The report explores the impact on corporate Asia of growing arguments for green economic governance. It describes the concept of a ‘green economy’, and its relevance in Asia, as well as exploring the roles that policymakers, investors, corporates and accountants need to play to facilitate the transition to a green economy.
The report has been produced following a series of events that took place in April and June 2012 in four cities across Asia (Singapore, Jakarta, Hong Kong and Beijing). The events addressed the potential for and implications of a shift to a green economy in each of the countries where they were held and brought together experts from the NGO, investment, corporate and accountancy communities. They were held in partnership with the international NGO, WWF.
Asia is at the forefront of many of the global sustainability issues that are affecting the world today. In recognition of this fact, a number of governments across the region have developed policies, regulations and budgets intended to address matters such as climate change and water scarcity. For example, the Chinese government has ambitious targets for reduction of the carbon and water intensity of its economic activity, while the South Korean government has spent US$37bn on environmental and low-carbon projects since 2008, representing 81% of its post-financial-crisis economic stimulus package.
The creation of laws and policies that promote sustainability is arguably the greatest driver of responsible investment in Asia at present. Although the responsible investment industry is not as established in Asia as in other parts of the world, the past decade has seen significant growth. In 2000, there were only 30 such funds available in the Asian Market, a figure that has risen to 410 in 2012.
Investors have an important role to play in the shift to a green economy in Asia. Asset owners and fund managers make capital allocation decisions and are key stakeholders in the companies they hold, therefore they are well placed to influence the companies to act in a more sustainable manner.
The business case for sustainability is gaining momentum in Asia and, as a result, leading companies are integrating sustainability into their corporate culture and decision-making processes. The benefits that such companies experience include more resilient supply chains; a lower dependency on natural resources leading to lower input costs; and increased sales, as customers both within Asia and from around the world are now considering sustainability in their purchase decisions.
Increased government and investor focus on sustainability is creating new markets and the region has seen a large number of green entrepreneurs establish successful businesses, particularly in the clean energy space. Accountants have an important role to play in the shift to the green economy in Asia. They will need to develop knowledge and experience in a number of areas that have previously been overlooked by the corporate sector. The core skills and experience of accountants will be valuable to companies seeking to measure and report their environmental and social impacts. In line with companies across the world, Asian businesses will increasingly have to produce sustainability and CSR reports.Accountants are key stakeholders in the process because they are closely involved in corporate reporting, either as report preparers or the providers of assurance.