Emerging and developing Asian economies are the fastest growing region globally. Home to two of the world’s most populous countries and serving as the manufacturing hub for the world, Asia will be critical for the success of global climate mitigation and adaptation in the coming decades.
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Introduction
The transition towards green energy also brings new opportunities. Indonesia, the Philippines, China, and Australia host some of the world’s largest deposits of mineral resources critical for the production of EV batteries or solar panels, such as lithium, cobalt or graphite.
At the same time, the impacts of climate change are more tangible here than for example in Europe. Asian cities make up 99 out of 100 cities with the highest level of environmental risk[2]. And in the Workers’ Rights Index, the APAC region ranks second lowest (4.05/5) after MENA. Asian businesses and their downstream suppliers face increasing pressure to comply with strict supply chain rules of global companies[3].
In this context, it becomes clear why sustainability is becoming a huge topic in Asia. Governments or governing bodies, companies, and investors, therefore, pay increasing attention to ESG and incorporate it into their policies and actions.
Asia also puts the sustainability discourse in Europe and the US into a new light. Whereas the Republican anti-ESG wave, labelling ESG as ‘woke capitalism’, is gathering momentum in the US, no such pushback is evident among Asian asset owners. For them, there are substantial material ESG risks, the ignoring of which would lead to poorer investment outcomes[4].
While the EU’s ban of ICE (internal combustion engines) car sales after 2035 faces serious headwinds in Central and Eastern Europe[5], it might be surprising that China[6], South Korea[7] and Japan[8] also have 2035 as their deadline, with India set to follow suit in 2040.
[1] World Economic Outlook, April 2022: War Sets Back The Global Recovery (imf.org)
[2] Asian Cities in Eye of Environmental Storm – Global Ranking | Maplecroft
[3] ASEAN supply chains pressured to go green | IFLR
[4] https://www.asianinvestor.net/article/the-war-on-woke-will-the-anti-esg-wave-in-the-us-reach-asia/480986
[5] https://www.tu-auto.com/eastern-europe-lags-behind-in-automotive-transformation/
[6] https://asia.nikkei.com/Business/Automobiles/China-plans-to-phase-out-conventional-gas-burning-cars-by-2035
[7] https://www.coltura.org/world-gasoline-phaseouts
[8] https://www.wsj.com/articles/japan-to-phase-out-gasoline-powered-cars-bucking-toyota-chief-11608887640
