the value chain.
What Can Asian Corporates Do?
At a corporate level, there has been an encouraging acceleration in the number and scale of commitments and in reporting on climate action initiatives. In 2021, 3,879 companies in Asia disclosed their climate targets and emissions through the Carbon Disclosure Project (CDP) – a 29% increase year-on-year.
Yet there’s more to do. Only around 900 of those companies have thus far adopted science-based targets, and just 300 (8%) have net-zero targets. There is also work to be done to turn commitments into action, with only 38% of companies reporting that they are following a specific low-carbon transition plan.
Turning ambition into action requires a strategic focus and a defined short-, medium-, and long-term plan. Based on regional best practices, SAP and BCG created a corporate climate action framework that details:
- Immediate actions for businesses include:
- Making climate action a CEO priority.
- Understanding the scope and scale of climate risks and opportunities using public and proprietary data.
- Setting measurable decarbonization targets and milestones.
- Identifying and implementing cost-efficient solutions to tackle emissions
- Transformative medium-term actions include:
- Mobilizing organizational resources by embedding climate action strategies in corporate governance, committing investments, and clearly communicating activity.
- Accelerating collaboration with upstream and downstream stakeholders such as customers, suppliers, competitors, investors, and regulators.
- Long-term actions include:
- Expanding existing value chains and acquiring new capabilities to reduce emissions footprints across existing value chains through new technology and digital solutions.
- Fostering new ideas in adjacent businesses and new green markets.
Asian businesses face diverse opportunities and challenges. Hence, these solutions must be custom-made to create unique measures that meet global demands. Asian leaders must take bold measures to save their businesses and the region. Pledges and net-zero commitments made at global summits must turn into actions.
Learn more about SAP Asia Pacific sustainability solutions, insights, and customers here.
