As we kick-off 2023, we are reflecting on the current state of the decarbonization movement across Asia, highlighting some key opportunities that we see ahead of us.
The bright spots show that deep decarbonization is possible.
Our work with individual customers has been, and continues to be, encouraging. For many companies, Science Based Scope 1 and 2 targets are now perceived as very achievable. We are seeing confidence grow when it comes to renewable energy procurement opportunities across the region. And where the main concern for businesses really is, lies with the value chain.
At RESET Carbon, we work with numerous footwear and apparel businesses which traditionally have more mature supply chains. We are regularly seeing how at least 50% reduction goals by 2030 can be delivered. Deep reductions in manufacturing are affordable, significant materials switches are available, and there are enough companies moving to drive these new behaviours and technologies to scale.
What still presents a challenge though is that the value proposition isn’t biting hard enough yet. In Asia, much of this responsibility falls at the feet of Governments who have been slow to regulate in 2022.
Regulation – and China’s growing response – is critical
For many corporations, particularly in Asia, and particularly those who are not exposed to concerned B2B or B2C customers or risk conscious investors, the value proposition for ambitious decarbonization simply is not strong enough without regulation.
To date, Asian governments have moved far too slowly, but it is coming. As ever the pace and direction of change in China is likely to be critical in influencing much of the rest of the region.
In 2022 with the challenges posed by COVID-19, it appears on the surface as though decarbonization has taken a back seat. But behind the scenes, China has been preparing for action. The 20th National Congress of the Communist Party of China (CPC) took place in October, and revealed important updates in China’s green transition plans, including:
- President Xi’s speech, which highlighted green development as a top national priority for the next five years
- The appointment of Chen Jining as the new Shanghai party secretary, whose background in environmental engineering and experience Minister of China Environmental Protection speaks volumes
- The commissioning of several committees to develop sustainability standards fit for China, including the Zero Carbon China Standards, China ESG standards, and more
In 2023 we expect a lot of this behind the scenes work and preparing of new policy to come into view and accelerate the rate of change rapidly. And with China moving we believe other Asian markets, for example those in Southeast Asia competing for supply chain business, will need to respond.
Hong Kong’s two electricity providers (HK Electric and China Light and Power) highlight the power of Government involvement. HK Electric and China Light and Power have both aligned their public corporate goals with the Government’s Net Zero by 2050 target. For many Hong Kong located corporates this potentially means significant amounts of future scope 2 emissions will be reduced by their utility providers making the task of hitting ambitious goals significantly easier.
The 1.5° target is still relevant for businesses
As a final thought, although it is becoming increasingly clear that the 1.5°C target is going to be difficult to achieve at the global level we don’t expect this to change the way that businesses look at the situation. Companies in practice select their own level of ambition, using SBTi and other programmes. Whether or not global emissions can reach this level has no bearing on an individual companies’ ability to do the same.
Companies will also find it difficult to justify setting targets at any lower threshold than 1.5 degrees. Therefore building 1.5°C strategies will deliver the same benefits to companies – reduced exposure to regulations, investor, and customer preferences – as it does today.
Despite the absolute need for regulation to ensure meaningful progress on decarbonization at a global level, companies will hopefully not be distracted by the failure of global policy and chart their own path.
If your business needs support with any aspect of its carbon journey, connect with our team of engineers and carbon consultants for an exploratory call today.