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By Leslie Maasdorp
Global leaders, policymakers, business and academia are convening at the Boao Forum for Asia Annual Conference against the backdrop of deepening global fragmentation, geopolitical tensions and heightened uncertainty in the global economy.
In the face of these unprecedented global challenges, Asia is emerging as a growth engine of the world economy. According to the International Monetary Fund (IMF), Asia will contribute as much as 75 percent to global growth in 2023. China and India combined will comprise 50 percent of global growth, placing the continent at the center of the efforts to restore global economic recovery.
The presence of Li Qiang, the newly elected Chinese Premier, as well as foreign leaders such as the prime ministers of leading nations such as Spain, Singapore and Malaysia signifies just how important Boao Forum for Asia has become as a platform for dialogue among decision-makers in the region. Expectations are therefore understandably high that the forum will produce tangible outcomes that will deepen economic cooperation and further integration in Asia.
Asia-Pacific accounts for half of the global greenhouse gas emissions. It is therefore not surprising that the Boao Forum agenda has climate action and energy transition in particular, as one of the most preeminent topics on the agenda. There is a new sense of urgency and purpose around this theme as the time has arrived for governments and companies to convert their climate commitments into concrete action.
In 2021, China released a plan to peak carbon emissions by 2030 and achieve carbon neutrality by 2060. These goals provide a clear roadmap for businesses to design their own decarbonization strategies and for cities and provinces to align their medium-term plans towards this goal.
Of particular significance for Asia, is the pledge by China to not build new coal-fired power projects abroad. For well over a decade, China has made major advances in the rollout of renewable power generation, battery storage technologies, electric vehicle manufacturing and the construction of smart grids. As the world's largest emitter of carbon, this leadership role of China in the global transition to net zero is indeed critical. I expect that leaders of businesses and governments will reinforce several messages during the conversations on climate action. Firstly, strong emphasis is likely to be placed on the key role of banks and financial institutions in the transition to net zero. Since they provide financing for small businesses and large corporations, financial institutions have the ability to help industries replace old technologies with greener, less carbon-intensive alternatives.
Many of these global institutions have made net-zero commitments of their own during the 26th UN Climate Change Conference of the Parties in Glasgow in 2021. In addition to reducing their own emissions, these institutions are mobilizing larger volumes of finance towards new climate solutions. There is already a high degree of consensus that accelerating the green transformation across industries in Asia is the only way to achieve high-quality development and create long-term prosperity for all citizens.
It is expected that calls will be made for the financial services industry to raise the bar and set even more ambitious targets in mobilizing larger volumes of private capital and seizing the significant business opportunities from the green economy. Concrete calls will be made for renewed efforts to rapidly scale climate technologies that have become commercially viable. In short, sustainability will be presented as a new growth driver, a spark for innovation and an enabler for value creation and long-term growth.
Many Asian central bank governors are attending the Boao Forum 2023. I expect that these regulators will highlight the role of data analysis and the development of new forward-looking metrics for banks to assess the progress of the green transition. Banks across the region will be expected to publish their emissions data as part of their environmental, social and governance (ESG) reporting to central banks.
The press conference for the Boao Forum for Asia Annual Conference is held in Boao, south China's Hainan Province, March 28, 2023. [Photo/Xinhua]
Secondly, there are troubling signs today of a retreat from multilateralism as protectionism, nationalism and inward-looking policies are on the rise in many countries. I expect that regulators and business leaders will highlight the collective capacity of Asian economies to respond to these global challenges such as climate change by bolstering multilateral institutions including multilateral development banks.
The sobering reality is that countries on their own do not have the resources, technologies or capabilities to tackle global challenges like pandemics, climate change or loss in biodiversity. Multilateral institutions are uniquely positioned to fulfill this role.
Thirdly, I expect policymakers to place renewed emphasis on the need for a just energy transition in the conversation on climate change. Plans to accelerate the phasing out of fossil fuels are important. Of equal importance, however, are the efforts to address the social consequences of such a transition. Workers and communities who live and derive their livelihoods from the coal and fossil fuel industry will experience job losses and economic hardships.
It is vital that plans including training and retraining programs are put in place to provide alternate jobs and economic opportunities to such communities. The Just Energy Transition Partnerships bring all the stakeholders including governments, development banks, commercial institutions and non-governmental organizations together to explore the design and funding of a transition plan that is tailored to the specific conditions in each country. Several Asian countries including Indonesia and Vietnam have announced such Just Energy Transition partnerships in 2022.
Expectations will now grow for other Asian economies to follow suit and announce their energy transition plans. Finally, 2023 could well emerge as the breakthrough year for decisive climate action in Asia.
Leslie Maasdorp is the Vice President and Chief Financial Officer of the New Development Bank. He is also a member of the World Economic Forum's Global Future Council on Resilient Financial Systems.
