The Battle for Net Zero Will Be Won or Lost in Asia

Home to more than half of the world’s population, Asia accounts for more than half of global primary energy consumption. Given its robust economic growth over the past three decades, Asia is also now the leading contributor of annual global greenhouse gas emissions with a 51% share. Asia’s pivotal role in global supply chains puts it at the center of a complex web of interregional embedded emissions.

As a result, Asia—the most vital engine of global economic growth and the region most vulnerable to the impacts of unchecked emissions growth—is at the heart of the climate crisis. But businesses in Asia also have the greatest opportunity to lead on climate and transform their business for competitive advantage.

Asia’s Climate Challenge

The world is already struggling to align with the necessary changes to achieve the critical 1.5°C Paris agreement pathway—a fact laid bare in the recent IPCC (Intergovernmental Panel on Climate Change) Sixth Assessment Report.¹ 1 IPCC, Sixth Assessment Report, 2023, https://www.ipcc.ch/assessment-report/ar6/. Notes: 1 IPCC, Sixth Assessment Report, 2023, https://www.ipcc.ch/assessment-report/ar6/. The implications for Asia on the current trajectory are extreme: a severe increase of 3.2°C, could deliver a 26% dip in GDP for Asia. Southeast Asia fares even more poorly, with an expected hit of 37% to GDP. These economic impacts stand alongside far-reaching social and health considerations.

Heading off such scenarios requires accelerated action in Asia. The region must deliver more than half of the emissions reductions needed to achieve the International Energy Agency’s (IEA) Net Zero Emissions by 2050 Scenario.² 2 IEA, Net Zero Emissions by 2050 Scenario (NZE), https://www.iea.org/reports/global-energy-and-climate-model/net-zero-emissions-by-2050-scenario-nze. Notes: 2 IEA, Net Zero Emissions by 2050 Scenario (NZE), https://www.iea.org/reports/global-energy-and-climate-model/net-zero-emissions-by-2050-scenario-nze. But the climate solutions in Asia are not straightforward. The region is diverse, and the need to deliver a just energy transition that balances economic growth, upward mobility, security, affordability, and sustainability means there is no one-size-fits-all solution that can be rolled out across the region.

Asia’s Sustainability Opportunity

The economic and business opportunity for Asia in driving to net zero is commensurate with the challenge.

Asia is projected to unlock 43% ($4.3 trillion) of the $10.1 trillion revenue opportunity available by 2030 from activities like the expansion of renewable power, energy efficiency in buildings, transportation and agriculture, and greater circularity in producing industries. The story of job growth is equally compelling, with more than half (58%) of the 395 million jobs required to service those opportunities situated in Asia.

Companies have an essential role in realizing this opportunity and tackling overarching climate risks. Like the nuanced challenges faced by nations across the region, there is no sufficient single response. Corporations will need to define and implement both adaptation and mitigation strategies while also taking steps to support a just energy transition.

To achieve this companies can adopt an approach based on best practices in the short-, medium-, and long-term:

• Take immediate action. This includes making climate action a top CEO priority, gaining a clear understanding of climate opportunities and risks, setting clear decarbonization targets and milestones, and fully leveraging existing cost-efficient emissions solutions.
• Enable transformation. Companies must mobilize the organization and resources to deliver climate impact and accelerate ecosystem collaboration, including to address Scope 3 emissions.
• Unlock new growth. Climate action provides opportunities for companies to build out new capabilities and businesses, powering new green growth both within and beyond their existing value chain.

Certainly many companies in Asia and elsewhere are just beginning this journey. But we see a number of forward-looking Asian companies that are already driving tangible climate outcomes across key industries, including real estate, energy, transport, and agriculture.

Unmitigated climate change is the biggest threat of our generation. Corporate inaction on climate has a negative business impact. Conversely, timely corporate climate action will yield tremendous growth opportunities. Asian corporate leaders can make bold changes—for the good of their business and the world.

This article is a summary of a longer report published by the World Economic Forum in collaboration with Boston Consulting Group and SAP. The full report can be downloaded here.