Standard Chartered & Bain’s 4 Ways for ASEAN to Decarbonise

Standard Chartered and Bain & Company’s report says South-East Asia is ‘woefully off track’ and urges an acceleration of effort by businesses and countries

The 10 nations that make up the ASEAN region are being given a no-nonsense challenge by Standard Chartered and Bain & Company to ‘accelerate’ efforts to decarbonise.

The companies joined with Temasek and GenZero to author a report that will not make for comfortable reading in the countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

It points out that five of the 10 have net zero roadmaps that remain conditional on securing funding, while only 20 of the 100 highest emitting corporates have announced carbon-reduction roadmaps.

Meanwhile, 75% of the ASEAN power sector still depends on fossil fuels for generation.

And US$1.5tn of cumulative investment is needed to meet 2030 targets.

Now for the good news

Despite the downbeat statistics, the report offers plenty of good reasons to move the dial, including: 

  • Unlocking ASEAN’s green economy will bring US$300bn in new revenue by 2030
  • It will create 6 million job opportunities
  • 13 investable ideas across four sectors will drive US$150bn in additional annual revenue by 2030
  • Blended finance could deliver US$20bn in funding to bridge the emissions gap.

ASEAN is the 4th largest energy consumer globally. While the region has committed to cut carbon emissions by 32%, its energy demand is projected to rise by 42% by 2030.

Kimberly Tan from GenZero

The executives’ summary

Senior executives from Bain & Company, GenZero, Standard Chartered and Temasek shared their views in the report’s foreword.

Satish Shankar, Regional Managing Partner, Asia-Pacific, Bain & Company, said there was a “steady uptick” in ASEAN nations making climate commitments.

But he added that “uncertainties about the transition path and supporting regulation and policies make it difficult to take decisive action at scale and invest the billions of dollars that are needed to ensure a speedy and effective transition.

“To break this logjam, the largest corporates and investors, including the multilateral financial institutions, need to act with urgency and conviction to lead the way.”

Kimberly Tan, MD and Head of Investment Group, GenZero, said: “We believe that an acceleration of effort by countries, corporates and investors is imperative as Southeast Asia remains woefully off-track despite significant progress in 2023.”

While she remains “optimistic”, she added: “Total green investment increased by 20% from US$5.2bn to US$6.3bn in 2023 but remains far short of the US$1.5trn needed to fund Southeast Asia’s transition by 2030.”

Patrick Lee, CEO, Singapore and ASEAN, Standard Chartered, said there are plenty of suggestions to drive ASEAN forward.

He said: “The report seeks to offer knowledge and insight to propel us towards sustainable goals and shine a light on opportunities and progress across public, private and regional pathways.

“It identifies a list of market-ready, high-impact investable ideas that currently hold momentum, of which further uptake can bring clear advantages to the region and build scalable, long-term solutions for the future.”

Kyung-Ah Park, Head, ESG Investment Management & MD, Sustainability, Temasek, said: “Southeast Asia faces the dual, often conflicted challenge of addressing the rising need for affordable and reliable energy while simultaneously cutting emissions.

“Alongside the development of green solutions, accelerating the green transition in Southeast Asia will require financing mechanisms for both the managed phaseout of coal and adoption of new technologies in hard-to-abate sectors.”

Standard Chartered logo

The four-point plan

The report contains four central ideas on how SEA can speed up its green transition.

They are:

1 - Focus attention on investable decarbonisation ideas – ie put money behind ‘proven ideas with high abatement potential and deployability’

2 - Scale up policies and incentives to enable corporate action: carbon pricing; clusters for green transition; disclosure and regional collaboration; actively promote interoperable frameworks that support cross-border finance and capital at the lowest cost

3 - Promote innovation in finance to catalyse investment – for example, blended finance, carbon credits and project financing

4 - Advance country and regional plans for the transition path.

The final – mixed – verdict

The report says the region has ‘made a step forward’, with the number of corporate SBTi commitments doubling from 2022 to 2023.

There has also been a 200% annual growth in EV sales from 2019 to 2022.

It says: ‘Translating ambition to action and results will take time; yet we know there are investable ideas and accelerators to leverage and speed up SEA’s progress.’

It calls on all stakeholders to take action, including governments, businesses and investors.

In terms of the businesses, the message is that they should identify revenue growth opportunities, invest in resource and capability building, look for opportunities to optimise risk-return and resilience and establish corporate roadmaps aligned with national plans.

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