AS we start 2022 afresh, it would be remiss not to reflect at 2021 for potential learnings in the year ahead. December 2021 ended on a sombre note in Malaysia. Unprecedented flash floods hit Selangor and Kuala Lumpur.

       Flood-prone areas in Pahang, Negri Sembilan, and the East Coast saw water levels rise higher than previous years.

       In the Philippines, Typhoon Rai was among the most powerful storms the country has endured. South-East Asia (SEA) is among the most at-risk regions for impacts of climate change.

       The Global Climate Risk Index 2021 shows Myanmar, the Philippines, and Thailand as among top 10 countries most affected by extreme weather conditions between 2000 and 2019. Vietnam ranks at number 13 on the same list.

       Apart from the precious loss of lives, each country’s financial toll from climate events, range from US$1.5bil (RM6.3bil) in Myanmar to US$7bil (RM29.3bil) in Thailand.

       As the earth gets hotter, the Intergovernmental Panel on Climate Change’s predicts that Asia will experience rising sea levels, heat waves, drought, and increasingly intense rainstorms.

       SEA could be hit with higher flood levels and extreme tropical cyclones. Action on climate change is no longer optional for governments and companies worldwide.

       Decarbonisation is essential and a sign of willingness to curb climate catastrophe. It is time for companies and countries to view sustainability and decarbonisation as opportunities instead of threats. Lowering emissions has been a continuous effort by Asean member states.

       At the 26th United Nations Climate Change Conference of the Parties (COP26), the Philippines pledged to cut greenhouse gas emissions by 75% by 2030. Indonesia and Singapore also notably signed up to several partnership coalitions towards reducing methane and restoring forests.

       Yet, despite all the COP26 commitments, even if all are carried out, global warming projections still range between 1.8°C and 2.4°C, exceeding the 1.5°C threshold.

       COP26 signals progress but climate actions need acceleration from this point.

       A key outcome of COP26 is the greenlight to fully implement the Paris Agreement on carbon markets and transparency.

       SEA countries are expected to implement the carbon market, alongside many others.

       China, the world’s largest manufacturing country, has pledged to become carbon-neutral by 2060 despite longstanding reliance on coal power.

       Moving fast and aggressively on decarbonisation; China has built more new wind capacity in 2020 than the whole world combined in 2019.

       Companies globally are perceiving the pressure to be more sustainable from customers, investors, and regulators. Due to stricter policies and goals from the Paris Agreement, businesses that don’t act may start to see decreased demand for their products and services as CO2 emissions rise in costs.

       These businesses will likely have lower margins and could see up to 50% of their profits put at risk, based on Roland Berger’s study ‘A New Competitiveness Paradigm’.

       Traditionally, a company’s competitive edge is achieved by either good cost structure, unique product, or innovation.

       In the new landscape of sustainability competitiveness, the edge is determined by the company’s action on climate issues.

       By offering climate-friendly, low-emission products and services, firms can reduce their costs and make themselves more competitive.

       Many companies have seized this new opportunity. More than 1,500 businesses worldwide, representing over €10 trillion (RM47.3 trillion) in revenue and 19.3 million employees including in carbon- intensive sectors – have set themselves net zero targets.

       The number of companies disclosing their emissions footprint have grown to represent more than 50% of global market capitalisation.

       Embarking on sustainability begins with setting decarbonisation (e.g. net-zero) targets by a certain date. Next reduce footprint across the value chain in own production as well as suppliers and customers.

       Finally, reinvent the business model to capture new business opportunities from sustainability.

       Global technology companies: Amazon, Facebook, Microsoft and Google have been the fastest movers on sustainability, alongside consumer goods companies due to strong consumer demand.

       When COP27 reconvenes at the end of 2022, more concrete plans to mitigate the world’s climate crisis will be needed. Achieving the global mission of limiting rising temperatures will require participation and collaboration of public and private sectors in SEA.

       Ultimately, business must continue but they cannot carry on as usual. In March last year, the United Nations secretary-general António Guterres called for all governments, private companies, and local authorities to “end the deadly addiction to coal.”

       In 2022, it is imperative that we keep our commitments to phase out fossil fuel, as Guterres has rightly stated to be “the single most important step to get in line with the 1.5-degree goal of the Paris Agreement.”

       Roland Berger is actively committed to combating climate change (net-zero by 2028).

       As a knowledge partner of the 12th Sustainable Innovation Forum, Roland Berger is supported with concrete solutions and measures that are applicable today and not just in the distant future.

       See Roland Berger’s Climate Change Combat Radar, Roland Berger’s Carbon Footprint Model, Transportation Decarboniser and Circular Economy offerings here > bit.ly/rb-sustainability

       Roland Berger was a Knowledge Partner of Star Media Group’s StarBiz Summit 2021, held in conjunction with the group’s 50th anniversary. To rewatch the Manufacturing & Construction industry power panel session moderated by John Low, visit bit.ly/starbiz-rolandberger.

       John Low is Roland Berger South-East Asia managing partner.