Asia Pacific (APAC) firms are making inconsistent progress when it comes to climate action and environmental sustainability. According to a report by Forrester, only 33% of large APAC firms have created a position for a director, VP, or executive to lead the company's sustainability programme, compared to 58% among the Fortune Global 200. Firms that don’t have a dedicated lead instead have sustainability committees made up of CEOs, department heads, and other C-level executives.
Meanwhile, 53% of APAC firms have established a target date for the partial or total elimination of greenhouse gas emissions, which remains consistent with the global average of 55%. Most firms also rely on the Greenhouse Gas Protocol Corporate Standard to measure and manage greenhouse gases and incremental targets to achieve shorter-term goals and communicate progress transparently.
On the other hand, APAC firms are more aggressive than their global counterparts when it comes to committing to carbon-neutral dates. Close to half of APAC firms (41%) have set a date by which they will attain carbon neutrality -- typically via a combination of generating less carbon dioxide across their operations and compensating for the carbon dioxide they do generate by purchasing carbon offsets. This is significantly higher than the global average of 23% among the Fortune Global 200. Among APAC firms that have set a date, most are either targeting to be carbon neutral by 2050, in line with the goals of the Paris Agreement, or by 2060, the date set by China.
Forrester stated in its report that APAC firms are taking very different approaches in terms of what practices to implement and how aggressively to implement them. Furthermore, government policies and positions are also wildly inconsistent, creating confusion and giving many firms cover to delay taking desperately needed action when it comes to their targeted timeline for achieving carbon neutrality. This, in turn, hinders real progress on a global scale; despite climate action gaining momentum.
COVID-19 has put far greater emphasis on sustainability as part of companies' CSR plans and made business resilience a board-level priority.
However, too many APAC firms’ sustainability plans remain limited or even simply performative. To make matters worse, some of these plans were even put on hold during the pandemic.
Forrester foresees this to change rapidly through 2022 as consumers and employees expect more action from firms.
According to Forrester, the prevalence and intensity of values-based consumers accelerated during the pandemic, spurring more people to rethink their priorities when selecting brands and products. Consumers are now focused on the environment and expect organisations to take action, particularly as they become more empowered through technology and information. This also applies to employees, who increasingly factor corporate values into decisions on which companies to work for. These have furthered firms’ awareness of CSR and sustainability, with 42% of purchase influencers in APAC at firms that prioritise CSR practices saying that the importance of these as a business initiative has increased due to COVID-19.
Additionally, institutional investors have emerged as an enabler via sustainable finance and a gatekeeper by monitoring the environmental, social, and governance (ESG) credentials of the investments they manage. To spur sustainable investments, India, Malaysia, and Thailand have published guidance on ESG governance and reporting. Meanwhile, Singapore and Hong Kong are racing to establish themselves as regional hubs for sustainable banking and green finance.
However, the main issue APAC faces is that its climate legislation varies widely across the region. ESG regulations remain fragmented; unlike the EU, there are currently no regional ESG disclosure frameworks in APAC. Forrester predicts that the disparities in practices between markets will gradually decrease as governments look to progress from enticing firms with grants, to imposing a mandate for sustainable practices. For instance, Singapore's efforts to reduce the release of hydrofluorocarbons has quickly expanded from grants encouraging alternative approaches to regulations forcing compliance. Meanwhile, New Zealand has enacted a law forcing financial services firms to assess the effects of climate change on their own investments and the companies they lend money to. These efforts will gradually streamline the practices adopted in each market, reducing the inconsistency among firms in the region.
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