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14 Feb 2022
CGM is the 2nd country chapter in the world and first in Asia Pacific to support the World Economic Forum’s Climate Governance Initiative. Now, we are delighted to announce the ASEAN Climate Governance Network, officially launched on 14 February 2022 by the Chairman of CGM, Datin Seri Sunita Rajakumar and the Chairman of the Climate Governance Initiative, Karina Litvack.
This was followed by contributions from Anouj Mehta, the Country Director of Thailand Resident Mission and Unit Head of the ASEAN Catalytic Green Finance Facility who gave an Overview of Climate Risk in the ASEAN region.
He enlightened us as to how just half a degree of warming will have lasting and devastating effects on the biodiversity in the ASEAN region and the larger Asian continent as a whole. For example, a sharp decline in marine population, coral reefs, fish stocks, will create multi-generational issues that will be near impossible to resolve.
He further elaborated that the ASEAN Catalytic Green Finance Facility [ACGF] in 2.5 years have raised USD 2 billion through public sector funding, de-risking projects to catalyse private capital into these infrastructure projects.
Eugene Wong, the CEO of Sustainable Finance Institute Asia presented his thoughts next on financing the ASEAN climate transition. Investments will be required, whether it be in business processes, human capital or equipment. As part of the financing process, investors and financiers will need to know what your company is doing about climate change and what its risks are, be they physical risks, business impact or financial risks, such as impairment and stranding.
Directors need to make themselves aware of the changing financing criteria that incorporates green initiatives as well as the opportunities available. There are also increasing incentives being provided to assist companies through this transition. For example, Enterprise Singapore introduced the Enterprise Financing Scheme-Green (EFS Green) and Bank Negara’s Low Carbon Transition Facility Banks are pivoting to sustainable lending.
Dr. Victoria Hatton, the Director of Sustainability and Climate Change from PwC New Zealand, then shared high level insights arising from the regional report “Code Red – Asia Pacific’s Time to Go Green”.
We are heading in the wrong direction with a 2.5% global average decarbonisation rate whereas a 12.9% rate is needed to witness a significant positive impact in the regions decarbonisation efforts.
APAC only boasts a 0.9% average decarbonisation rate but are responsible for 52% of global CO2 emissions. The region needs to significantly increase efforts to decarbonise as fewer than 25% of APAC govt have firm net zero commitments.
A stronger collaborative effort between the government and private sector in sharing the costs of R&D, supply chain transformation, etc is essential. There are tremendous opportunities for businesses to become early adopters of these strategies. The top 20 PLCs are already seizing the initiatives be setting Science Based Targets (SBT) and adopting the principles of the Task Force on Climate-Related Financial Disclosures (TCFD). Carbon Disclosure Project (CDP) has 75 APAC companies on its A-list for disclosure and reporting.
Consumer attitudes are changing as awareness of the problems facing us due to climate change continues to grow. Gen Y & Z are tomorrow’s investors and business owners; reimagining business for net zero emissions could be a golden opportunity for green growth, and immense end-to-end transformation.
Moving on, the first panel discussion was on “Enhancing Climate Resilience of ASEAN Businesses” moderated by Datuk Johan Raslan of Climate Governance Malaysia and the Institute of Corporate Directors Malaysia with Vicky Bowman from the Institute of Directors Myanmar, Dominic Scriven from Dragon Capital and Vietnam Institute of Directors, as well as Anthony Chin from the MARUHAN Japan Bank, Laos.
Dominic talked about the very low levels of climate change awareness in Vietnam, even among COP countries or the TCFD, only a handful of companies publish reports on physical and transition risks. These practices need to be adopted by businesses and create a sense of fiduciary duty to shareholders / stakeholders to run businesses for profit whilst taking into consideration their impact on the climate. Governments in many countries have also increased incentive schemes to attract businesses toward the idea of protecting the environment. It is extremely difficult for businesses to re-orient strategy without the governments support. First movers will have an advantage.
Vicky explained not many companies in Myanmar are not even aware of climate change risks, let alone any opportunities. Furthermore, reliable information is scarce in Myanmar, and there is a tendency by government officials to generate optimistic data, as there is no reward for being the bearer of bad tidings. To understand the way that impacts are already materialising, and future risks, the private sector themselves needs to obtain information from global sources such as www.coastal.climatecentral.org and ground-truth it, working with local NGOs.
Anthony explained that while Laos is one of last frontier countries, there is currently a big push to leapfrog and go digital in an effort to reduce emissions and impact on the environment.
The second panel discussion “Role of Company Directors in the Climate Crisis” was moderated by Shai Ganu from the Singapore Institute of Directors, with Dante Briones from the Institute of Corporate Directors Philippines, Ria BWS Pardede Sidabutar from the Indonesia Institute of Directors and Kulvech “Colin” Janvatanavit from the Thailand Institute of Directors.
Dante felt a top-down approach needed to be taken and it is the responsibility of directors to implement these values. While Environment, Social and Governance (ESG) and climate change are part of the agenda, levels of awareness are high at larger corporations but small medium enterprises which account for a majority of a country’s businesses need to be made aware.
A disproportionately large proportion of conglomerates in the Philippines are family businesses, requiring a strong commitment to reach net zero, not financing coal plants, buying from only renewable energy sources, increasing awareness of employees.
Climate change mitigation is good for business, not to feel good but many companies clearly showing successful drive starts with the owners and board who are pushing for it, strategic initiatives and measurable time-bound targets are closely monitored at board level have proven to be an effective strategic measure.
Colin shared that there is a fiduciary duty of care, disclosure, loyalty companies have not only to shareholders but to other stakeholders as well. Boards must ensure management team can implement these culture transformations. Global benchmarks versus local & personal impacts to identify meaningful indicators for performance measurements, why we do what we do, what the problems we have are.
Climate governance will in turn govern our children’s future, which he reminds us will require: Care, Curiosity and Courage.
Ibu Ria viewed that Indonesia needs massive capacity for adaptation although the state has allocated 4.1% of its budget for reducing emissions it is still insufficient as the law stipulates segregation of duty and there are expectations of competence and expertise.
Boards are the source of direction and will help business prioritise climate action, however it is important to remember that the board of commissioners is helped by committees to improve governance and hence, a special committee for climate change is needed to provide specific support, especially technical knowledge which might be needed.
Climate change is the dominant issue of the global life, she says, the future of our children is at stake and we all have to adopt global sustainability without being left behind or before it’s too late.
Shai concluded that we need collaboration not competition. Companies which integrate these morals and ideas successfully have a huge advantage over those who are slow to adopt these initiatives. It does not solely come from goodness [moral imperative] but they should understand and appreciate the business benefits a focus on the environment would have. It is time for a little more conversation on these subjects in the private sector.
This brought the launch to a close with a useful overview of the Climate Governance initiatives being employed in the ASEAN region and strategies to help the private sector transform their organisations to include green and sustainable practices to ensure a better tomorrow for us all.
There is an urgent need for businesses to work closely with government to implement policy frameworks, incentives, accurate & timely data to combat the current issues being faced in combating climate related issues.
The way we make things, the way we source things, the way we finance what we do, the way we value businesses and scarce resources, will all change with the implementation of green strategies.
With this, our Valentine to the Earth, let us all think hard about how we can individually step up to meet the urgent needs of this existential crises and make a real difference.
Next, at the ASEAN Climate Governance Network, we have a series of webinars coming up, curated in close collaboration with the Sustainable Finance Institute Asia (SFIA) who are inviting top speakers in the region [representatives from government, regulators, businesses], so we can collectively continue this journey with Care, Curiosity and Courage.
Resources
Watch the recording of the event here:
Anouj Mehta
Dr. Victoria Hatton
Reading materials:
Event page: