The Green Revolution in Asia-Pacific: Companies Racing to Net Zero
As countries across the Asia-Pacific (APAC) region make ambitious commitments to achieve net zero targets, a green revolution is swiftly taking hold. In response, businesses are urgently implementing strategies to decarbonize their operations, recognizing that sustainability is not just a buzzword, but a critical component for their very survival in a rapidly changing world.
Leading the Charge: Setting Ambitious Targets
Over 670 APAC companies have pledged to slash their emissions through initiatives like the Climate Disclosure Program (CDP) and Science Based Targets initiative (SBTi), showcasing a remarkable commitment to combatting climate change.
These companies are not just making vague promises, but are taking concrete actions to align with global efforts to limit warming to 1.5°C above pre-industrial levels.
Their dedication to sustainability and reducing carbon footprints is a testament to their forward-thinking approach and recognition of the urgent need for environmental stewardship in today's rapidly changing world.
Despite the pandemic, momentum is building. Since 2019, the number of companies aiming for the most ambitious 1.5°C pathway has doubled annually.
Currently, 254 firms have set SBTi targets, each committing to cut absolute emissions by 4.2% every year.
Who's Leading the Pack?
Japan's leadership in emissions reduction targets is truly commendable, especially considering its relatively low contribution to regional emissions at just 6%. On the other hand, Australia stands out for the high proportion of businesses committed to the fast-track 1.5°C pathway, showcasing a commendable dedication to sustainability.
In terms of industries, manufacturing and services are leading the charge, with 29% and 21% of companies respectively committing to emissions reduction targets. It is interesting to note that sectors traditionally associated with high emissions, such as power generation and fossil fuels, are lagging behind in this green revolution. This highlights the need for these industries to accelerate their efforts and align with global sustainability goals to drive impactful change.
The Scope 3 Challenge
For many organizations, tackling Scope 3 emissions – those from their value chain – presents a significant challenge. Over half of the companies that have committed to targets through initiatives like the Climate Disclosure Program (CDP) or Science Based Targets initiative (SBTi) are actively addressing this hurdle.
Leading the charge in this effort are industries like biotech, healthcare, and pharma, who are not only setting ambitious goals for themselves but also pushing their suppliers and customers to follow suit by establishing their own emission reduction targets.
This collaborative approach within the value chain demonstrates a shared commitment to sustainability and a recognition of the interconnectedness of environmental impact across industries.
By engaging stakeholders at every level, these companies are paving the way for a more comprehensive and impactful reduction in greenhouse gas emissions throughout the region.
The Big Picture: Impact and Opportunity
These commitments are set to slash regional emissions by at least 8% – that's 336 million tons of CO2 by 2030, with an additional 104 million tons by 2050. If we include companies that have pledged but not yet set targets, we're looking at a 12% reduction in regional emissions.
While putting a price tag on this is tricky, conservative estimates suggest companies could avoid $3-10 billion in costs by 2030 if carbon pricing takes hold in APAC.
The Road Ahead: Challenges and Opportunities
The good news? About 40% of emissions could be cut with a positive economic impact, and another 20% at a relatively low cost of less than $50 per ton of CO2.
Companies aren't just playing defense – they're eyeing opportunities too. While extreme weather poses risks worth about 26% of revenue, the potential gains from green growth and low-emission products could boost revenue by 18%.
In today's climate-conscious world, addressing your carbon footprint isn't just good PR – it's essential for staying competitive. Smart businesses are setting clear emissions targets, mapping out reduction strategies, and positioning themselves to capitalize on the green growth revolution.
The race to net zero is on. Are you ready?
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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Maiden Capital. The information provided is meant as a general guide only and should not be construed as investment advice. You should always consult your financial, legal and tax advisers regarding private equity and real estate investments