Companies in Asia Pacific show high awareness of climate-related issues, but more actions needed to achieve Paris agreement targets

• Half of the 2,511 companies (54%) that report to CDP are integrating processes for identifying, assessing, and managing climate-related issues in their overall risk management
• Australia and New Zealand have the highest rate (58%) of companies that report using climate-related scenario analysis to inform their business strategies, followed by Southeast Asia (53%), suggesting an emerging leadership across the sub-regions in Asia Pacific
• Companies are beginning to engage with their value chains, however only 34% engaged with both upstream and downstream stakeholders
• Asia Pacific now accounts for 25% of science-based targets recognized by the Science Based Targets initiative (SBTi) globally, and more companies are set to follow suit
• 54 companies based in Asia Pacific have been named among 179 companies on CDP’s prestigious ‘A List’ for their leadership on corporate transparency and action on climate change

New findings from global environmental non-profit CDP finds that despite increased awareness of climate-related risks in the Asia Pacific region, companies in the region have yet to put in place comprehensive initiatives to achieve targets in line with the Paris Agreement.

CDP’s latest analysis, Towards Climate-Resilient Growth: Asia Pacific’s Ambition Gap, analyzes self-reported data from 2,511 companies across the region in 2019 and identifies key trends and progress on corporate climate action at geographic level, as well as the challenges in ramping up ambition, transparency, and best practices.

Asia Pacific now accounts for 25% of science-based targets recognized by the Science-based Targets initiative (SBTi) globally – an increased from 21% in 2018 - and more companies within the region are set to follow suit.

However, for the region to rise to the challenges of low-carbon transition, companies in the region need to step up their current level of initiatives. The report finds that only 39% have set absolute targets, and just 34% engage with both upstream and downstream stakeholders. Moreover, only 36% reported a year-on-year decrease in Scope 1 and 2 emissions.

Although a significant majority (79%) of companies have board-level oversight on managing climate-related risks and opportunities, only 13% have monetary incentives in place for their C-suites or above that are tied to environmental projects or targets (including emissions reductions, energy saving, or supply chain engagement).

Of the risks identified, 56% are transition risks, especially risks associated with policy and legal changes, whereas the most cited physical risks are increased severity of weather events such typhoons and floods. However, only half of these companies (54%) confirms an active integration of climate-related issues into multi-disciplinary company-wide risk management processes.

About half (51%) of companies in the region report using climate-related scenario analysis to inform their business strategies. On the sub-region level, the region comprising Australia and New Zealand have the highest rate (58%) of companies that report using scenario analysis, followed by companies in Southeast Asia (53%), suggesting an emerging leadership across the sub-regions in APAC.

The regional findings also show that, only 34% of companies engage with both upstream and downstream stakeholders. As CDP’s global analysis indicates, supply chain emissions are on average 5.5 times as high as a company’s directly accountable emissions, making multi-stakeholder engagement across the value chains critical in achieving global net-zero GHG pathway.

2020 marks the start of a critical decade for accelerating actions to avoid the worst impacts of climate change. As Asia Pacific is home to the world’s fastest growing economies and considered one of the most vulnerable regions to climate impacts, companies, investors, and cities in the region must address the ambition gap and drive more actions towards a climate-resilient future.

Encouragingly, we are seeing a rise in environmental stewardship among corporates in the region. 54 companies in Asia Pacific recently named among 179 companies on CDP’s prestigious ‘A List’ continue to lead on corporate transparency and climate action, this latest report highlights that more companies must follow suit in fully addressing climate-related issues in their business as well as their supply chain.

Pratima Divgi, Director of Hong Kong, Southeast Asia, Australia and New Zealand at CDP, said: “CDP’s A List benchmarks which companies are doing their best to address the global challenge of low-carbon transition. It is encouraging to see more companies from Asia Pacific are taking the necessary steps to climate actions and demonstrating strong leadership. Much needs to be done in developing climate resiliency and CDP appreciates the involvement of business leaders across the region in our common goal towards a transformational change for a low carbon economy.”

Sherman Kwek, Chief Executive Officer of CDL Group, which receives an ‘A’ score in 2019 for the second consecutive year, commented: “As a significant contributor to carbon emissions, the building sector must play a bigger role in driving emissions reduction. From integrating sustainability into our business two decades ago, CDL has continued to push the envelope with green building innovation and climate-focused strategies. We are honoured to be recognised for the second consecutive year on the CDP A List and will continue to steer affirmative action to support the global agenda towards a low-carbon economy.”

Lawrence Ho, Chairman and CEO, Melco Resorts & Entertainment, recognized by CDP as the region’s ‘Best First Time Performer 2019’, commented: “It’s both exciting and very rewarding to have Melco’s sustainability achievements recognized by a body as well respected as CDP. Lying behind Melco’s Above and Beyond strategy is a deeply-rooted personal desire to continuously improve our performance in this critical area, plus a determination to inspire our guests with a future that is both entertaining and sustainable. Never before has it been more relevant for companies to set new standards of environmental responsibility, and for organisations like CDP to monitor our performance and accountability.”

Maria Victoria A. Tan, Executive Director, Group Risk Management and Sustainability, Ayala Corporation, recognized by CDP for its ‘Most Improved Performance’ for 2019, commented: “We are immensely thankful for the recognition by CDP as it is a testament to our hard work under the leadership and support of our Chief Finance Officer, Mr. Jose Teodoro K. Limcaoco. Disclosing our performance to a platform such as CDP’s helps us remain accountable which is a vital part of our commitment to sustainability. Moreover, we recognize that CDP is aligned with other indices that rate organizations and our response to the platform is therefore essential. The road to attain this recognition was challenging but we are all the more inspired to carry on our mission to pursue our sustainability agenda.”

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About CDP

CDP is an international non-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests. Voted number one climate research provider by investors and working with institutional investors with assets of US$96 trillion, we leverage investor and buyer power to motivate companies to disclose and manage their environmental impacts. Over 8,400 companies with over 50% of global market capitalization disclosed environmental data through CDP in 2019. This is in addition to the over 920 cities, states and regions who disclosed, making CDP’s platform one of the richest sources of information globally on how companies and governments are driving environmental change. CDP is a founding member of the We Mean Business Coalition.