Six steps to realising a net-zero ASEAN
Much is said of the importance of Southeast Asia in the global economy. The region is home to 677 million residents1, or about 8.6 per cent of the world’s population2. Combined, the USD3.4 trillion economy3 of the 10-member Association of Southeast Asian Nations (ASEAN) accounts for some 3.6 per cent of global GDP4.
What’s less discussed is the region’s potential when it comes to helping the world mitigate climate change through net-zero emissions. Southeast Asia is currently home to 15 per cent of the world’s tropical forests, which collectively store more than two-thirds of global carbon stocks5. However, with its population growing at about 1 per cent annually, more than 900 million consumers will live in ASEAN by 20506. The economy is expected to grow accordingly – and be accompanied by widespread deforestation7.
Low-carbon growth is an imperative for ASEAN. In 2018, carbon dioxide (CO2) emissions stood at almost 1.6 billion tonnes for the bloc8, accounting for 4.7 per cent of world’s 34 billion tonnes of CO2 emissions9. Yet with the predicted high population and economic growth, the amount of carbon in the atmosphere could almost double by 204010. What can be done?
At the recent “ASEAN Business Forum 2021: Is there an ASEAN way to sustainability?” webinar staged by Standard Chartered, industry leaders identified six steps that will help realise the region’s low-carbon future while building a more prosperous and sustainable ASEAN.
1. Understand that sustainability and growth go hand in hand
Many organisations view sustainability and economic growth as an either-or. For Dr Isabelle de Lovinfosse, Head of Southeast Asia COP26 Strategy at the British High Commission in Singapore, however, both go hand in hand.
“Businesses shouldn’t look at the transition to a more sustainable economy as a threat,” she asserts. “It’s about seeing it as an opportunity to grow, and become more resilient.” Businesses and governments must set emission-reducing targets and frequently monitor the progress of these, she adds, irrespective of how large or small these goals are. In addition, the world’s natural ecosystems must be allowed to thrive.
2. Deploy low-carbon solutions
Currently, about 80 per cent of Southeast Asia’s energy mix is made up of high-emitting coal and oil, and moderately emitting natural gas11. Increasing the proportion of zero-emission energy forms like geothermal power and biofuels will significantly reduce the region’s carbon footprint, but other measures such as energy efficiency technologies and carbon capture and storage must also play their part, explains Azis Armand, Vice President Director and Group Chief Executive Officer of Indika Energy.
While many of these technologies are already deployed, there may be some resistance to these in conventional companies, Armand cautions. Boards at such entities tend to be unfamiliar with how these technologies work, and unaware of the benefits these will bring to energy portfolios as well as the overall carbon footprint of individual companies. Education is key to overcoming such issues, and will help to spur greater interest in zero-carbon energy among Southeast Asian companies. “In the next nine years, we need to reduce global emissions by 45 per cent,” adds Daniel Hanna, Global Head of Sustainable Finance at Standard Chartered. “ASEAN has a really key role to play.”
3. Embrace the circular economy
The reuse of all sorts of materials can reduce the carbon footprint of entire economies while slowing consumption of the world’s natural resources. Not only is the circular economy expected to reduce global emissions by 39 per cent by 203212, it will also lower materials usage by 28 per cent by the same date.
Dr Axel Schweitzer, Chief Executive Officer of ALBA Group, highlights the efforts of Singapore’s national e-waste management system13. Rolled out in July 2021, the initiative encourages consumers to responsibly dispose of electronic items such as ICT equipment, large appliances, batteries and solar panels at designated recycling bins. Manufacturers of these items are obliged to take these back and reuse the materials in them. The initiative is expected to reduce the 60,000 tonnes of e-waste generated annually in Singapore14.
4. Ensure project fulfilment
Unfortunately, sustainability projects often fall short of meeting their targets. “What we see especially in the field of recycling is not a lack of goal-setting,” observes Schweitzer. “But rather, not the right kind of implementation and coordination between the sustainability and sourcing departments.”
Differing views and conflicting priorities typically interfere with these initiatives. In the field of recyclable plastics, for instance, the combined goals of all industry players should create demand that far outstrips supply. Yet the inability of the market to meet its recycling goals curbs this need.
5. Measure and monitor carbon emissions
Presently, most organisations keep track of their sustainability initiatives through use of simple spreadsheets. This contrasts greatly with their respective financial records, which typically leverage sophisticated software and cloud-based solutions.
“While we all love Microsoft Excel, there are much more sophisticated approaches for the world to monitor carbon,” says Dr Lucas Joppa, Chief Environmental Officer at Microsoft. Emissions within supply chains are notably challenging to identify and manage, for example, yet they represent between 65 per cent and 95 per cent of a company’s carbon footprint15. “We need to move from a place where it’s novel to think about a carbon system of record to a place where it sits side by side with an organisation’s financial system of record if we are to make any meaningful progress towards net-zero.”
The Microsoft Cloud for Sustainability can help organisations with this task. Not only does the solution help identify, benchmark and monitor emissions, it can assist with setting carbon reduction goals as well16.
6. Mobilise green finance
Banks, investment managers and investors have a critical role in achieving net-zero. They can support low-carbon projects through loans or the raising of capital via debt and equity, and help build a vibrant carbon market. “We need to decarbonise as quickly as we can,” says Hanna. “And what we can’t decarbonise, we need to compensate for through offsets.”
In 2020, Standard Chartered committed USD75 billion to helping finance sustainable infrastructure17. The bank said in October 2021 that it will cease financing, at an individual client entity level, companies that are expanding in thermal coal, and by 2030, Standard Chartered will only provide financial services to clients that are less than 5 per cent dependent on revenues from this energy form18.
The bank is also playing a crucial role in establishing an ASEAN carbon market. Earlier this year, Standard Chartered announced its intention take action on climate change through the Singapore-based Carbon Impact X (CIX). A joint venture with three other organisations including the Singapore Exchange and Temasek Holdings, the voluntary carbon market will use cutting-edge tools like satellite imagery, artificial intelligence and blockchain to monitor the progress of offset projects. On 1 November 2021, CIX completed its first-of-its-kind portfolio auction of nature-based carbon credits with 19 global buyers from various industries.19
“50 per cent of the world’s nature-based offsets supply is in Asia, and a lot of that is sitting in ASEAN. We’d like to see this market grow 15-fold,” says Hanna. “CIX will play a critical role in bringing together buyers and sellers, and creating a trust-based environment, which will make a significant impact to the collective challenge we all face.”
1 https://www.worldometers.info/world-population/south-eastern-asia-population/
2 https://www.worldometers.info/world-population/
3 https://www.statista.com/statistics/796245/gdp-of-the-asean-countries/
4 https://www.statista.com/statistics/268750/global-gross-domestic-product-gdp/
5 https://ec.europa.eu/jrc/en/science-update/southeast-asia-s-forests-their-future-affects-ours
6 677 million growing by 1% annually over 29 years is 903.46 million
7 https://ec.europa.eu/jrc/en/science-update/southeast-asia-s-forests-their-future-affects-ours
8 https://data.worldbank.org/indicator/EN.ATM.CO2E.KT
9 https://data.worldbank.org/indicator/EN.ATM.CO2E.KT
10 https://www.mdpi.com/1996-1073/12/24/4650/htm
12 https://www.circularity-gap.world/2021
15 https://www.cnbc.com/2021/08/18/apple-amazon-exxon-and-the-toughest-carbon-emissions-to-capture.html