Asia-Pacific companies have recently showed a shift in attitudes, significantly improving awareness and actions of decarbonization, driven by push from the West, domestic regulations, as well as investor and consumer interests, Malavika Bambawale, managing director, sustainability solutions – APAC with ENGIE Impact, said in an interview.
ENGIE Impact is the sustainability consulting division of French energy company ENGIE. Bambawale said she saw "a very solid momentum" toward addressing climate issues, despite the shocks brought by geopolitical tension, COVID-19, and economic downturn. As a result, the demand for carbon offsets and clean energy solutions have significantly increased in this region, she said.
Bambawale said stakeholders in the West have become one of the key drivers that push APAC companies to adopt decarbonization solutions.
"Corporates in the West are really embracing this change, and they are also driving investments in APAC, because APAC is their Scope 3," she said.
According to Greenhouse Gas Protocol, Scope 3 emissions of a company refer to all indirect emissions of the company, including both upstream and downstream emissions incurred by parties along the company's supply chains, except for emissions from purchased electricity, which is covered in Scope 2.
The Western companies have set manufacturing bases and data centers in various APAC countries, such as Indonesia, Malaysia, Vietnam, and Singapore, Bambawale said, adding that these market players now really have a sense of urgency and were driving the regional demand growth of renewable energy and carbon offsets.
The Carbon Border Adjustment Mechanism or CBAM, proposed by the European Union, has also become "a headache" for APAC companies, Bambawale said.
Once CBAM is implemented, heavy carbon taxes will be imposed on APAC companies that export goods to European markets, which is expected to severely impact their profitability and cost-competitiveness. The taxes under CBAM can be waived if the exporter countries have domestic mechanisms to put a meaningful price on carbon.
"Even within our own boundaries, we have got more and more regulations coming," Bambawale said, adding that more and more governments in this region have announced carbon neutrality targets, which also accelerates the push on low-carbon transformation.