The Yangtze River reduced to a puddle in parts of China.1 Thousands rescued from flash flooding in Australia.2 Rising sea levels threatening thousands in India.3 New Zealand hit with the worst cyclone in 100 years.4 A record-breaking heat wave that melted road surfaces,5 shut down schools, and sent the heat index in Bangkok to a staggering 54 degrees Celsius.6
Across Asia-Pacific (APAC), the regular beat of recent news stories like these has started to resemble some of the worst predictions from the Intergovernmental Panel on Climate Change, whose latest report outlines a worsening series of climate catastrophes if the world does not immediately pivot to achieve net-zero by mid-century.
According to analysis by the Deloitte Economics Institute, the compounding effects of these worsening environmental events would create a drag on the region’s productivity, public spending, and economic growth, amounting to as much as US$96 trillion in lost GDP by 2070.7 In a climate-changed future, productive capital and knowledge would be diverted away from investments in value-adding innovations and infrastructure, to repairing climate damage and managing communities’ health and well-being, according to the Deloitte research.8
If climate-resilient development is imperative to the region’s future, how prepared are Asian economies for the kinds of changes that the world’s scientists say we need to make? An analysis of emerging trends in the regulatory, business, and consumer spheres indicate that meaningful change is already underway.
To understand how the world is responding to the climate crisis, Deloitte surveys consumers biannually from across 23 geographies about their environmental awareness and belief that climate change is happening. Because beliefs drive actions, the analysis also includes correlations to behaviors and choices spanning household purchases, civic engagement, and social interactions. Together, these indicators provide insights into the population’s current state of eco-consciousness and where there is opportunity to accelerate progress.
Deloitte’s Global State of Consumer Tracker is an online survey across 23 geographies, with responses concentrated in North America, Europe, East Asia, and South Asia. Each data set represents approximately 1,000 adults (18 and older), with an approximate margin of error of +/-3%. Responses are weighted at the geography level to represent publicly available age, gender, and income distribution. The results included in this report were collected between March 23 and 30, 2023.
Our data shows that the majority of APAC respondents recognize that climate change is a human-induced issue. This awareness has started to influence people’s daily choices, from what they buy to how they engage with governments, and even the conversations they are having at work and home.
At the same time, most governments in the region have introduced time-bound, nationally defined carbon reduction goals aligned with the Paris Agreement. These programs seem to have strong support among regional respondents, which mirrors the shift toward greater civic participation around climate issues.
Within the business community, retailers and consumer market leaders are advancing environmental, social, and governance (ESG) principles by setting new standards and expectations for transparency for their value chain partners. Suppliers at all levels are increasingly being asked by some of their most important customers to share data on their carbon emissions, material choices, and internal ESG practices. This information, in turn, is being incorporated into external sustainability reports, product labeling, brand communications, and even conversations about future product design.
But there is much more work yet to be done to harness this eco-consciousness, and companies and governments can intensify systemic responses to the latent demand. People in APAC seem ready to make sustainable choices, but there is work needed to normalize affordable green products, competitively priced low-emission sources of energy, convenient ways to recycle waste, and low-carbon transportation options. Because these are systemic and structural issues, government plays a key role in creating the norms, incentives, and penalties required to speed this change.
The benefits of action for the region could be metamorphic. Transforming the economies of the region to prevent the worst effects of climate change could turn a potential GDP loss into an economic boom that could generate US$47 trillion in net economic growth by 2070, according to Deloitte economists.9
It is, therefore, in the interest of businesses to harness the momentum toward sustainability to provide people with goods and services that enable them to put their eco values into practice. This change is only possible if the business, civil society, and policy communities collaborate on these solutions from a systems perspective, understanding the interconnected nature of the challenges—as well as the opportunities that are now squarely in our sights.
Climate change is exacting a heavy cost on APAC, and Deloitte’s survey data suggests that people in the region are well aware of those impacts, according to Deloitte’s Global State of the Consumer Tracker.
Consistent with the responses from across the world, one-third of respondents from APAC have recently experienced extreme heat within the past year. Based on our data, 130 in 1,000 people have experienced severe flooding, and conversely, 160 in 1,000 people have experienced severe drought (figure 1).
Sixty-four percent of respondents in APAC say they believe that climate change is an “emergency,” and 43% say they have “felt worried or anxious” about climate change within the last month. Within the region, the sense of climate emergency and climate anxiety is the highest in India (figure 2).
Among those surveyed from APAC, 52% said they had changed their activities or purchase behaviors to respond to climate concerns, a sentiment that was strongly shared among all age groups (figure 3).
Among respondents in APAC, the most frequently cited behavior changes are reducing energy use at home, limiting purchases, and reducing food waste. And while respondents in the region seem to be strongly in support of sustainability activities in their personal lives, the region lags global averages when it comes to waste management—recycling, composting, and reducing food waste (figure 4). Boosting these behaviors may require government policy and infrastructure investments to solve these issues at a system level.
Importantly, the data shows this eco-awareness may be spreading: Seventy percent of the respondents in the region say they are openly talking about making changes for the environment, and 58% have “talked with a friend or family member about personal environmental choices, such as eating less meat, composting/recycling, or using greener travel options” (figure 5).
Concern for the environment is not only strong in the personal realm, though. The results show that it is spilling over into civic and social spheres, too. Respondents from the region are also more likely to communicate with public officials about environmental issues, donate to environmental causes, and attend climate rallies. They are also marginally more supportive of climate regulations, with 49% of APAC respondents saying they “would support new regulations aimed at climate protection, even if they might make some goods or services more expensive or unavailable” (figure 6).
In concert with the growing public support for action, the region’s regulatory landscape is also starting to shift. Recognizing that climate change is an existential threat, governments in the region have spearheaded time-bound, national-level legislation to achieve net-zero. The following are just some of the recent policy developments and initiatives being implemented across the APAC region.
Australia: In Australia, Climate Active incentivizes Australian businesses to become carbon neutral by awarding Climate Active Carbon Neutral Standard certification.10 Furthermore, the Emissions Reduction Fund (ERF) aims to provide incentives for a range of organizations and individuals to adopt new practices and technologies to reduce their emissions and store carbon.
China: The country is levying an “environment protection tax” on air, water, solid waste, and noise pollution. The cost of discharging pollutants for high energy-consuming and high-emissions enterprises has also increased in industries such as thermal power, steel, cement, and chemicals to encourage cleaner production, promote energy conservation, and reduce emissions.
India: The updated Nationally Determined Contribution (NDC) was communicated to the United Nations Framework Convention on Climate Change in 2022 after it was announced in the 26th United Nations Climate Change Conference. The update announced India’s commitment to reduce emissions intensity of its GDP by 45% by 2030, enhancing the country’s climate targets and intensifying steps toward achieving its long-term goal of reaching net-zero by 2070. The updated NDC captures a citizen-centric approach to combating climate change and reaffirms India’s commitment to work toward a low–carbon emission pathway, while simultaneously working to achieve sustainable development goals.
Japan: The Japanese government has implemented two incentive-based initiatives to promote sustainable development, namely, the Digital Transformation Investment Tax Incentive, which encourages the use of digital technology, and the Carbon-Neutral Investment Incentive, which aims to reduce greenhouse gas emissions in the production process and supports the development of products that accelerate decarbonization.
New Zealand: Through its Emissions Reduction Plan and National Adaptation Plan, New Zealand is working to reduce net emissions by 50% below the 2005 gross emissions levels by 2030. Its sustainability commitments also include programs such as:
Taiwan: The National Development Council in Taiwan plays a key role in coordinating the implementation of “Taiwan’s Pathway to Net-Zero Emissions in 2050.” From the perspective of waste disposal and social welfare, Taiwan has implemented the Waste Disposal Act, which deals with effective clearance and disposal of waste, improvement of environmental sanitation and maintenance of public health. Taiwan has also come up with Regulations for Cosmetic Recall and Regulations of recall and destruction for food and related products.
South Korea: The South Korean government established strategies for “Sustainable Nation for All,” an overview of its national climate change strategies. As an example of how they are putting this into place, the South Korean Ministry of Environment has established a fee based on how recyclable a product is. The producer can pay a fee of up to 50% less for products that have the highest recyclable rating. This gives companies an enormous incentive to produce more recyclable products.
For businesses operating in the region, these high levels of motivation and eco-consciousness present an opportunity to enable consumers to make greener choices. The Deloitte survey data shows that this strong environmental concern has started to influence what people value in their everyday purchases, in particular, categories such as household products and food. Among those surveyed, a “sustainable product” was one that is made from more sustainable materials, created using greener energy, and packaged in an environmentally friendly way (figure 7).
The preference for greener products was so strong among some respondents that they are willing to accept trade-offs in exchange for sustainably produced goods and services, with 40% of respondents saying they paid a premium for their recent sustainable purchases, but still few have moved to adopting recycling/upcycling as the norm (figure 8).
On both a global and regional basis, most respondents are purchasing at least some “sustainable” products, some of the time. Among those who have not yet made a switch to eco-friendly products and services within the last four weeks, 29% of respondents in APAC cited cost as the biggest purchase barrier (33%), followed by factors related to convenience and access (figure 9).
The results underscore the unmet need for convenient, affordable products that don’t force consumers to trade-off between saving money and saving the planet. It may also indicate that current brand campaigns for sustainable products are not as robust as for conventional products.
As eco-consciousness in the region grows, consumer businesses are likely to feel a mounting pressure to change how they operate. To reach global net-zero emissions by mid-century, companies will soon be required to curb emissions at every level of the value chain. Within that operating environment, consumers will soon need solutions to help them live a more sustainable lifestyle. Those companies that understand the scope of the possibilities and requirements that are fast approaching will be better positioned for the changes ahead.
What those look like depends on where a company sits in the business ecosystem. Consumer electronic companies, for example, may need to reduce their use of new rare earth minerals by recycling their products or planning for longer use cycles than they do at present. Retailers may find opportunities to incorporate used or upcycled products into the mix, and shared services models such as car and bike-sharing could affect how people choose to get around in cities.
Consumer packaged goods companies are already redesigning products with an eye to external transparency expectations from investors, emerging product-compliance requirements, as well as direct asks from some of their biggest customers. Some of these requests include such things as:
At the business strategy level, demonstrating transformational capacity through sustainability programs reduces enterprise risk, builds brand value, and aligns consumer businesses with the enormous commercial opportunities that are now emerging in the region. For those who are ready to help achieve net-zero carbon emissions by 2050, the sustainability initiatives that support that goal include:
Making pragmatic choices with a longer-term horizon builds value and reputation for businesses because it demonstrates transformational capacity as well as the ability to respond to emerging risks. Harnessing the high eco-consciousness of the APAC population is just one part of the enormous commercial opportunity this moment presents to those who choose to act now.
The business community is just one piece of the puzzle, though. To achieve the system-level shifts that Deloitte economists say would create an economic boom for APAC, governments need to step in with investments in materials science research, renewable energy, and green infrastructure.
At the moment, several challenges remain for those who want to make greener lifestyle choices. Among those surveyed, cost, convenience, and time rose to the top as the key barriers preventing respondents in the region from taking more action on climate in their personal lives (figure 10). Governments can play an essential role in closing that gap by providing the policy, regulatory context, and coordination that align all sectors of society toward sustainable behaviors and choices.
Steps have already been taken by most governments across the APAC region to achieve carbon-neutrality; adaptation and mitigation strategies are being driven through subnational levels, industries, sectors, and a combination of incentive-based and penalty approaches.
In the automobile sector in New Zealand, for example, clean car standards are being developed and a combination of charges are being imposed on high-emitting vehicles, while rebates given to low-emitting ones are propelling consumer choices. The state of Maharashtra in India offers incentives for green buildings and has mandated that the renovation of existing buildings and the development of all new government buildings shall be carried out according to International Green Building Council’s green building rating system.
However, the pace of progress is as varied as the region, and more can be done by governments to accelerate the speed and intensify the efforts towards supporting societies’ ambitions to build a healthy, strong, climate-resilient APAC. In addition to the landmark Green New Deal legislations that are being rolled out in the region, there are several ways policymakers can continue to accelerate progress toward a low-carbon economy, including:
Those with their own carbon-neutrality declarations to uphold must partner with every segment of society to ensure that their commitments can be met.
Fresh from the pandemic, the world is increasingly recognizing that economic growth is limited by the physical limits of the planet: Without a functional natural ecosystem, there can be no economic growth and prosperity. As the world starts the transition to net-zero economy, consumption-led growth will need to be replaced with a more holistic definition of economic health, one that accounts for environmental health and social well-being.
Recognizing this shift to a more circular economy will enable market and business opportunities that can generate value for the business, customers, and planet and will be critical to a healthier planet and human progress. Supported by strong consumer demand, the private sector in APAC can be market-leading by providing greener product choices and introducing supply or process innovations that mitigate environmental impact at all levels. Being able to meet customers’ needs while reducing environmental damage is likely to be at the heart of a pragmatic strategy for businesses that want to succeed in an increasingly eco-friendly APAC.
Governments can support this transformation by making investments in research and technology, while creating sensible regulatory schemes that offer clear, impact-driven standards that apply to all market participants. Together, business and government can drive large-scale changes that will be crucial to building a climate-resilient future.
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