What it really takes for Asia to get to net zero

Companies are setting ambitious goals for cutting carbon emissions, but what changes do they need to make to achieve them?

Despite growing awareness of regional climate risks, just 8% of companies in Asia Pacific had set a net zero goal in 2021, according to regional analysis carried out by CDP, a non-profit that helps companies and cities disclose their environmental impact.

Tackling climate change isn’t the only reason companies should care about net zero; there is now a strong business case for slashing emissions and investing in a sustainable future, climate experts and business leaders tell Future Planet ahead of ahead of the BBC’s Sustainability in Business Summit in Singapore.

“The massive transition away from fossil fuels will bring huge opportunities and risks [for companies],” says Abhas Jha, head of climate change and disaster risk management at the World Bank.

Opportunities include lower operating costs and the ability to attract long-term investment and a talented workforce, says Jim Bullock, Microsoft Asia’s director of energy and sustainability.  Companies prioritising net zero “are already being rewarded by consumers, lenders, and investors – with increased sales, preferable ratings, and investment terms,” he says.

Microsoft has set the goal of being carbon negative by 2030. By 2050, it has pledged to remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.

To achieve these ambitious goals, the tech giant has implemented an internal carbon fee, making business units pay for emissions linked to their air travel and electricity usage. The funds raised are invested in energy efficiency, clean energy and carbon offset projects.

Companies that choose not to rapidly accelerate their net zero plans “risk being left behind,” says Esther An, the chief sustainability officer of City Developments Limited in Singapore, which has been ranked the world’s most sustainable real estate company.

“Climate risks are investment risks,” says An. “Investors are increasingly looking at how companies set targets and disclose emissions pathways to achieve [these] targets.” Companies with strong sustainability credentials are therefore in a much better position to access long-term investment, she says.

Continued investment in polluting fuels, such as natural gas, is also risky as these aren’t compatible with limiting global warming to 1.5C and therefore could become worthless in the next 10-20 years, says Jha. Global Energy Monitor has warned that $379bn (£316bn) invested in new gas infrastructure across Asia risks becoming a stranded asset as the world moves away from fossil fuels.

“Inertia and short-termism” are stalling the net zero transition in the region, says Jha. There is also a lack of “innovative finance to lower the cost of capital for companies seeking to transition”.

As the region’s financial hub, Singapore is in a strong position to merge public and private finance and ramp up investment in clean energy projects and carbon-absorbing ecosystems, such as forests and peatlands, to help reduce emissions in the region, says Jha. The Asia Pacific region is in urgent need of investment in renewables as the continent with “the largest population, the largest GDP growth, and one of the most carbon intensive electricity grids”, says Bullock.

High-quality data and a credible and transparent system for monitoring emissions are critical for encouraging companies to switch to renewables and tracking their progress, according to Bullock and Jha.

Many companies do not currently have access to such tools. “This means that organisations are working in isolation and tracking outcomes in different ways that can’t be compared easily,” says Bullock.

This is where the likes of Evercomm come in. The Singapore-based start-up collects data and uses artificial intelligence to help companies minimise their energy consumption and reduce their overall carbon emissions. Evercomm provides companies with a clear breakdown of how much energy they are using, how much they need and where savings can be made, highlighting how sustainable measures can help reduce their operating costs.

Net zero “is a powerful growth engine for companies to tap into”, says Evercomm’s CEO Ted Chen. “Net zero planning needs to make business sense.”

“To address [these] concerns, we have started to see companies and financial institutions stepping up their requirement for higher-quality disclosure data sources,” says Chen.

Access to reliable, consistent data has helped Microsoft reduce its energy consumption by 20% and invest in new emissions-slashing technologies across the business, says Bullock.

“The perception of higher cost for sustainability practices remains,” says An. “But companies are starting to wake up to the fact that achieving climate goals is an “investment, not a cost.”