A domino effect to transform to a low-carbon future
Can Asia be the linchpin as well as a leader?
On 12 December 2020, the world is set to honour the 5th anniversary of the historic Paris Agreement. With this momentous occasion coming up in a month, and working towards the 26th UN Climate Change Conference of the Parties (COP26) next year, it has been interesting to track how countries, specifically in Asia are making global headlines in terms of their net zero ambitions.
Till now, we have heard from China, South Korea and Japan – some of the bigger voices in the region. Beijing set its first long term climate target when it announced its plans through a video address by President Xi Jinping to the UN General Assembly that China is aiming for carbon neutrality by 2060. President Moon Jae-in announced that South Korea will commit to achieving carbon neutrality by 2050, a much welcome policy pledge. Prime Minister Yoshihide Suga has promised to accelerate a fundamental shift in Japan’s coal policy to achieve carbon neutrality by 2050. Meanwhile, looking at India’s current policy stance on renewable energy and NDCs, is a carbon neutrality pledge announcement far away?
Looking at these declarations begs the question: when will other countries in Asia follow suit? If they are not declaring transformative pathways to creating zero carbon futures, what are the hurdles stopping them? These thoughts persist as we launched the 2020 Performance Update of our Climate and Energy Benchmark in the Automotive sector this week. Considering the projected influence and emissions contributions of this sector, where are the ambitious, climate positive pledges of automotive manufacturers, in line with their countries’?
To us, this truly plays out like a game of dominoes. The world has reached a critical juncture in terms of climate action, and it is alarmingly clear that the work of each stakeholder group has a ripple effect on that of the other. Amongst other major factors, companies depend on regional and national policy initiatives to draft their climate narrative and set their ambition for decarbonisation. Governments encourage transparency, action and accountability in companies to promote action towards climate. But we ask a critical question – who takes the lead? Our research has shown that a full decarbonisation and energy transformation needs a multi-stakeholder approach, and for all groups to act harmoniously.
This co-dependency of policy and company action is featured in our 2020 Performance Update of the Automotive Benchmark, one of the sectoral assessments in the World Benchmarking Alliance’s (WBA) Climate and Energy Benchmark.
How are automotive companies in Asia faring when it comes to a low– carbon transition? Here is a snapshot:
China: Amongst the companies assessed in WBA’s 2020 Performance Update of the Automotive Benchmark, Chinese companies stood out with their performance in emissions from manufacturing and use of cars. Four of the five top-performing companies are from China (see here). However, Chinese automotive manufacturers are lacking in a few key areas like: engagement, transparency of data, and limited disclosure on clear emission reduction targets goals. This points to a clear trend: that Chinese automotive companies’ ambitions and goals for low carbon transition are highly driven by national development plans and governmental guides. To better respond to the Paris Agreement, more initiatives and actions need to be put forward by companies themselves. China’s low carbon ambitions set at the national stage will definitely play a critical part in shaping this response.
India: The two Indian automotive companies in the assessment, Tata Motor and Mahindra & Mahindra, set and disclosed emissions reduction targets. Tata’s targets, which do not include Jaguar Land Rover (refer here), to reduce its scope 1 and 2 (manufacturing) emissions by 40 by 2020 and 70 percent by 2040 are not ambitious enough to be fully aligned with the its well below 2-degree pathway. Mahindra & Mahindra aims to reduce manufacturing emissions by 47 percent per vehicle produced and to reduce vehicle-in-use emissions by 30 percent for each vehicle sold between 2018 and 2033. Progress in a low-carbon transition can be accelerated by Indian automotive companies if they discover new business strategies and continue to increase their sales of low-carbon vehicles. To encourage and support these moves by the companies, the Indian government needs a clear-cut policy pledge towards a low-carbon future.
Japan: Japanese automotive companies in the assessment showed considerable room for improvement and progress on low-carbon transition. Some companies do not have plans fully aligned with science-based targets, whilst some Japanese companies’ sales of electric vehicles fall behind the requirement of their well below 2-degrees pathway. Companies such as Toyota Motors and Mazda have not sold any full battery-based electric vehicles yet. In order to transition to a low-carbon future, Japanese companies need to set Science Based Targets and establish a long-term plan aligned with this. The climate pledge by Prime Minister Yoshihide Suga is an encouraging move towards helping companies in Japan set ambitious targets for low emissions.
What is the joint call to action?
Company actions and policy initiatives go hand-in-hand when it comes to moving towards decarbonisation.
For governments: We look forward to seeing more climate positive policies that allow stakeholder groups to take meaningful steps towards a low-carbon economy. Moving towards COP26, we hope to see big moves on both the national and regional fronts, for multilateralism and solidarity to come to life, and for attention to be pledged where science points us to do so.
For companies: We look forward to seeing more ambitious emissions reduction transition plans, and hope to see trailblazers rise up to help move their industries towards a low-carbon future.
And to WBA ourselves: We hope that our benchmarks and call to action for systems transformation will act as an accountability mechanism for companies, governments, and other stakeholders in their journey towards the SDGs.
Signing off, with much hope…..