Three hotspots indicate how more action will be mandated and done next year to boost climate action and regulatory compliance
With the Asia Pacific region’s many low-lying coastal cities exposed to flood and typhoon risks, coupled with rapidly increasing humidity and temperature levels, climate change mitigation is the top business agenda necessitating more robust and comprehensive climate action.
In 2023, as governments and corporations look to hasten the pace of climate change resilience, what are some environmental, social and governance trends to monitor and preempt? Three areas of note are as follows:
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At every level of society, the climate action pressure is on
As more APAC countries commit to net zero targets, decarbonizing emissions from business operations has become a license for operation for companies in the region. To stay competitive in an increasingly climate-conscious region, more companies will have to proactively address their own footprint and seize the opportunity for greening efforts.
Our own survey data in September 2022 has indicated that sustainability is a central part of respondents’ organizational strategy — marking a 13% increase over the previous 12 months.
In the year ahead corporate climate action will build on the momentum by tapping on technology, embracing digital transformation, sourcing alternative energy sources, and establishing multilateral partnerships for skills and knowledge transfers.
As sustainability becomes a critical business priority, achieving climate goals will be on most organizations’ restructuring agendas.
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Data will drive climate action leadership
Continual technological advances will offer new possibilities for organizations to optimize efficiency in areas such as power consumption, emissions and waste management, as well as boost monitoring and sustainability of goals and metrics.
Data will be the lifeblood of climate leadership in2023. It will help enterprises set a baseline to know what need to be changed, measure changes over time, and ensure that the change achieved is meaningful. Information, and quality of information, will be crucial in achieving sustainability goals, and 2023 will see an accelerated shift to prioritize data exploitation to further climate goals.
Public and private organizations will move to build robust digital infrastructure by tapping on digitalized, centralized and cloud-based data management tools that, when combined with human expertise, accelerate decision-making and drive results that meet ESG mandates.
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Stronger push to address Scope 3 through greater supply chain collaboration
Logistics is a critical enabler of the global economy, and APAC has a significant role to play.
The region continues to undergo a fundamental shift from being a production hub for global markets to being a market that global companies increasingly source from, manufacture in and sell to. A PwC report estimated that trade between the 15 signatories to the Regional Comprehensive Economic Partnership (RCEP) could reach US$428bn by 2030.
With significant growth, there has also been refined climate-focused action to promote green production and economic development. One survey found that firms across the region have posted significant cuts to greenhouse gas emissions, with businesses from 12 APAC countries making the list of top 200 performers, including Japan, India, Taiwan, and Australia.
In 2023, we can expect corporate green action to move from a sole focus on companies’ Scope 1 and Scope 2 emissions, to include the indirect emissions that occur due to a company’s upstream and downstream value chain: Scope 3 emissions.
A corporation at the consumer end of a supply chain may have committed full-scale to a green action plan, but that would not mean much ultimately if it does not have any effect on smaller players down the length of the chain, which are often left in the dark. McKinsey estimates that up to 80% of consumer goods manufacturers’ emissions come from their supply chain.
Hence, 2023 will see greater collaboration between larger and smaller firms to lay the groundworks for industry-wide decarbonization to further climate goals and build supply chain resilience. Private-public partnerships will continue to encourage industry-wide decarbonization through collaboration and capacity transfer, and will set precedents for the coming year’s climate ambition and action.
As technology, consumer consciousness and even greener national policies build the case for robust and refined climate action, businesses must ensure sustainability-focused growth takes center stage in their operational capacities and priorities.
Only with aligned objectives, purposeful action and a forward-looking ethos, can the region develop and exercise the ability and capacity to take strong and comprehensive climate action in 2023.
