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

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.

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.

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.

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.

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 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.