Green economy offers $1tn boost to Southeast Asia: study

This is among the findings of global consultancy Bain & Company’s Southeast Asia sustainability outlook, “Southeast Asia’s Green Economy: Pathway to Full Potential”, released on Thursday.

The region could be greener by 2030, spurred on by accelerating global momentum and investment to address sustainability and climate challenges.

Yet Southeast Asia still has a long way to go. With its share of global population, biodiversity and resources, the region can play a far bigger role, offering significant growth potential moving forward, the report said.

Accelerating development of the Southeast Asian green economy offers a $1 trillion economic opportunity annually for businesses by 2030, enabling regional companies and societies to build a competitive advantage for the future.

As part of Bain’s continued efforts to drive sustainability transformation across the globe, the firm has launched a Global Sustainability Innovation Centre (GSIC), with the support of the Singapore Economic Development Board.

The GSIC will seek to pioneer innovative solutions to accelerate corporates’ sustainability journeys, tackling some of the planet’s biggest challenges. The centre will be based in Singapore and will support Bain’s deep expertise in sustainability in the region – helping companies to reach their ESG goals.

“Globally, countries are prioritising sustainability investments as concerns about climate change and the resulting transition to a green economy gathers speed and urgency,” said Gerry Mattios, co-director of the Singapore centre and co-author of the report.

“Stimulus programmes injected into economies around the world to address the Covid-19 pandemic and promote ‘build back better’ initiatives are accelerating the push towards greener, more sustainable industries. Yet in this race, Southeast Asia can build a lot more momentum to seize the opportunity.”

The report says Southeast Asia is lagging behind other regions in their green initiatives. This lag presents a threat to Southeast Asia’s global competitiveness but also creates immense opportunities for the region, it adds.

“Adopting green practices will meet the region’s wider environmental, social and governance (ESG) ambitions and in turn deliver societal benefits such as preservation of the earth’s natural ecosystems and social inclusivity – ends in themselves that also underpin increased growth,” explained Dale Hardcastle, co-director of the Global Sustainability Innovation Centre in Singapore and report co-author. “By unlocking the green economy, the economic growth of a wide range of sectors in the region would immediately follow.”

Southeast Asia has pathways across industries that can unlock the trillion-dollar potential of the green economy, says the report. It also identifies areas where Southeast Asia can be a global leader:

Sustainable energy and resources: Where excessive resource extraction and energy consumption followed by waste mismanagement were the norm, the region could benefit from a $270 billion opportunity as it embarks on decarbonisation and electrification, a sustainable energy transition, responsible consumption and embedded circularity.

Healthy and sustainable food systems: Where agricultural growth has typically been inefficient and wasteful, Southeast Asia has the potential to innovate and increase production in a regenerative and conscious manner that will make nutrition widely accessible. This represents an $205 billion opportunity for the region.

Efficient industrial operations and logistics: As industrial activity in Southeast Asia expands due to geopolitical shifts, manufacturing processes can be reimagined and supply chains connected and made transparent with full traceability. The region can help ensure low carbon footprint and capture an $200 billion opportunity while doing so.

Green and connected cities: As urban populations grow, the way is clear to build affordable green homes in satellite settlements connected by green public transportation, representing a $185 billion opportunity in Southeast Asia.

Green financing and liquid carbon markets: While sustainable initiatives have struggled for financing and carbon-offset revenues have gone to waste, Southeast Asia can take the lead in green financing be a home for a liquid carbon market where incentives to reduce emissions can be part of the prescription.