$1 trillion prize for ASEAN economies to drive green future

Southeast Asia has been told that the adoption of a green economy will open up $1 trillion in economic opportunities.

A report by consultancy Bain and Company has said if the region’s economies pursued the economic and societal potential of the green economy the benefits would be tangible.

The firm’s Southeast Asia sustainability outlook, “Southeast Asia’s Green Economy: Pathway to Full Potential” said the region could be greener by 2030, spurred on by accelerating global momentum and investment to address sustainability and climate challenges.

However, it warned Southeast Asia still has a long way to go. With its share of global population, biodiversity and resources, the region can play a far bigger role, offering significant growth potential moving forward said the report..

“Southeast Asia could transform quickly, ensuring sustainable energy, creating healthy and sustainable food ecosystems, developing efficient industries and supply chains, establishing greener and more connected cities, and spearheading green financing,” it added. “Accelerating development of the Southeast Asian green economy offers a $1 trillion economic opportunity annually for businesses by 2030, enabling regional companies and societies to build a competitive advantage for the future.”

“Globally, countries are prioritizing sustainability investments as concerns about climate change and the resulting transition to a green economy gathers speed and urgency,” said Gerry Mattios, Co-Director of Bain’s Global Sustainability Innovation Centre in Singapore and co-author of the report. “Stimulus programs injected into economies around the world to address the COVID-19 pandemic and promote ‘build back better’ initiatives are accelerating the push towards greener, more sustainable industries. Yet in this race, Southeast Asia can build a lot more momentum to seize the opportunity.”

Currently, there is a gap between where Southeast Asia is compared to other regions in their green initiatives, the report cautioned. This gap presents a threat to Southeast Asia’s global competitiveness but also creates immense opportunities for the region.

“Adopting green practices will meet the region’s wider environmental, social and governance (ESG) ambitions and in turn deliver societal benefits such as preservation of the earth’s natural ecosystems and social inclusivity—ends in themselves that also underpin increased growth,” explained Dale Hardcastle, Co-Director of Bain’s Global Sustainability Innovation Centre in Singapore and also co-author of the report. “By unlocking the green economy, the economic growth of a wide range of sectors in the region would immediately follow.”

“Southeast Asia has pathways across industries that can unlock the trillion-dollar potential of the green economy,” said the report.

Bain’s research highlighted five key areas where the region could deliver benefits from its move towards a greener economic future:

  • Sustainable energy and resources: Where excessive resource extraction and energy consumption followed by waste mismanagement were the norm, the region could benefit from a $270 billion opportunity as it embarks on decarbonization and electrification, a sustainable energy transition, responsible consumption and embedded circularity.
  • Healthy and sustainable food systems: Where agricultural growth has typically been inefficient and wasteful, Southeast Asia has the potential to innovate and increase production in a regenerative and conscious manner that will make nutrition widely accessible. This represents an $205 billion opportunity for the region.
  • Efficient industrial operations and logistics: As industrial activity in Southeast Asia expands due to geopolitical shifts, manufacturing processes can be reimagined and supply chains connected and made transparent with full traceability. The region can help ensure low carbon footprint and capture an $200 billion opportunity while doing so.
  • Green and connected cities: As urban populations grow, the way is clear to build affordable green homes in satellite settlements connected by green public transportation, representing an $185 billion opportunity in Southeast Asia.
  • Green financing and liquid carbon markets: While sustainable initiatives have struggled for financing and carbon-offset revenues have gone to waste, Southeast Asia can take the lead in green financing be a home for a liquid carbon market where incentives to reduce emissions can be part of the prescription.