Green tech investments set up Asia for sustainable growth

Business leaders exchange ideas on driving progress in private sector efforts to slow climate change at the Asia Green Tech Summit in Singapore on Feb. 8. (Photo by Ken Kobayashi) 

Companies in Asia are rushing to tap green technology to advance their sustainability goals as the global climate crisis forces enterprises in the fast-growing region to grow without harming the environment.

Business leaders, government officials and investors highlighted the role green tech has to play in combating climate change during a summit in Singapore on Wednesday, with delegates agreeing on the importance of innovation to push the environmental agenda forward.

The Asia Green Tech Summit, hosted by Nikkei and the Financial Times, brought together investors and business leaders from around the globe to discuss how finance and technologies can be deployed at scale to support Asia's transition to a net-zero world.

Jacqueline Poh, managing director of the Economic Development Board, Singapore's investment promotion agency, said the key to keeping the green economy growing will be an ecosystem that encourages innovation.

"We are, on the one hand, extremely vulnerable to the impacts of climate change," Poh said, referring to the country being confined to a small island with limited natural resources and little space to produce alternative energy. "And on the other hand, [Singapore is] a place that uses technology very intensively in order to overcome all our natural disadvantages."
 

As part of its transition to a low-carbon economy, Singapore has committed to reaching net zero by 2050. Net zero refers to a balance in which no more greenhouse gas is added than the amount taken away.

Singapore, which has long been Asia's preeminent finance hub, now endeavors to become a regional center for green technology. As head of the government agency tasked with attracting investment, Poh said the ability to make core technology and research capability commercially viable will be key to achieving the target.
 

"Singapore takes targets very seriously," Poh said. "We never commit to something unless we are quite sure we can actually achieve it. The only way we know we can achieve this ... is if we know the technology has the potential of maturing."

Poh spoke about Climate Impact X, a global exchange for high-quality carbon credits jointly set up by financial players like Singapore's DBS Bank, Standard Chartered, Singapore Exchange and Temasek Holdings, the country's state investor.

The new digital platform will allow companies to discover, compare and purchase carbon credits from various projects around the world.

"I really do think that one of the key areas that we should be looking at is what is essentially a five- to 10-year development of a lot of these technologies, including agri-food and circular economy," Poh said.

The Asia-Pacific region is home to five of the world's 10 largest emitters -- China, India, Indonesia, Japan and South Korea -- and accounts for about 45% of the world's total greenhouse gas emissions due to its large population, according to research by consultancy McKinsey & Co.

Asia is home to more than 4.5 billion people.

Financial institutions have committed to furthering the climate agenda, extending loans for projects that promote sustainability goals while scaling back support for pollutive activities.

Southeast Asia's largest banks -- from Singapore's DBS, Oversea-Chinese Banking Corp. and United Overseas Bank to Malaysia's Malayan Banking -- are jostling to finance initiatives that incorporate environmental objectives.

In Thailand and Singapore, lenders like UOB and DBS in recent years have extended loans worth hundreds of millions of dollars to back real estate developments embedded with power-generating solar panels, energy-efficient fittings and other green technologies.
 

Warren Evans, the Asian Development Bank's special senior advisor on climate, said there is no single institution that can provide adequate financing or technical support to deal with climate change. He called for the need to collaborate across the financial sector.

"Much of our role is to crowd in partners," Evans said. "The more that we can identify concessional sources of finance to combine with our relatively inexpensive money, the easier it is to meet the needs and demands of our client countries."

Sumitomo Mitsui Banking Corp., known in Japan as SMBC, has been reallocating capital to greener initiatives, having earmarked at least 30 trillion yen ($228 billion) within the current decade to promote environmental ventures.
 

The lender has been providing project financing to renewable energy ventures such as solar and wind power enterprises in Japan and overseas.

Rajeev Kannan, SMBC's managing executive officer, at the summit highlighted the crucial role climate impact data plays in helping to assess the outcome of sustainability efforts. In this regard, artificial intelligence can deliver a big boost, Kannan said.

"It helps us in the origination of transactions and writing transactions and even monitoring our transactions because we can have clear sustainability performance targets," he said. "We can compare a particular transaction against a peer to see how they are, sort of, tracking."

SMBC has worked with Microsoft to tap insights from AI in the area of trade financing, Microsoft Singapore's Director of Legal and Regulatory Affairs Jeth Lee noted at the summit.

"So, [we are] really helping the smaller companies that have, let's say, a renewable energy project that they want to embark on; they need financing," he said. "Even if you're a smaller company ... you can tap the power of the hyperscale public cloud to run your applications."
 

On the data front, Japan's ABeam Consulting is tapping analytics to help clients track the outcome of their sustainability efforts. The company manages a platform to collect and analyze information related to environmental, social and governance objectives.

ESG goals are meant to hold companies to certain ethical standards in their business activities, ostensibly ensuring that the environmental impact of a project is minimized from inception to completion.

ABeam thus aids companies in strengthening their abilities to process and understand the results of their ESG methods.

At the summit on Wednesday, ABeam President and CEO Tatsuya Kamoi emphasized the importance of linking data on metrics like greenhouse gas emissions across companies. He called for data models to be standardized.

"It is important to be able to bring that visibility of the greenhouse gas emissions across the supply chain," he said. "We are participating in these experimental activities with data companies to come up with some sort of data model and data analytics to streamline the data of the greenhouse gas emissions."

Asia's addressable market size for green services is expected to reach $4 trillion to $5 trillion by 2030, according to McKinsey's study. Transport is expected to be the largest segment, worth $900 billion to $1.1 trillion.

The shipping sector, with about 60,000 ships globally, accounts for around 3% to 4% of the world's carbon dioxide footprint, said Jeremy Nixon, CEO of container shipper Ocean Network Express (ONE), a Singapore-based joint venture of Japanese liner companies.

While shippers bring out more efficient models that use less fuel, the key is to expand the use of cleaner alternatives like green hydrogen and renewable methanol, Nixon said. Working closely with the energy industry and regulators will be essential to set new standards for adopting or phasing out certain fuel types, he said.

"What we wish to avoid is each region or each country coming up with its own individual carbon regulations," Nixon said. "That's very difficult for shipping to be able to digest, because we move things on a global basis for global clients."
 

A version of this article was first published by Nikkei Asia on Feb 8 2023.
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