More words, less action for Asia’s top emitters

Yasmine Raso

Senior Journalist, Financial Newswire

28 March 2023

New environmental, social and governance (ESG) research from Barclays has found there is room for improvement for the Asia Pacific’s top 50 corporate greenhouse gas (GHG) emitters and their climate targets.

The study said the climate targets of the 50 listed firms, which account for approximately 20 per cent of the region’s energy emissions, can be boosted in areas such as “target refinement, capital alignment, executive pay linkage and clarity of carbon strategy”.

This comes as while over 70 per cent of the 50 companies screened had net zero targets with an average timeline four years ahead of national targets, only six per cent of companies have announced both near- and medium-term emission reduction targets.

The screening also showed that 36 companies (72 per cent) have adopted the reporting recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), but only eight of them plan to also consider the Science Based Targets initiative (SBTi) to properly verify their climate targets.

“The Asia Pacific (APAC) region generated close to 40% of global GDP in 2021, but consumed 80% of coal usage globally, 38% of oil and 23% of natural gas while contributing 51% of the new CO2 added to the earth’s atmosphere,” the research said.

“This high fossil-fuel dependence inevitability implies a rising share of responsibility for global efforts to decarbonise.

“We think the level of overall ambition has room to tighten, given that the United Nations is calling for a 45% reduction in emissions by 2030 in order to keep global warming to no more than 1.5°C while the Intergovernmental Panel on Climate Change’s report suggests a 50% reduction.”

The research also revealed companies from four sectors came out of the top 50: power (26 per cent), steel (20 per cent), cement (18 per cent) and energy (14 per cent). China (38 per cent) and India (18 per cent) accounted for over half of the market, followed by Japan and Australia (both eight per cent). Barclay’s report said carbon markets are also likely to come to the forefront in the region as it aligns with its status as the world’s largest emitter.

“For investors, carbon markets help to quantify the potential impact of environmental regulations on the financial health of companies in their investment portfolios. Meanwhile, escalating fossil-fuel costs and legislation are driving more corporate issuers to consider decarbonisation or transition plans, which will likely create investment opportunities,” the report said.

“Carbon markets in Asia Pacific are mainly operating in the DM countries (Australia, New Zealand, Japan). However, we could see significant expansion in their application as China moves to Phase 2 of its roadmap and carbon markets are launched elsewhere (ie, India, Indonesia and Vietnam). Given this, we think the region – already the world’s biggest CO2 emitter – could become the largest carbon market by 2025, with 44% of global emissions covered by existing or soon-to-be-launched carbon markets.”