2025 Wasn’t Great for Climate Action… But Not the End of the World Either
In Asia, 2025 didn’t feel like a banner year in the fight against climate change. Although we did see continued evolution of government policy – for example, power sector regulation in Vietnam and a potential early Chinese emissions peak1 – there wasn’t much from governments that forced companies to sit up and re-evaluate core risks and business strategies.
For those of us working on supply chains, US Government tariffs and EU Omnibus regulations – coupled with some regional walk-backs on Scope 3 emissions accounting – often raised leadership level conversations with companies about the timing and ambition for investing in low carbon supply chains.
On the flipside, many more mature ‘carbon-serious’ companies – that have put in the work on carbon accounting and emissions targets – went deeper into the implementation challenge and into conversations about making investments to reduce emissions across their operations and value chains. In 2025, corporate renewables procurement, for example, became a much more widespread topic of discussion in East and Southeast Asian markets.
Decarbonization Outlook in 2026: Trends, Insights and Expectations
Despite headwinds, the corporate decarbonization situation has continued to mature. Going into 2026, what issues are we expecting to drive the debate?
- Most companies see the longer game. Despite challenges, climate action has not fallen off a cliff in Asia. With 2025 sitting alongside ’23 and ’24 as the hottest three years on record, most companies realize that short-run political sentiment may not be the best guide for corporate climate strategy. So, whilst investments in carbon reductions are becoming more targeted, valuable legacy programs represent significant sunk costs linked to a longer-term business case that are likely to be protected. We expect this trend to continue to deepen.
- Ready or not, carbon border taxes arrive this year. As part of that longer game, companies and products under the scope of the EU’s Carbon Border Adjustment Mechanism (CBAM) are being impacted from January 1, with further category expansions to new products and raw materials on the way. Countries such as Taiwan, Singapore, Malaysia and Thailand are all considering domestic regulatory responses which could further broaden the number of companies impacted by a carbon pricing regime in the next couple of years. Even a modest price signal is going to change how businesses treat the climate problem – especially those in supply chains with tight margins. Whilst awareness of potential cost exposure remains surprisingly low, we expect 2026 to mark the beginning of the shift from ‘nice-to-have’ to ‘core competitiveness’ for low carbon supply chains in tax-affected sectors.
- Climate leaders are becoming more visible, revealing a competitive edge. The companies that have stayed focused and ‘climate-serious’ are becoming increasingly visible compared with those that are not. In recent years companies have often been evaluated more on their targets and intentions than their actual performance, but as the numbers between the ‘climate serious’ and others diverge, it becomes increasingly easy to understand who is on top of their carbon risk and who is not. To give one example, apparel market leaders such as Nike, H&M, adidas and Inditex are disclosing reductions in scope 3 emissions, whilst many competitor emissions are unreported or increasing.
- Fundamental carbon reduction financials remain strong. No-one’s energy unit costs are going down, and cutting carbon – especially in sectors such as manufacturing and real estate – can be delivered cost effectively through energy savings. While many companies have done a great job optimizing energy performance in flagship facilities, few are managing energy spend at the asset portfolio level, and 10-20% energy saving opportunities with sub 3-5 year paybacks abound in Asia.
- China continues to drive clean technology costs down. In direct contrast to the West, China continues to double down on clean technology and using its domestic markets to drive scale and price reductions. In 2025 we saw continued cost reductions in storage, EVs and solar, and other clean technologies – making them more accessible for Asian consumers as a result.
The Business Case for Climate Action in Asia
For business in Asia, continued action on climate change makes strong commercial sense. However, companies should proceed carefully, as moving from targets to implementation drives a more material conversation on costs and returns. Companies need to look at the realities of the marketplace in terms of cost saving, customer expectations and incoming regulations before making larger commitments to low carbon solutions.
Sector and market-specific context is everything. Apparel is not private equity. Real estate is not manufacturing. China is not Malaysia or Bangladesh. At RESET, we help you unpack the value proposition of where and how to invest – and then implement it effectively. Our team has expanded globally to deliver on this work. Having appointed Thibault Boiron in the US and Danielle King in Singapore during 2024, we have since expanded our presence across the UK, Europe, and Southeast Asia: Sam Nunn has relocated to England to cover the UK and Europe, and we have recently welcomed Thomas Nguyen and Darren Goh, who are joining us in Vietnam and Malaysia respectively. Our global presence reflects our ambition to deepen our relationships with clients and support closely wherever they are – get in touch with our team here.
1 Chinese emissions peak. Report launch webinar — China’s Climate Transition: Outlook 2025 – Centre for Research on Energy and Clean Air