The COVID-19 pandemic is accelerating the development of the global green economy although parts of the world, such as South East Asia are not keeping pace.
A new report from Bain and Company finds that the region is now at an inflection point, but with the right policies, has the opportunities to unlock a trillion dollars in value by the end of the decade.
This year alone $3 trillion dollars has been committed to green industries and sustainable initiatives around the world.
According to a new paper called Southeast Asia’s Green Economy: Pathway to Full Potential, written by Dale Hardcastle and Gerry Mattios, “Revenue pools from new growth sectors and estimated cost savings from efficiencies offer pathways to competitive advantage while advancing sustainability and society’s welfare.”
As was clear during the digital transformation of the world’s economy, the spoils of success go disproportionately to leaders at the expense of laggards. That’s a problem for a country like Australia whose political class in both the Coalition and the ALP has anchored itself to diminishing industries like coal.
Contrast that with the European Union, which, according to Bain and Company has channeled $US600B from its recovery fund and 2021 to 2027 budgets to sustainable investments and green industries. And that is on top of country-level activities in places like Spain, Germany, and France.
In the US, the incoming administration of Joe Biden has already flagged plans to invest an additional $2 trillion into clean energy, infrastructure and electric vehicles.
China likewise has put investments into sustainability at the forefront of planning, the authors say, with, “… an ambitious five-year economic plan in 2020 that prioritizes innovation and technology in its sustainability initiatives.”
However, Bain and Company bell the cat on the relatively poor performance in the SE Asian region, noting that no ASEAN nations make the top 40 in the UN’s Sustainable Development Goal ratings. And they note this is in the context of the region already facing increasing environmental stress, with rising emissions and diminishing resources.
“Unless addressed, this inaction presents a real threat to Southeast Asia’s global competitiveness in the decade ahead.”
Bain and Company say that investors “increasingly favour companies with better sustainability stewardship, while governments are considering taxes on imports from countries with high carbon footprints. Meanwhile, consumers are demanding sustainable products from the brands they support.”