On the back of progress made across the region, at this year’s summit we sought to envision a future where Asia Pacific takes the lead in advancing innovative solutions to climate change. But only if governments, regulators and investors work together can we turn this vision into reality.

We know Asia Pacific is especially vulnerable to climate change. Geographically, the region ranges from the Himalayas to Pacific islands, its climate zones from tropical to polar.

Temperatures are rising twice as fast in Asia Pacific as the global average.¹ By mid-century, it’s estimated that rising waters will affect nearly a billion people. Of the 25 cities most exposed to a 1-metre rise in sea level, 19 are in Asia.²

In arid and semi-arid areas, sand and dust storms are increasing, while droughts are intensifying. Data from the past 50 years show that a person living in Asia Pacific is six times more likely to be affected by a climate-related disaster than someone outside the region.³

At the same time, we know Asia is contributing to climate change. It’s home to five of the top 10 carbon-emitting countries and accounts for more than half of global greenhouse gas emissions.⁴ Of course, the region also accounts for 60% of the world’s population.⁵

But while gross carbon emissions in Asia are high, per capita emissions are still low – highlighting the prospect that future emissions could get dramatically worse.

Asia Pacific key to progress

Still, we see significant opportunities, too. By 2050, global energy demand is forecast to be 8% lower than today while supporting a world economy twice as big and a planet with two billion more people.⁶ That’s because most of our energy will come from renewables, and we believe it’s this region that holds the key to progress.

All major economies in Asia Pacific have committed to net zero, and it’s home to many of the raw materials and high-tech solutions that will power our net-zero future. Businesses in Asia Pacific lead industries from solar panel manufacturing to alternative proteins and plastic recycling, with new innovations emerging. It’s a region ripe for uncovering tomorrow’s sustainability leaders.

Although we’re seeing an increasing appetite for sustainable solutions, we’re aware not all clients in Asia Pacific are asking for them. But these issues apply to mainstream investments, creating portfolio risks that need to be managed. The physical impacts of climate change on this region are so severe that governments and regulators can’t afford not to act.

We’re seeing rapid regulatory change in several countries. For example, India is developing a carbon market. It’s this reality that will continue to drive institutional adoption, and we need to work together.

Our industry has a critical role to play in allocating capital to the energy transition. It’s our responsibility to showcase how investing sustainably is not a charitable decision, but a performance-driven one. It’s why abrdn has built tools to analyse climate change scenarios and test the credibility of companies’ net-zero targets. It’s also our job to innovate. So we’ve co-created an innovation centre with Edinburgh University to fund new research. Meanwhile, our Sustainability Institute in Asia Pacific drives training and knowledge-sharing.

Powering the energy transition

Many commentators argue that investors should only invest in green or low-carbon sectors. Certainly, this type of investment is important. But there’s also a need to invest in brown sectors to drive the energy transition. Exclusion alone won’t address the challenges, nor offer the best investment opportunities.

Engaging with companies to support credible transition goals and talking with regulators will help to create a landscape that allows us to allocate capital in a way that works for our clients. If governments introduce the right incentives, capital will follow. We’re already seeing examples in this region. Look at what China has done with renewables.

Now that Europe has introduced the first round of regulations, Asia Pacific has the chance to build on this progress. This promises to create opportunities for innovation and investment. Renewable solutions are getting better and cheaper – and they’re being developed in Asia Pacific.

Chinese, Korean and Japanese battery technology is already powering the globe. Singapore is now the largest producer of sustainable aviation fuel in the world.⁷ Together we can channel capital into this region’s formidable transition leaders and innovators to fuel the global fight against climate change.