by Clara Kwan
The 28th Conference of the Parties (COP28) to the United Nations Framework Convention on Climate Change, held in Dubai, was a significant global event with far-reaching implications, particularly for Asia. As a region facing unique environmental and developmental challenges, Asia’s response to COP28’s outcomes is crucial. Equally important is the role of businesses in this region, which must adapt and evolve in the context of these developments. This article explores the implications of COP28 from an Asian perspective and why it necessitates a stronger commitment to sustainability in the business sector.
The Asian Context at COP28
Asia, home to some of the world’s fastest-growing economies, is on the frontline of climate change. The region faces diverse challenges, from rising sea levels affecting low-lying areas to increasing frequency of extreme weather events. COP28 brought several issues to the fore that have direct implications for Asia:
- Renewable Energy and Energy Efficiency: The commitment to triple renewable energy and double energy efficiency by 2030 offers an opportunity for Asian countries to lead in green energy transition.
- Agricultural Emissions: The inclusion of agricultural emissions in national climate plans is particularly relevant for Asia, where agriculture is a vital economic sector.
- Financial Support for Climate Challenges: The pledged financial support, including the significant US$30 billion fund, could aid Asian countries in their climate adaptation and mitigation efforts.
However, these positive steps are tempered by some concerns:
- Non-Binding Nature of Agreements: The resolutions of COP28, while ambitious, are not legally binding. This raises questions about the commitment levels of participating countries, particularly impacting Asia, where many countries depend on global cooperation for climate action.
- Vagueness in Commitments: The lack of specificity in some agreements, such as the terms used for transitioning away from fossil fuels, could lead to varied interpretations and implementations, potentially slowing down the required pace of change in Asian countries.
Why Businesses in Asia Must Embrace Sustainability Post-COP28
The outcomes of COP28 underscore the need for businesses, especially in Asia, to integrate sustainability into their core operations. Here’s why:
- Market Opportunities, Innovation and Competitive Advantage: The global shift towards sustainability, echoed in the active COP28 participation by many countries, opens up new market opportunities. Sustainability drives innovation. Businesses that innovate in green technologies and sustainable practices can gain a competitive edge, not just locally but also in international markets.
- Access to Green Financing: Initiatives like the FAST-P (Financing Asia’s Transition Partnership) as announced by Singapore in COP28 aim to mobilize significant capital for green transitions. Businesses that incorporate sustainability into their practices are more likely to gain access to this growing pool of green financing, which can support their sustainable development and innovation efforts.
- Risk Management and Resilience: Climate change poses various risks to business operations, including supply chain disruptions and increased operational costs due to resource scarcity. Adopting sustainable practices is essential for risk management and ensuring long-term business resilience in the face of these challenges.
- Meeting Investor and Consumer Expectations: Investors and consumers are increasingly demanding sustainability in business operations. Companies committed to sustainable practices are likely to attract more investment and customer loyalty, which is essential for long-term success.
- Enhanced Corporate Reputation and Social Responsibility: Engaging in sustainability enhances a company’s reputation and aligns with the growing public expectations for businesses to be responsible stewards on environmental and social issues. This can lead to improved brand loyalty and trust among stakeholders.
- Regulatory Compliance and Policy Alignment: Countries around the world are likely to introduce stricter environmental regulations and policies and enhanced climate ambitions in response to COP28 agreements. Businesses need to adapt to these changes to remain compliant and avoid potential penalties.
COP28 has set the stage for significant environmental action globally, with specific consequences and opportunities for Asia. The region’s businesses are now at a critical juncture where adopting sustainable practices is not just an ethical choice but a strategic necessity. The path forward requires a concerted effort from governments, businesses and individuals to realize the vision of a sustainable and resilient Asia in the face of climate change.
Global Head, Sustainability and Impact Investment at Consulus
Clara leads ImpactCORE, a proprietary change method of Consulus, geared towards businesses who prefer a hard look at the financials and climate change to map out a viable path to truly win in the fight for the planet and also be a sustainable business venture. Our solutions include investment, business model, organization transformation and digital tools to enable change.