Talking Heads – Asien bei Klima- und Naturschutzzielen mit ins Boot holen

This is an audio transcript of the Talking Heads podcast episode: Getting Asia on board on climate and nature goals

Daniel Morris: Hello and welcome to the BNP Paribas Asset Management Talking Heads Podcast. Every week, Talking Heads will bring you in-depth insights and analysis through the lens of sustainability on the topics that really matter to investors. In this episode, we’ll be discussing stewardship in the Asia-Pacific region. I’m Daniel Morris, Chief Market Strategist. And I’m joined today by Jane Ho, Head of Stewardship for APAC. Welcome, Jane, and thanks for joining me.

Jane Ho: Thanks for having me.

DM: Let’s dive right into the topic. Could you talk about what are the most urgent issues from your point of view on sustainability for investors in Asia today?

JH: Climate is what a lot of investors initially focused on; it remains the most relevant topic for sustainability today in Asia. Just to give some context, Asia accounts for half of global emissions and coal actually accounts for almost 60% of power generation in the region. You can imagine that transition away from fossil fuel is the most important topic in this region today and clearly has global implications because we cannot reach our net zero targets globally without Asia being on board.

Those are complex issues and policymakers in the region need to balance affordability, accessibility with sustainability. The social side is important, the coal economy being a key source of employment up and down the value chain. The International Energy Agency estimates that close to almost seven million people are employed by this economy. We need to take all this into account when we’re thinking about transition away from fossil fuel.

Some of us talk about the just transition, which is doing decarbonisation and the transition, but leaving no one behind. This remains one of the most prominent issues in the region. Investors have a big role to play, both on the financing side for the investments and on the side, on engagement with corporates, but also policymakers.

Climate remains key. But related to that, there is nature and deforestation, which is coming to the forefront. Deforestation is a key focus. We cannot reach our climate goals given that forests are some of the world’s largest carbon sinks absorbing about annually one and a half times the annual emissions from the US. Southeast Asia has one of the highest rates of deforestation. You’re looking at countries like Indonesia, Laos, Malaysia.

Another area of focus related to the climate work also has implications for biodiversity. Asia has multiple biodiversity hotspots. Deforestation can lead to flooding, landslide, etc. We need to look at how we’re coping with those changes with adaptation as well. To summarise, climate and climate-related issues continue to be the most prominent issues in Asia.

DM

What is a surprising statistic, or at least to me, and I imagine to a lot of our listeners, is the high percentage of energy coming from coal – it is such an important energy source in Asia. That highlights the challenges of a transition that moves from coal to other, renewable sources of energy. At the same time, with so many people employed in the industry, making sure that they’re not left behind, that’s a lot to focus on. You talked about climate, nature and deforestation. What are the key priorities in 2024 and for BNP Paribas Asset Management in Asia from a stewardship perspective?

JH: Let me remind our listeners of what  stewardship means for us. Stewardship for us is using our investments and influence with companies and policymakers to achieve our sustainability goals. We see this as an obligation and an opportunity and part of our fiduciary duty to clients to safeguard long-term returns. The main tools are voting and engagement – that could be one-on-one meetings with companies or collaboratively with other investors – and policy advocacy.

We’re guided by the three Es – the preconditions to safeguarding long-term returns for our investments [as set out in our Global Sustainability Strategy]. The three Es are energy transition, healthy ecosystems and equality. This maps to the urgent sustainability issues for Asia that we talked about earlier on climate and energy transition, linking in with equality, discussing the elements of just transition in our engagements.

Corporate engagements will continue to be a big part and doing so collaboratively as well. We continue to be a strong supporter of Climate Action 100+, which is the largest collaborative engagement initiative globally focused on climate and focused on the highest emitting companies.

As you can imagine, when engaging with state-owned enterprises, it is important to consider the framework that companies are operating in. We’ll be talking with regulators as well as the companies on topics such as coal phaseout, just transition, the role of gas and renewables.

On nature, we are stepping up our work on Nature Action 100+, which is a new collaborative engagement programme similar to Climate Action 100+, but focused on nature and aiming to align companies with the Global Biodiversity Framework‘s goal to reverse nature loss by 2030.

In summary, we are focused on climate and climate-related nature issues.

DM: What about new things that we should be looking out for?

JH: There is our sustainability report 2023, which will be coming out in the next month with more details on what we talked about. From a broader perspective, we’re expecting more regulations on sustainability disclosures in Asia. We see a lot of jurisdictions adopting the new global baseline for sustainability reporting: the International Sustainability Standard Board recommendations. It is something to look forward to for companies in the region.

On nature, there will be two COP events this year with Colombia hosting COP16 on biodiversity in October and Azerbaijan hosting COP29 in November.

DM: Thank you very much for joining me.

JH: Thank you very much for having me.