As featured in FTBeyondbrics.
Hurricanes Florence and Michael and record temperatures across Europe have grabbed global headlines this year. But spare a thought for communities and businesses across Asia, which have suffered a string of particularly severe weather-linked disasters in recent weeks and months.
Super-typhoon Mangkhut left a trail of destruction in the Philippines, Hong Kong and southern mainland China in September. Earlier in the year, Japan and parts of China were hit by some of the worst weather in decades. The monsoon floods that inundated Kerala, in southern India, were the worst in a century.
The rest of the world should take note.
After all, Asia is an engine of global economic growth. It is a key region for companies from around the world to manufacture in, source from and sell to. Its ports and airports are among the busiest in the world and are critical to the flow of goods around the planet.
So climate change disasters in Asia can have ripple effects half a world away. Witness how, in 2011 and early 2012, flooding in Thailand caused damage costing billions of dollars and disrupted supply chains around the globe. Or how the days-long closure of Kansai airport in western Japan, flooded by Typhoon Jebi in September 2018 , left manufacturers scrambling for alternative cargo hubs.
Part of Asia’s particular vulnerability to the effects of rising global temperatures stems from sheer geography. Many of its cities and megacities — Shanghai, Mumbai, Ho Chi Minh City and Jakarta among them — are in low-lying coastal areas susceptible to rising sea levels and storms sweeping in from the oceans.
Climate change and rapid urbanisation in many parts of Asia are exacerbating this vulnerability. As Asia’s cities expand and global temperatures rise, more and more homes, airports, power plants, warehouses and factories will find themselves at higher risk of weather-linked disasters. A recent assessment by HSBC found that India and south and south-east Asian countries are most vulnerable to climate risks.
No wonder, then, that the economic cost of natural disasters has soared. From 2007 to 2016, average damages from disasters triggered by natural hazards in the Asia-Pacific region were an estimated USD76 billion a year. That’s more than twice the cost in the decade before that, according to a report by the UN Economic and Social Commission for Asia and the Pacific, the Asian Development Bank, and the UN Development Programme.
There are reasons to be hopeful about Asia’s climate-change efforts.
Many countries and communities are beginning to build their capacities to manage and guard against weather-related disasters, and to reduce emissions. Technological advances have put more low-carbon technologies into the hands of city planners, architects and businesses. Traffic management and waste treatment systems, technologies that make buildings and cities more energy and water-efficient, clean energy, low-carbon transport — all of these have improved, and are increasingly commercially viable.
While China and India remain the world’s largest and third-largest emitters of greenhouse gases, respectively, both are making big efforts to “green” their economies. India plans to generate 175GW of electricity from renewable sources of energy by 2022. China has ambitious goals to lower carbon intensity and has become a major global player in solar and wind energy and in electric vehicles.
In Hong Kong, meanwhile, the authorities this year announced a green bond issuance programme that, at up to HKD100 billion (more than USD12.7 billion), is potentially the world’s largest sovereign green bond programme to date.
All of this is good news. After all, Asia as a whole will account for some 60 per cent of the world’s additional energy needs in the coming years. So environmental efforts here are critical to the entire planet’s fight to keep temperature rises at bay.Still, given the scale of the challenges, policymakers, businesses, individuals and the financial sector will need to not just continue but intensify their efforts to move towards a lower-carbon world.
Part of the challenge lies in raising awareness among companies and investors about the importance of environmental — and social — action. Just 23.7 per cent of Asian issuers and 40 per cent of Asian investors polled in an HSBC-commissioned survey this year have an Environmental, Social and Governance (ESG) strategy in place. That’s well below the global average. In Europe, the figures stand at 86.7 per cent and 84 per cent, respectively.
On the policy front, action needs to range from tightening (and enforcing) building regulations, regulating land use and encouraging investments in low-carbon technologies to facilitating ways for companies to raise financing for environmentally-friendly projects. None of this will come cheap. Take seaports. Upgrading Asia-Pacific’s biggest ports so they can cope with the climatic conditions expected towards the end of this century will cost up to USD49 billion, according to the consultancy Asia Research and Engagement.
But doing nothing, or doing too little too late, will only worsen the long-term pain — not just for the region itself, but for the rest of the world too.
Helen Wong is chief executive, Greater China, at HSBC.