As nations continue to focus on tackling the COVID-19 pandemic, human civilization also simultaneously faces one of its biggest challenges - the race to net-zero. This balancing act, to reduce and remove greenhouse gas (GHG) emissions, must be achieved if we are to limit the worst effects of climate change. And with the COP26 global gathering getting underway, it is increasingly clear that without talk transitioning to quantifiable and widespread action, then the target of achieving net-zero emissions by at least 2050 will be doomed to failure.
The issue is not that the global community does not agree that action is needed. In total, 196 countries have signed the climate change mitigation targets of the Paris Agreement. Reaching net-zero therefore requires a continuous orchestration of various stakeholders with different interests, supported not just by bold commitments, but by better policy design and an enabling environment.
A growing role for South East Asia
At the global level, new analysis by the UN shows that the world is falling well short and the current level of ambition will not sufficiently reduce carbon emissions. In Asia, it is a similar picture – with Climate Action’s Tracker listing the progress of most country as ‘highly insufficient’.
While Singapore has rolled out the Green Plan 2030, Indonesia and Laos have announced net zero targets, and a number of countries are exploring carbon pricing schemes, it is a concern that none of the ASEAN nations have a climate plans that meets the goals of the Paris Agreement.
Against this backdrop, the Global Reporting Initiative (GRI) – provider of the world’s most widely used and trusted sustainability reporting standards – and SM Investments, the largest business conglomerate in the Philippines, jointly delivered the ASEAN E-Sustainability Summit on 21 and 22 October 2021. With more than 8,400 over two days, this series of seminars took place under the theme “Leaving No One Behind: Private Sector in Solidarity for Sustainable COVID-19 Recovery and Delivering the SDGs”. Many of the summit discussions can be viewed in YouTube recordings.
A business case for net-zero
Some would say that, given that GHG emissions for many ASEAN countries are relatively low, when put in a worldwide context – the Philippines emissions account for 0.4% of the global total, for example – why should we act? Federico Lopez, Chairman and CEO of First Philippine Holdings (FPH) Corporation posed the question, “why not leave the responsibility to the world’s largest emitters?”. Yet as he went on to explain, South East Asia, and especially the Philippines, is one of the most vulnerable regions to global warming, therefore, the country has to respond urgently too.
Beyond impacts on the environment and communities, the price tag of inaction for the ASEAN region will run into trillions of dollars. South East Asia is a supplier for many global supply chains – from resources and food such as rubber, rice and palm oil, to high-tech manufactured goods. Yet many of these supply chains are not yet climate-friendly, which raises risks for the future competitiveness of the region, while continuing to increase energy demands and emissions.
Leaving no one behind in the low-carbon transition
Giulia Genuardi, Head of Sustainability Planning and Performance Management of Enel SpA (Italy) and a member of GRI’s Global Sustainability Standards Board (GSSB), cautioned that while decarbonization is absolutely necessary, it has to be a just transition. As she put it, net-zero is a “global movement that requires a coordinated roadmap and collaboration across countries, sectors and industries to ensure that no one is left behind in the process”.
Increasing climate shocks and the continuing pandemic negatively impact vulnerable communities the most. Sara Jane Ahmed, Finance Advisor with the Vulnerable 20 (V20) Group, emphasizes the importance of building resilience in the local contexts and global economy to address inequalities. She shared at the Summit that progressing the Sustainable Development Goals must go hand-in-hand with the low-carbon transition.
However, the transition to a decarbonized economy does not come without challenges. Jade Feinberg, SGX Vice President for Sustainability and Sustainable Finance, shared the steps companies can take at different stages of their decarbonization and transition journeys and how Climate Impact X (CIX) contributes to a holistic climate mitigation strategy. CIX, as a global exchange and marketplace, will provide price discovery, quality standardization, increased trust and access to high-quality carbon credits for hard-to-abate emissions.
Businesses move forward to address barriers
All is not lost for ASEAN’s race to net-zero, with the private sector leading the way and setting ambitious targets to decarbonize. As Lopez of FPH stressed, “the urgency for all of us is to go beyond incremental sustainability and transform into regenerative forces that align our profit engines with the need for a better, more just world and a safer planet.” Massive changes are underway – including shifts in consumer buying habits for greener products, increased corporate transparency on climate impacts though better reporting, and halting investment in coal power – all of which increases opportunities of businesses to participate in the net-zero targets.
NEO, a real estate developer with a portfolio of seven 5-star BERDE certified green office buildings, is the first office portfolio in the Philippines to achieve net-zero emissions. Raymond Rufino, CEO of NEO, shared that companies from developing countries and of modest size can and should do their share to contribute to decarbonization. He also corrected the mistaken notion that only new buildings can be energy efficient, underscoring there is even a stronger impetus for existing buildings as they emit higher GHG emissions.
The need for credible targets and disclosure
Ahead of COP26, 200 companies around the world have pledged net-zero emissions by 2040. But how do we guarantee that these commitments are translated into actions? On the flipside of what can be called net-zero exuberance, there is an increased risk of “carbonwashing”, according to Dr. Kim Schumacher of the Tokyo Institute of Technology and a GRI GSSB member. He warned that there is a “massive degree of corporate impact frontloading in the form of climate change mitigation-related public relations… but is not matched with similar ambition in terms of tangible action with regard to proper measurement, reporting, and verification
At the capital market level, Andrew Glass, Head of Sales and Partnership of Viridios Group, shares that environmental artificial intelligence (AI) technology can create trust transparency to the complex voluntary carbon credit and co-benefit markets, which can help translate the value of ESG in dollar terms to C-suites and the Boards.
Enel, a global leader in sustainable energy, fosters trust and credibility among its stakeholders through sustainability reporting. Genuardi emphasized that reporting is a fundamental instrument in establishing accountability and transparency.
Katrina Francisco, Senior Director of SGV, believes that decarbonization offers opportunities in which businesses can create a long-term value and embed such value in the narrative of their sustainability reports. As companies progress in their reporting journey, Francisco encourages companies to have their reports externally assured, once a robust internal sustainability reporting process is in place, to help build credibility. When seeking assurance, Dr. Schumacher cautions companies of “competence greenwashing”. The newly updated GRI Universal Standards emphasize that assurance should be carried out by experts that possess the necessary credentials and competence.
Time is short – but hope remains
The concerns about if and how we will reach net-zero in time are legitimate. The warning sirens dare getting louder and the risks – environmental, social and economic – are increasing, if as a global community we do not fully commit to the low-carbon pathway.
Yet, as the engagement of the private sector in the ASEAN region has underlined, companies are willing to contribute towards global solutions. And as the 2021 report from the Intergovernmental Panel on Climate Change sets out, the climate can still be stabilized, if we redouble our efforts and quicken the pace of change. This is certainly the hope for all of us, one that we can only reach if all organizations, governments – and companies – work together to secure a sustainable future.