Southeast Asia’s

Green Economy 2021 Report:

Opportunities on the
Road to Net Zero
Main report SEA’s Green Economy 2021 Report: Opportunities on the Road to Net Zero
This report
Deep-dive sections

Find out more about SEA’s progress Find out more about the building blocks Find out more about
on its climate ambitions for SEA’s Net Zero journey SEA’s green capital flows
here here here
Defining the Road to Net Zero Catalyzing the Journey Unlocking Capital Flows
Country insights

Find perspectives
Find perspectives on Brunei,
Find perspectives Find perspectives Find perspectives Find perspectives on the Find perspectives Cambodia, Laos,
on Indonesia on Malaysia on Singapore on Thailand Philippines on Vietnam and Myanmar
here here here here here here here

2
Disclaimer Reference
The information in this report is provided on an “as is” basis. This document was produced The information included in this report should be sourced as “Bain,
by Bain & Company, Microsoft, and Temasek (“the authors”) as of the date of writing and Microsoft, and Temasek, Southeast Asia’s Green Economy 2021 Report:
is subject to change. This document has been prepared solely for informational purposes Opportunities on the Road to Net Zero.”
over a limited time period and for providing a perspective on the market. Projected market
and financial information, analyses, and conclusions contained herein should not be
construed as definitive forecasts or guarantees of future performance or results.
The authors or any of their affiliates and any third party involved make no representation
or warranty, either expressed or implied, as to the accuracy or completeness of the
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signatory of the authors.

3
Authors Acknowledgements
The “Southeast Asia’s (SEA) Green Economy 2021 Report: Opportunities on We would like to thank the team who has worked tirelessly to develop this report:
the Road to Net Zero” is jointly produced by a collaboration between Bain &
Company, Microsoft, and Temasek. Contributing authors are as follows: Bain & Company
Chii Fen Hiu, Manager
Dale Hardcastle, Global Sustainability Innovation Center Co-Director and Iain Tan, Senior Associate Consultant
Partner, Bain & Company Panyakorn Rakpanitmanee, Senior Associate Consultant
Sean Chua, Associate Consultant
Gerry Mattios, Global Sustainability Innovation Center Co-Director and Xavier Lim, Associate Consultant
Expert Partner, Bain & Company Jessy Chua, SEA Market Reputation Lead
Michele Koe, Senior Specialist, SEA Market Reputation
Vinayshankar Kulkarni, Global Sustainability Innovation Center Lead and Yan Xin Tay, Senior Specialist, SEA Market Reputation
Senior Manager, Bain & Company Krishnakanth Balam, Senior Manager
Gwyneth Fries, Expert Senior Manager
Lorena Paglia, Sustainability Chapter Lead and Connected Customer Harry Ng, Consultant
Experience Regional Engagement Leader for Asia-Pacific, Microsoft
Microsoft
Frederick Teo, Managing Director, Sustainable Solutions, Temasek Supriya Addanki, Director of Communications for Asia-Pacific

Temasek
Ashley Chan, Vice President
Nicholas Ong, Associate Vice President
Celine Koh, Communications Manager

The insights and content of this report also benefited from the wisdom of >60
leading industry experts across SEA and beyond. The richness and clarity of
thought in this report would not have been possible without the thought
leadership from these individuals. To all who answered our call, wrote a thoughtful
email, or filled out our survey – we owe you our deepest thanks.

4
 All figures cited in this report are in USD

Prologue
Last year, we set out on a mission to estimate the value of building SEA’s change are also most at risk of being left behind (e.g., coastal and Indigenous
sustainability ecosystem, with the aim of shifting the discourse on sustainability from communities) as countries transition to low-carbon economies. For a developing
problem to opportunity. In doing so, we discovered ~$1 trillion in opportunities for region like SEA, climate justice and climate action must go hand in hand.
SEA by 2030, providing the first dollar-value estimate of the region’s green economy.
With complex interconnections unlike any other systemic undertaking in our
We also identified clear, high impact areas for businesses and investors to capitalize
economic history, charting a strategic path to realize value from the low-carbon
on while driving forward the sustainability agenda.
economy requires a highly nuanced and holistic approach. We must become Net
This year, we dive deeper into an integral theme of sustainability, one that is Zero while also preserving biodiversity, saving our fresh water, and improving the
considered among the greater challenges humanity has been tasked with solving in livelihoods of rural communities.
modern history – climate action and the race to Net Zero.
That said, the Net Zero imperative offers significant opportunities to those who dare
Through this report, we highlight the burning platform for immediate and to push the boundaries of convention. It presents avenues for diverse business
accelerated climate action, as the window to achieve Paris goals narrows. We provide segments to create commercial leverage while leading the climate transition. As this
an objective assessment of SEA’s progress against climate ambitions and plan, report finds, realizing this will require nontraditional thinking and an unprecedented
highlight the Net Zero imperatives for SEA along with the commercial opportunities scale of collaboration and co-innovation.
it brings, and map out the landscape of green capital flows in the region. Finally, we
We hope this report begins to paint the picture of both the imperative for climate
suggest tangible individual and collective actions that can make the vision of a
action as well as the opportunities it brings. Finally, we hope to inspire tangible
sustainable SEA a reality at scale.
actions from all sets of stakeholders – business leaders, investors, government
Though our focus is on Net Zero, it is important to recognize that climate action officials, or simply the concerned citizen.
cannot be undertaken in isolation. We must consider the interrelationships with the
other planetary boundaries of freshwater use, ozone depletion, biosphere integrity,
land system change, biogeochemical flows, atmospheric aerosol pollution, ocean
acidification, and the release of novel chemicals. We must also do our best to ensure
a just climate transition – paradoxically, those who are most impacted by climate

5
 Foreword by Bain & Company

Climate action is the imperative of this decade. The recent Intergovernmental Panel opportunities3 could be generated through the green economy, with new growth
on Climate Change (IPCC) report reinforced the urgency for action and highlighted areas contributing ~6-8% to our region’s GDP by 2030.
the undeniable human element driving the climate emergency. This transition to a
To capture this opportunity, SEA businesses must lead, not follow. Despite macro
low-carbon reality is the largest-scale transformation Bain has helped our clients
factors not within control, corporates must identify the optimal strategic space where
embark on in our nearly 50-year history. We embrace the challenge.
they can play an active commercial role while advancing SEA’s climate ambitions.
There is growing recognition of SEA’s pivotal role in the global fight against climate This will require unconventional thought and ecosystem-wide collaboration. At Bain,
change. The region holds some of the most valuable natural capital in our forests, we are helping clients to develop sustainability strategies that are intertwined with
mangroves, and peatlands. Rich in natural resources, such as rice and rubber, SEA is their core business ambitions, with tangible actions that lead to results. We observe
the start of many supply chains – making the decarbonization of SEA a significant value from embracing sustainability: sustainable brands enjoy a 3x
Satish Shankar nonnegotiable for multinational corporations (MNCs), who must reimagine their increase in customer loyalty and a 4x increase in household penetration, and
Regional Managing Partner, supply chains to achieve Net Zero. employees are 50x more likely to be happy working for purpose-driven companies.
Bain & Company, Asia-Pacific We understand the benefits of this firsthand – sustainability is embedded in our
While our potential is vast, SEA risks being left behind if we do not act now. Robust
DNA. As a company, we have been carbon neutral since 2012 and aim to achieve Net
sustainability measurement and reporting is becoming the global mandate and SEA
Zero by 2030.
businesses and suppliers, many of whom are small-medium sized enterprises (SMEs),
face a real threat if they are unable to keep up. SEA also faces twin challenges of At Bain, we firmly believe that bold steps define the future. We recently launched
needing to increase economic growth while decarbonizing societies. Thus far, we FurtherTM – Bain’s integrated suite of environmental, social, and governance (ESG)
have not moved fast enough – as this report finds, our latest NDCs1 are not 1.5°C capabilities that brings the full force of our talent, expertise, and energy to create a
pathway-aligned, leaving a gap of ~3-4 Gt in 2030. Meanwhile, climate risk to the more sustainable, equitable, and inclusive world. We invite you to join us as we push
region is increasing, with real impact on future GDP.2 the boundaries along the road to Net Zero journey and go Further, together.
The imperative to act is undeniable, and the time to leap is now – not only because
of the risk that inaction could pose, but also because climate action represents
significant opportunities. In SEA, we estimated that ~$1 trillion economic

Notes: 1. Nationally determined

contributions; 2. Gross domestic
product; 3. From new growth
areas and efficiency gains, with
majority of opportunities having
decarbonization impact

6
 Foreword by Microsoft

The scientific consensus is clear: the world confronts an urgent carbon problem. The We have a responsibility to protect our most finite resource – the planet. Without
carbon in our atmosphere has created a blanket of gas that traps heat and is immediate and drastic action today, adapting to these impacts in the future will be
changing the world’s climate. If we don’t curb emissions, and temperatures continue more difficult and costly.
to climb, science tells us that the results will be catastrophic.
And Microsoft is doing our part to accelerate the world’s transformation to a Net
At some level, every industry is undergoing sustainable digital transformation. From Zero future with Clean Energy Startups and Ecosystem and through our Climate
5G, cloud computing, and internet of things (IoT) and data – technology has Innovation Fund, committing $1 billion of capital to invest in meaningful, measurable
accelerated and transformed the innovation agenda for companies. From digital climate solutions, particularly where the capital need for climate solutions is not
supply chains that improve business processes and reduce carbon footprints to IoT being met; supporting technologies that are relevant to Microsoft’s core business
sensors streaming real-time telemetry for predictive analytics, there is no shortage of and that of our customers; and ensuring developing economies and underserved
Sandy Gupta examples of how technology can enable ambitious sustainability outcomes. And this communities benefit from climate solutions. That, and we have been carbon neutral
COO, Vice President of Sales, is further transformed by start-ups and digital natives who are using artificial since 2012, but that’s not stopping us from committing to being carbon negative by
Marketing, and Operations, intelligence and data to create solutions that are disrupting industries. 2030, and by 2050, will remove from the environment all the carbon the company
Microsoft Asia-Pacific has emitted either directly or by electrical consumption since it was founded in 1975.
That is one of the reasons we are investing in the SEA Clean Energy Facility (SEACEF)
to accelerate deployment of large-scale, innovative, high-impact clean energy We are one year into a decades-long strategy and while we have made some early
projects and businesses in critical SEA markets. progress, we know that one company or organization alone cannot meet the world’s
climate challenges.
We see businesses in manufacturing unlocking new data-driven insights to cut
carbon across their operations and supply chains; retail tracking the carbon footprint It is our role as leaders, working together as a coalition to bring in our strengths,
of products from farm to fork, field to fiber to consumer, and everything in between assets, resources to build a region that is more resilient, equitable, greener, and
to reduce their emissions and deliver purpose-driven products to customers. sustainable for everyone. This is purpose driven technology, where the mission is to
collaborate for the greater, common good.
The opportunity is here and what this report underlines is the urgent need for public
policy, capital investments, technology, partnerships, and demand for a Net Zero
future to come together so SEA can push ahead with achieving a sustainable future.

7
 Foreword by Temasek

The urgency for climate action has never been greater. The recent IPCC report While both green fundraising and capital deployment is picking up in the region,
suggests that we are at imminent risk of breaching the 1.5⁰C threshold. We are we have a long way to go. Building up the region’s sustainable infrastructure in
making progress, but we need to urgently step up our efforts in large-scale areas such as renewables, electric vehicles and waste management will require
reductions in emissions to limit warming to 1.5⁰C. some $2 trillion in investments over the next decade. By contrast, this report
finds that only ~$9 billion has been deployed to green businesses and assets
We cannot afford to wait. If warming continues unabated, global temperatures in 2020.
could rise by 3.2⁰C by 2050. In this scenario, the global economy stands to lose
close to 20%1 of its GDP compared to a world without climate change by the At Temasek, sustainability is central to what we do. We have committed to halve
mid-century. The most impacted regions, in the same scenario, include emerging our portfolio carbon emissions by 2030 and to be Net Zero by 2050. We actively
Steve Howard Asia, with SEA countries projected to lose up to 37%1 of their GDP. Many view seek sustainable solutions from plant-based foods, to alternative energy sources
Chief Sustainability Officer, the climate emergency and transition toward a low-carbon economy as the to bring about a sustainable future. The road to Net Zero will not be easy, but it
Temasek challenge of our generation; we see also the significant value and opportunities offers significant opportunities for collaboration between private, public, and
it brings. Temasek seeks to catalyze and invest in solutions to these key global philanthropic sectors to unlock SEA’s full potential.
challenges.
This report offers an important update on the opportunities for investors,
In SEA, we are seeing promising investible areas emerge, especially across companies, and governments to collaborate and accelerate the transition to a
energy and agri-food, as highlighted in this report. Valuing our region’s natural greener economy in the region. I hope that it will provide useful insights and
capital as a carbon sink and preserving our biodiversity is also critical. To that help catalyze further action for our collective sustainable future.
end, we have established Mandai Nature Fund, in partnership with Mandai Park
Holdings, to help wildlife, nature and communities thrive in Asia. Our joint
venture with DBS, SGX and Standard Chartered - Climate Impact X - offers a
global marketplace for high-quality carbon credits to increase capital flows to
nature-based solutions such as reforestation and regenerative agriculture.

Shifts in investor sentiments promise to unlock green capital flow to accelerate

the transition. 57% of investors now integrate sustainability in their investing
thesis, up from 52% in 2019. Multiple forces are at play, from stakeholder
pressures to an emerging recognition of the opportunity. Green fundraising has
been on an upward trajectory, with ~150% annual growth in green debt issued
Notes: 1. Swiss Re Institute – since 2016. Capital deployment into green assets by PE/VC funds have also
The economics of climate increased by ~50% annually since 2016.
change: no action not an option
(Apr 2021)

8
Key takeaways

As the global narrative on climate change SEA has mobilized in the past year, with We know what needs to be done: ~90% of
shifts from challenges to action, there is landmark national announcements and SEA’s emissions are addressable through the
growing recognition of the importance of growth in corporate action, but pathways energy transition, valuing nature, and the
SEA as a critical part of the Net Zero puzzle. to results remain unclear. agri-food transformation.
SEA is the start of many supply routes and is home to some Only 2 SEA countries have Net Zero commitments, robust Opportunities exist as we decarbonize SEA’s
of the world’s most valuable natural capital sources: ~25% of climate plans are sparse, and carbon prices remain low heaviest emitting sectors. Scaling the voluntary carbon
global investible pantropic forest carbon stock, 19-46% of blue (~$4-5 per tCO2e). The region faces a ~3-4Gt gap to 1.5°C- markets and leveraging data and digital innovation can
carbon stock, and ~97% of tropical peatland carbon sinks. aligned emissions levels in 2030 based on latest NDCs. further accelerate our Net Zero journey.
While MNCs, government-linked enterprises, regional
corporates, and family-run businesses lead the way, SMEs
face resource constraints to make the shift.

SEA investors’ mindsets are shifting, and The playbook to accelerate SEA’s path to
green capital is beginning to flow, but there Net Zero must account for regional nuances
is a long way to go. and include individual and collective action at
an ecosystem level.
The region needs ~$2 trillion in infrastructure investments
over the next decade for a sustainable transition. In 2020, All sets of stakeholders – businesses, investors, communities,
only ~$9 billion capital was deployed into green businesses and governments – are required. Key ingredients for SEA’s
and assets. collective action plan include ecosystem-wide co-innovation,
collective transition support leveraging blended financing and
public-private partnerships, and regional/cross-border
collaboration. Those who lead the charge stand to gain
$1 trillion in economic opportunities by 2030.

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Summary by the numbers

Global momentum is growing

+1.5°C $3 trillion 27%

by early 2030s planned green investments SBTi3 companies
global warming vs. pre-industrial levels $3 trillion planned green investments by the world’s SBTi companies make up 27% of
to be exceeded by early 2030s, largest economies and $121 trillion in AUM1 of global market capitalization in
according to the latest IPCC report investors and funds who have signed the PRI2 2021 vs. 11% in 2019

The imperative for SEA is clear…

15
climate crises in SEA
17-37%
GDP impact due to climate change
100%
loss of SEA’s peatlands by 2030
15 of 24 climate-linked crises that IFRC4 responded to in 17-37% GDP loss expected for SEA by 2050 (2.7-4.2% by 100% of peatlands and 50% of forest cover expected
Asia-Pacific in 2020 occurred in SEA – the most impacted 2030) in 2.0-3.2°C global warming scenarios – the worst to be lost by 2030 and 2050 respectively, at present
globally. 4 of the 10 countries that were most affected by globally. At the same time, SEA has heavy economic rates of deforestation and land use conversion
climate-related disasters from 1999 to 2018 are in SEA, dependency on resource- and carbon-intensive industries,
according to Germanwatch’s Climate Risk Index (CRI) which represent >45% regional economy today5

…and there is a lot more to be done

~3-4 Gt gap to
1.5°C-aligned emissions in 2030
<$9 billion
to the green economy in 2020
deployed 2 SEA countries
with Net Zero commitments

We are not on track and the path to action is not clear: A global arms race is emerging to build the industries of Only 2 countries have Net Zero commitments and 2 have
latest NDCs leave a ~2.7–3.7Gt emissions gap to 1.5°C- the future, led by the US, Europe, and China. SEA needs announced or implemented a carbon tax, with prices at
aligned levels in 2030, closing the gap from previous $2 trillion in investments over the next decade for a $4-5 per tCO2e vs. ~$20 global average and $50-$100
NDCs by 11-18% vs. 68% for Colombia, 9% for China, sustainable transition, yet only <$9 billion capital was needed for 1.5°C pathway by 2030. SEA SBTi companies
64% for the EU, and 71% for the US deployed in green assets in 2020 represent 4% market capitalization vs. 27% for global

Notes: 1. Assets under management; 2. Principles for Responsible Investment; 3. Science Based Targets initiative; 4. International Federation of Red Cross and Red Crescent Societies;
5. Industries included are agriculture, forestry, fishing, mining, manufacturing, electricity, gas, and construction
10
Summary by the numbers

SEA has clear opportunities to accelerate its Net Zero journey

~90%
of SEA emissions
46%
of emissions
~25%
of global investible
15%
of emissions from
from 3 sectors from energy forest carbon agriculture
A small number of sectors are the problem 46% of SEA’s emissions come from energy, SEA holds some of the world’s most Agriculture forms ~10% of the region’s GDP
and the opportunity: bold action to accelerate presenting opportunity for SEA to leapfrog valuable natural capital, but this is at risk, but is also the source of 15% of emissions:
energy transition, value nature, and transform and pivot to cleaner energy sources: energy with LUCF2 accounting for 27% of SEA opportunities exist to empower smallholder
agri-food system can address ~90% of SEA’s efficiency, renewables adoption, grid emissions. Action today can save ~25% of farmers with sustainable practices and
emissions and deliver emissions reduction for modernization, and electrification are the world’s investible pantropic forest innovations, as well as build out the region
the wider world immediate opportunities while emerging carbon stock, 19%–46% of blue carbon, as a global center for ag-tech such as
CCUS1 and hydrogen hold future promise and ~97% of tropical peatland carbon sinks alternative-protein

Key actors are beginning to move

>85%
SEA businesses are family-run
78% MNCs require
suppliers to be sustainable
57% SEA investors
expect sustainability
$2 trillion
investment required
Family businesses, who represent >85% of 78% of MNCs will remove suppliers that Shifts in investor sentiments promise to There is a big need to address, which presents
SEA businesses valued at >$1 billion, are endanger their Net Zero transition by 2025, unlock green capital flow to accelerate the significant opportunity: $2 trillion investments
moving fast to scale the transition, while with SEA being an essential focus: 92% of transition: 57% of investors now integrate in infrastructure over the next decade is
SMEs, who make up ~40% of GDP, face rubber, 22% of semiconductor exports, and sustainability in their investment thesis required to enable’s SEA sustainable transition
resource constraints in making the shift many other resource routes including textiles while 19% identify as impact investors in
and palm start in the region 2021 (vs. 52% and 0% respectively in 2019)

3 key ingredients 1. Ecosystem co-innovation ~$1 trillion economic opportunities

Everyone – businesses, investors, governments, and
Will you join us
to drive collective action 2. Collective transition support
at an ecosystem level
to achieve a sustainable SEA 3. Regional collaboration
communities – has a role to play. For businesses who lead the
action on our path to achieving a green economy, up to ~$1 on this journey?
trillion economic opportunities are on the table by 2030

Notes: 1. Carbon capture, utilization, and storage; 2. Land use change and forestry
11
Executive summary

This is a moment of transition Our Net Zero plan must be crystalized

A new narrative has emerged around climate action Dialogue has changed with Covid-19. Concerns about Yes, allowances must be made. SEA has been hard hit
and global actors are responding. SEA is gaining regional interdependency and resilience have come to by Covid-19: the region’s GDP growth was 7.8% pt.
importance as a critical piece of the global Net Zero the fore, together with greater climate awareness. SEA lower than forecasted in 2020. Many SEA businesses
solution. There is renewed recognition of the untapped nations have made notable landmark moves in the remain in survival mode, with little extra resources
potential of SEA’s natural capital as carbon sinks, and past year– Singapore launched its National Green Plan, available to focus on sustainability. SMEs, who form
MNCs who have committed to Net Zero recognize Indonesia announced a 2060 Net Zero commitment, ~40% of the region’s economy and ~75% of the
they cannot deliver their climate goals without and the ASEAN Taxonomy Board began work on a workforce, are hard hit.
supporting change in SEA across their local supply regional sustainable finance taxonomy, to name a few.
chains. Put simply, the world cannot achieve Net Zero As a resource-rich, developing region, SEA faces
without SEA coming along on the journey. The region’s businesses are also mobilizing. Regional unique issues for change. Critically, SEA needs to
champions, government-linked corporations, and balance the climate transition with socioeconomic
SEA faces additional risks itself. It is one of the regions MNCs are all coming to the table, driven by internal needs and a reliance on fossil fuels for energy security.
most at-risk to climate shocks and stands to lose much values, self-interest and external pressures. Family- However, we also have significant opportunities: a vast
of future GDP (3-4% negative impact by 2030, owned businesses, who make up >85% of SEA amount of valuable natural capital and potential
translating to ~$130-$200 billion in 2.0-3.2°C global businesses valued at >$1 billion, are poised to play a renewable energy sources, corporate structures that
warming scenarios) unless it takes decisive and timely pivotal role in accelerating the transition and new can move fast and effectively scale sustainability, and a
action. The region needs to take three steps to investment. growing appetite for co-innovation and collaboration
accelerate its Net Zero journey: across sectors and organization types. All this is
Yet SEA is not on track. The region’s latest climate NDC needed to address SEA’s sustainability challenges.
1) Define its road to Net Zero commitments improve on 2015’s reduction targets by
only ~0.5–0.6 GtCO2e by 2030, leaving an estimated Challenges aside, SEA needs to take climate action now
2) Catalyze the journey and outcomes together gap of ~3 GtCO2e (conditional) to ~4 GtCO2e and define the right pathway that accounts for its own
(unconditional), to achieving promised emissions constraints, point of departure, and human needs.
3) Unlock capital and investments reductions in line with Paris Agreement’s 1.5°C goals.

12
Executive summary

The road to Net Zero presents clear opportunities for SEA

Together, the energy transition, valuing nature, and Valuing nature: We see two critical enablers to accelerate our journey:
transforming our agri-food system could address up to Nature is one of SEA’s largest and most undervalued
~90% of the region’s emissions while unlocking new resources; the global movement to “better price” Scaling the region’s voluntary carbon markets will
economic opportunities and industries of tomorrow. nature offers a material opportunity for SEA investors accelerate SEA’s decarbonization by pricing carbon
and businesses enabled by tech and financial while incentivizing the protection of our natural capital
Energy transition: innovation to scale protection of SEA’s vast resources and contributing socioeconomic benefits to the region.
Reshaping the region’s ecosystem from resource to realize potential as global carbon sinks and SEA holds immense potential, particularly in nature-
extraction to electrification is one of the largest biodiversity banks. based solutions. By 2030, ~$10 billion in revenue
challenges SEA has ever faced. Immediate opportunities could be realized across the value chain.
opportunities lean toward driving energy efficiency and Agri-food transformation:
renewables (e.g., solar, wind), scaled by grid Agriculture is the other backbone of SEA’s economy The growing “green data revolution” is also a major
modernization and electrification, and on the horizon, but is also a source of significant emissions and other catalyst for scaling climate impact. Thematic changes
rethinking transport, emerging carbon capture environmental impacts. Opportunities exist to such as the democratization of data, advanced
technologies and hydrogen innovations. empower smallholder farmers with sustainable predictive models, and growing cross-sector co-
practices and innovations that also improve innovation are enabling us to push boundaries at a
productivity, as well as build out the region as a global pace we never imagined possible. There are green
center for food tech, e.g., alternative-protein. shoots in digital innovation taking place in SEA, with
the development of Singapore’s digital twin for climate
resilience modelling and geospatial mapping of SEA
forests for better conservation as prime examples.

13
 Executive summary

Unlocking capital flows Leading by doing

SEA investors increasingly see sustainability as an Achieving Net Zero as a region demands individual Three ingredients are crucial for collective action:
opportunity vs. a risk: 57% of investors now integrate action by businesses, investors, governments, and
sustainability in their investing thesis while 19% identify communities, as well as collective action at an 1) Ecosystem-wide co-innovation: accelerate
as impact investors in 2021 (vs. 52% and 0% ecosystem level. commercialization of low-carbon tech that suits
respectively in 2019). Multiple forces are at play, from SEA’s needs, such as agri-tech and carbon capture;
investor pressures to recognition of this opportunity. Businesses must identify the strategic white space increase sharing of data/tools/standards through
where they can advance SEA’s climate transition while value chain-wide alliances; and mobilize public and
Mindsets are in turn starting to generate results. Green driving commercial value and innovation that is aligned private capital to conserve and restore SEA’s
fundraising has been on a strong upward trajectory, to their core business strategy. natural carbon sinks
with 40-150% growth per annum (p.a.) across debt
issuances, IPO1, PE/VC2 fundraising, and sustainable Investors can further unlock green and transition 2) Collective transition support, leveraging public-
public funds AUM3. capital flows in the region through catalytic financial private partnerships and blended financing:
instruments to de-risk investments and novel improve access to capital and build capabilities of
What is crystal clear is there is significant headroom to sustainability or transition-linked products to lower SMEs/smallholders, mitigate impact of stranded
invest more. ~$2 trillion in investments over the next barriers to financing, while governments need to assets for hard-to-abate sectors, and upskill and
decade is required to build out SEA’s infrastructure for demonstrate regulatory leadership to create investible retrain SEA’s workforce for the green economy
a sustainable transition. Governments cannot do this environments for sustainable assets.
alone – ADB4 estimates ~40% of infrastructure 3) Regional collaboration: develop a holistic SEA
investments need to come from the private sector. The scale of the Net Zero challenge is significant in Net Zero transition plan, establish a cross-border
economic, investment, nature, and human terms – SEA carbon trading system, and reassess energy
Yet, despite high liquidity, many barriers limit flows must find the path forward that meets the conditions security by exploring a regional grid to more
today: inconsistent government policies, an immature of its realities. We know where attention is needed, and efficiently connect demand to supply
ecosystem leading to high transaction costs and where the opportunities lie. Regional actors now need
evolving standards, and conservative mindsets. Action to come together to develop a robust Net Zero plan For businesses who lead the action, more than
is needed for change. that accounts for regional nuances and the distinct $1 trillion5 in economic opportunities are on the table.
needs of diverse SEA nation-states. SEA is at a pivotal transition point, and the decision is
Notes: 1. Initial public offerings;
2. Private equity/venture capital;
yours – will you join us on this journey?
3. Assets under management;
4. Asian Development Bank;
5. Majority of opportunities
have decarbonization impact

14
Contents

Introduction 2021: Year of transition and climate action 16

01 Defining the road to Net Zero 22

02 Catalyzing the journey 35

03 Unlocking capital for sustainability 59

Conclusion Leading by doing 66

15
 16

Introduction

2021: Year of
Transition and
Climate Action
Moving from “challenges”
to “solutions”
 A new global narrative emerges – Net Zero takes center stage

Global recognition that the Net Zero window is closing, and greater collective action is needed

Closing window
To limit global warming to 1.5°C above the pre-industrial
period, 45% reduction in annual emissions is required by 20301

Unless there are immediate, 2021 should be a turning We are off track
rapid and large-scale point for our planet and Global warming is expected to exceed 1.5°C by the early
reductions in greenhouse gas to accelerate efforts to cut 2030s, according to the latest IPCC report (we are at
emissions, limiting warming greenhouse gas emissions ~1.1°C2 today, with 2020 being the third warmest year on
to close to 1.5°C or even record). Further, emissions are on pace to increase by 4.8%
2°C will be beyond reach in 2021 – the largest increase since the great financial crisis
IPCC (August 2021) G7 Summit (June 2021)

Not enough scale

Long lead time for solutions to take effect; for example,
though renewables prices are falling quickly now, solar energy
took ~20 years to reach ~10% of global installed capacity

2021 must be the year for The United States is not

All hope pinned on COP26
Notes: 1. From 2010 baseline; climate action – ‘The waiting, the costs of In November, nations will come together to review
2. Based on the latest IPCC make it or break it year’ delay are too great, and commitments and strengthen ambitions for the first time
assessment. This is 10 years our nation is resolved since the 2015 Paris Agreement. Initial talks indicate
earlier than IPCC’s 2018 progress and alignment may not be enough, with
projections in the SR1.5 to act now
international transfers of offsets and mitigation outcomes
Sources: WMO; Reuters; White (Article 6) remaining at the center of dispute
House Briefing Room; IEA 2021
UN Secretary-General,
Global Energy Review; UNFCCC;
António Guterres (April 2021) US White House (April 2021)
New Climate Institute; BBC;
Global Data; IPCC 2021; CNA

17
 The scales have tipped – key actors are responding

The narrative is shifting from problem to solution and action

Non-exhaustive

~2.5x
Growth in mentions of
~52% 2016-20211 growth in media mentions of
climate action relative “climate action” vs. ~21% for “climate change”
to climate change

We see climate action The United States must Climate action is at As governments recognize the
as fundamental to advance a credible strategy the heart of the importance of climate action…
alleviating poverty and for robust and continued European Green Deal industries are left with little
boosting prosperity climate action choice but to change

Notes: 1. 2021 annualized

based on YTD July run rate;
2. ~$1.2 trillion from EU’s
green deal and ~$2 trillion in
proposed infrastructure and
clean energy spending by the
US; 3. Principles for Global Investors and
responsible investment; Corporations
4. Market capitalization data economies shareholders

$3 ~$121 ~27%
as of Jan 2021, covering 1,040
companies that were part of Planned infrastructure AUM of institutional Global market
the SBTi in October 2020; 5. and clean energy investors and PE firms capitalization4
Science Based Targets investments by that are UN PRI3 represented by SBTi5
initiative
economies representing signatories as of 2021 vs. companies
Sources: Factiva; European
Commission; White House
Briefing Room; UN PRI; WFE,
trillion+ ~45% of global GDP2
trillion ~11% in 2019
since 2020 as of 2021 vs.
Euromonitor; SBTi; World
Bank; Brookings Institute; ~$86 trillion in 2019
European Union

18
 Growing recognition of the risks of climate change to SEA…

Risks require immediate action

SEA is disproportionately exposed to ...with impact expected to continue Meanwhile, emissions expected
climate shocks… into the future to continue to rise with income levels

15 17-37% 5.4%
of 24 climate-linked crises in Asia-Pacific (vs. 18 in negative GDP impact in 2050, and 2.7-4.2% by growth in electricity demand in 2021 forecasted –
Notes: 1. More than 31 million
people have been affected in the
2019) that IFRC responded to in 2020 were in SEA 2030, due to climate events in 2°C-3.2°C the fastest growing region in the world (3% average)4
region; 2. Relative to a scenario – its busiest region globally1 scenarios2 – the most impacted region globally
without climate change (0°C).
SEA’s loss is particularly severe,
with world GDP expected to lose

96%
11-18% in 2050 in the same
scenarios; 3. A “ten-year flood”
has a 10% annual chance of
occurring; 4. Demand for
electricity in all other regions is
forecasted to grow at ~1-4%
of Bangkok’s land may be submerged
Sources: Swiss Re Institute; by a “ten-year flood” in 20303
Greenpeace; Reuters; IFRC;
International Energy Agency; UN,
Eastpring; Koh et al.; WEForum

19
 …and increasing significance of SEA in global climate action

Growing importance of SEA to global actors

~4%
As one of the fastest-growing
regional economies, it is expected GDP growth rate annually over the
important that SEA develops next decade (third only to India and China)
in a sustainable manner

SEA’s natural capital holds the

highest global potential as a
25% of global financially viable, investible
carbon stock in pantropic terrestrial forests SEA will be one of the biggest
beneficiaries of the realignment

19-46%
of supply chains as companies perceive
decarbonization lever
of global blue carbon storage potential it to be a viable alternative to China
(4.8 GtCO2e)

92%
Notes: 1. 2020 value of SEA
exports for natural rubber and of global natural rubber exports1
similar gum (HS 4001); 2. 2020 The world cannot reach Net
value of SEA exports for diodes, Zero without addressing its
transistors and similar supply chains, many of which

22%
semiconductors (HS 8541)
start in SEA
Sources: Swiss Re Institute; of global semiconductor exports2
Greenpeace; Reuters; IFRC;
International Energy Agency;
UN; Eastpring; Koh et al.;
WEForum

20
Three steps to accelerate SEA’s Net Zero journey

Opportunities exist along

SEA’s Net Zero journey, with
the voluntary carbon
markets and data/digital
innovations as key
accelerants
Catalyze the journey
Define the path to
Net Zero
Define the road
to Net Zero Investors’ mindsets are
shifting, but it is critical to
remove structural barriers
that exist today to address
Climate ambitions have begun to the significant need
form in SEA but more needs to be for capital
done to achieve Net Zero
Unlock capital flows

21
 01

Defining the Road

to Net Zero
Regional action and awareness
are building, yet pathways and
results remain on the horizon

Curious to find out more?

Read the deep dive here
 01
ROAD TO NET ZERO
Covid-19 has brought issues of regional risk and resilience into sharp focus
and spurred climate awareness

In the wake of Covid-19, we have witnessed a shift in discourse in SEA:

Heightened awareness of Increased need for Change in individual

supply chain disruptions resilient government behavior and
and food security risks green recovery budgets consumption habits

Covid-19 has reinforced the need to develop Covid-19 has highlighted the need to move Covid-19 lockdowns have changed the way
a more resilient, localized supply chain, away from the BAU1 approach governments individuals live and work (e.g., video calls
improve food security, and reduce the have taken in the past in response to external and work from home instead of traveling)
region’s reliance on global trade flows. shocks such as climate events. and if sustained, could potentially abate
~15% of all transportation emissions.
For example, Singapore launched its As part of SEA’s Comprehensive Recovery
“30 by 30” plan for local farms to produce Framework, a core priority is to advance The pandemic has also accelerated the
30% of nutritional needs by 2030 with toward a more sustainable and resilient shift to digital as a consumption platform
tech-enabled urban and sustainable future, including the transition to sustainable over the past year while also shifting
farming systems, which will also reduce energy and green infrastructure. consumers toward “conscious
emissions footprint. consumption” with~54% of SEA
consumers indicating they will be more
environmentally conscious in the future.

Notes: 1. Business-as-usual
Sources: CNA; LSE; Singapore
Food Authority; ASEAN; Bain
2020 SEA Digital Consumer
Survey; One Earth

23
 01
ROAD TO NET ZERO
SEA has made progress in the past year but more still needs to be done

Landmark moves by SEA nations

There has been a wave of landmark announcements by SEA governments in the past year, including 2 Net Zero commitments
(Laos, Indonesia) and 4 national green plans (e.g., Singapore’s Green Plan 2030, Thailand’s Bio-Circular-Green Economy model) to
accelerate the transition toward Net Zero

Steps forward in regional collaboration

In 2021, the ASEAN Taxonomy Board was set up to develop a regional, sustainable finance and transition taxonomies framework, and
Phase II of the ASEAN Plan of Action for Energy Cooperation was launched

Corporations in the region leading the way

Corporations across the spectrum are taking concrete actions to accelerate sustainability within and beyond their own organization’s
boundaries (e.g., working with suppliers and customers to drive their sustainability agenda). Family-led businesses have also awoken
to the importance of sustainability and resiliency in the wake of Covid-19 and are well-positioned to lead the charge in the region

NDCs and renewables targets lag global peers

SEA nations are behind global peers in Net Zero commitments (20% of SEA nations vs. 28% of the world), renewables supply targets
(~23-29%2 in SEA vs. ~40% in the US by 2040), and NDCs (latest SEA NDCs closed the gap from previous by 11-18% vs. 68% for
Colombia and 64% for EU). The region still has ~3-4 GtCO2e1 emissions gap in 2030 to achieve the 1.5°C pathway

Lack of robust plans to achieve Net Zero targets

Most SEA countries do not have all the elements of an effective Net Zero plan (e.g., Net Zero committed to law, absolute 2030
emissions targets, full sector coverage), leaving more to be done to enhance the scope and clarity of their commitment
Notes: 1. Bain analysis based on
latest country NDCs; 2. Based
on ASEAN Centre for Energy’s SMEs lacking in support and resources to make the shift
ASEAN (Phase II: 2021 – 2025)
target scenario or progressive Exacerbated by Covid-19, SMEs, who form ~40% of GDP and employ ~75% of the workforce, lack financial and human resources and
scenarios respectively sustainability capabilities to keep up with the rapidly evolving sustainability standards (e.g., access to green financing)
Sources: EIA; Reuters

24
 01
ROAD TO NET ZERO
SEA countries have made landmark announcements and moves in the past year alone

2020

Brunei to make carbon pricing centerpiece of climate strategy Jul

Vietnam pioneers post-pandemic carbon pricing Nov Philippines shuts door on new coal power proposals

2021

Feb Singapore Green Plan 2030 to change the way people live, work, study
and play

ASEAN Taxonomy Board begins work on regional sustainable finance Apr

and transition taxonomies

A new global carbon exchange will be launched in Singapore this year May No more coal plants in Indonesia in another bid to cut emissions

Jun Government proposes $5 per ton carbon tax to curb greenhouse gas emissions

SGX first Asian exchange to commit 1.5°C-aligned emission reduction targets Jul

Sources: Bloomberg; Jakarta

Post; Straits Times;
Straits Times (2); Reuters; East
Asia Forum; Carbon Pulse; Aug Indonesia sets Net Zero emissions goal ahead of COP 26
CNBC; LinkedIn; Jakarta Globe
ID; Reuters (2); The Edge

25
 01
ROAD TO NET ZERO
National ambitions are beginning to form across the region

Only 2 countries have Singapore is the only country whose unconditional 2 countries have implemented or announced a
committed to Net Zero emissions are expected to fall between now and 2030 carbon tax, while 4 are considering carbon pricing

Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam

Notes: 1. “Emissions targets”

refers to target reduction by Net Zero 2060 2050
2030 from BAU unless stated
otherwise; 2. Unconditional
Emissions Absolute Absolute
reduction not dependent on 2030 emissions intensity of GDP emissions target emissions target
external support. Conditional targets1 relative to BAU (select sectors) (economy-wide)
targets dependent on sufficient
international support; Unconditional2
3. Myanmar’s NDC largely -20% -29% -60% -45% 600 MtCO2e3 -3% 65 MtCO2e -20% -8%
addresses only energy and Conditional -42% -41% -67% 400 MtCO2e3 -75% -25% -25%
LUCF, which make up ~65% of
their emissions today; 4. Implied Regional (unconditional) target of ~26% by 2030
change estimated as percentage Implied change in
difference of calculated absolute emissions
absolute emissions level in 2030 (from 2018 levels)4
based on targets from 2018
Unconditional +39% +19% +9% +84% +158% +50% -3% +3% +99%
levels; 5. Emissions trading
scheme; 6. Refers to installed Conditional +31% -1% -11% +85% -62% -3% +62%
capacity, not to be confused
with power supply/generation;
Carbon pricing Carbon tax
7. Unconditional target for non- Carbon pricing
($5/tCO2e) Carbon tax and Carbon tax ETS legalized –
hydropower renewables; to be ETS under
announced, ETS5 ETS under (~$4/tCO2e) to take effect by
8. Based on 2 GWp solar implemented consideration
under consideration implemented Jan 2022
capacity target by 2030 as % of by 2025
consideration
estimated total power capacity
of ~13.8 GW; 9. Based on
ASEAN Centre for Energy’s Renewables ~11%
~30% ~25% ~48% ~30% ~40% ~38% ~15% ~30% ~32%
ASEAN target scenario (Phase II: installed by 20307
by 2035 by 2030 by 2030 (consumption) by 2035 by 2035 by 20308 by 2030 by 2030
2021 – 2025) capacity target6 (non-hydro)
by 2025
Sources: Reuters; Mongabay;
Regional target of ~33% by 20259 (from ~24% in 2018)
CNA; Greenplan; Power-
technology; The Edge; JTC;
Eco-business; Global Data; icap; Protect 5.8 Increase forest Reduce Eliminate net Plant 1 million
Business Inquirer; Bangkok Post; Nature Increase forest Increase forest million ha of Protect >20% of Increase forest Increase forest
cover to 70% deforestation loss in forests, more trees and
IEA; Export.gov; Platform 2020 reserves from cover to 60% forests and 1.9 terrestrial and cover to 55% cover to 42%
of total area by 25% by 2030 mangrove, add 130 ha of
redesign; Nupi; UNFCCC; 41% to 55% of total area million ha of 10% of coastal of total area of total area
(conditional) (50% seagrass, coral new parks by
All NDCs; UOB; ASEAN Energy by 2035 by 2030 peatlands by areas by 2025 by 2037 by 2030
by 2030 conditional) cover by 2028 2030
2030
26
 01
ROAD TO NET ZERO
Businesses in the region are leading the charge Non-exhaustive

Increasing commitments and taking tangible action to drive sustainability forward

SEA SBTi Regional Champions Government-linked Enterprises MNCs

signatories
Increasing recognition of Investments and partnerships to Collaboration with suppliers and customers to
sustainability risks and opportunities develop holistic infrastructure and decarbonize supply chains
drive ecosystem change

78% 30%
Improved business operations to
achieve efficiencies from
25 sustainability
Established $600 million decarbonization Will remove suppliers Have offered
(In 2020, CDL)1 achieved 44% that endanger their Net preferential pricing to
fund in partnership with BlackRock
reduction in carbon emissions Zero transition by 20253 sustainable suppliers3
intensity against 2007 levels…
over $30 million in energy
Targeting Net Zero by 2039 for entire
savings from energy efficient
supply chain (~90% of palm oil
retrofitting and initiatives across Acquisitions of renewable companies suppliers in SEA)
all its commercial buildings such as Amplus and SOLS Energy to
Notes: 1. City Developments
Limited; 2. Environmental, boost clean energy portfolio Requires 100% RSPO4-certified palm oil
social, and governance; by 2023 from suppliers (>90% in SEA)
3. According to survey with 400
of the world’s largest MNCs, Sustainability initiatives to
conducted by Standard capitalize on lower costs of capital Requires supplier certification for
Chartered in Mar 2021; 4
Targeting Net Zero by 2060 and environmental management
4. Roundtable on Sustainable
Palm Oil (The $255 million sustainability- increased transparency through (~44% in SEA)
Sources: The Global Economy; linked loan has) a mechanism to partnership with CDP Global
adjust to lower interest rates …and with customers and ecosystem drive forward
SC; SCMP; Reuters; Energy 2019 2021
Voice; PTBA; IEEFA; Unilever based on Indorama’s ESG2 sustainability agenda
suppliers; Nestle suppliers;
score (with maturity in 2025) Developing digital environmental
Samsung suppliers; Indorama;
Climate Bonds; Petronas; Global Accelerating electric vehicles adoption solutions and established AI for Earth
Data; CDL; Company websites; and $1 billion climate innovation fund
Industry interviews in partnership with Foxconn

27
 01
ROAD TO NET ZERO
Family-run businesses are poised to play a pivotal role in SEA’s transition

>85% of SEA businesses valued at >$1 billion are family-run1

Family businesses have multiple strategic advantages in Founder and family-led businesses hold the
key to a dramatic change (for sustainability in ASEAN)
shifting to sustainability: VP Sales & Marketing, Global Tech Co

Shorter chain of command

allows for more nimble decision-making and transformations
Family businesses have unique advantages that may enable
Majority family ownership them to bring more immediate impact (in sustainability)
results in reduced external pressures to manage for Managing Director, Government Investor Co
short-term profitability

Generational mindset
As a family business, longevity is the key common theme,
enforces an inherent sense of stewardship in building be that in commerce, sustainability, or people management
longevity and resilience for intergenerational transfer General Manager, Family Conglomerate Co

Examples of family businesses leading the charge

Notes: 1. Family-run businesses
have more than half of their Targeting group-wide Net Zero by Introduced innovative circularity Developed Singapore’s first carbon
shares controlled by (more than 2030 (scope 3 by 2050) through practices and energy efficiency assets neutral building and eco-mall by
1) members of the same family renewables (100% by 2030), energy and installed renewable energy in focusing on energy efficiency and
efficiency, low-carbon products and group subsidiaries (Shangri-La Group, carbon offsetting
Sources: Brunswick Group;
UNESCAP (CP Group); Hong nature-based solutions Kerry Logistics, etc.)
Leong; Company websites;
Institute for Family Business;
industry interviews

28
 01
ROAD TO NET ZERO
However, SEA is not on track, and there is a lot of work to do Based on latest NDCs

SEA expected gap to 1.5C compatible emissions levels in 20301 2030 emissions gap closed by latest NDCs
SEA emissions (GtCO2e):
(from 2015 NDCs)
Unconditional Conditional
* Non–Annex I benchmark countries

BAU2 2015 NDCs

11% 18% (conditional)
(~7Gt total) reduction
3.5 2.3 Increment
A from new 71%
NDCs3
1.5
B Gap
*
68%
0.8
0.5
1.0 3.7 64%
0.6 unconditional
3.6 *
9%
Notes: 1. 1.5oC compatible
emissions levels based on
2.7
IPCC’s estimate that annual conditional
emissions will need to fall by
1.5 SEA emissions per capita is set to overtake
45% from 2010 levels by 2030;
2. BAUs emissions taken from
global average by 2030
country NDCs where available;
3. Myanmar’s latest NDC had a Emissions per capita (tCO2e per capita):
significant contribution to the 1.5C compatible
Conditional
increment from new NDCs, as
they did not provide previous 2018 2030
mitigation targets in the old
NDCs. Myanmar’s BAU only 2018
accounts for selected sector
emissions, which contribute to 2030
~65% of total emissions today. A SEA’s latest NDCs predict a marginal B ~2.7–3.7 GtCO2e gap to 1.5C
Laos’ BAU emissions used in improvement of 0.5–0.6 GtCO2e from pathway compatible scenario
place of their old NDCs as
previous, which leaves projected remains in 2030 2018
targets provided in old NDCs
were not comparable; emissions levels at >4-5GtCO2e in 2030
2030
Sources: IPCC; Country NDCs;
Euromonitor; Economist;
Intelligence Unit; Bain analysis

29
 01
ROAD TO NET ZERO
Compared with global benchmarks, SEA’s climate ambitions appear modest

Most of SEA’s latest NDC targets lead to an increase in annual emissions SEA corporates have been less
by 2030 in absolute terms ambitious relative to global peers
Percentage change in absolute annual emissions by 2030 Conditional Unconditional
(from 2018, %) SBTi signatories as percentage of total market cap (%)

85 158
62 99
SEA 4%

Global 27%

Average annual emissions reductions of SBTi

companies since start year, percentage (%)

Notes: 1. Non-Annex I countries

as categorized by UNFCCC, and
Net Zero commitments do not SEA 4%
consider targets under
discussion; 2. SEA carbon price
SEA Net Zero commitments are in line with Regional carbon pricing is
range based on carbon tax non-Annex I countries, but trail global average still insufficient
implemented or considered in Global 6%
Singapore (SG) and Indonesia Countries with Net Zero commitments,1 percentage (%) Price per tCO2e2
(ID). European Union (EU), and
Required by SBTi
4.2%
United States (US), based on 2 SEA countries have
2021 ETS prices from Non-Annex I 18% $4 -$5 set or proposed a tax for 1.5°C target
International Carbon Action
Partnership (ICAP) as of June
2021. China prices based on
SEA 20%
>$7 China national ETS3
debut price of National ETS in
July 2021; 3. Emissions trading
Scope 3 emissions footprints remain a
scheme; 4. Climate policy Global >$18 California Cap-and-Trade4 challenge to measure and address globally,
agenda of President Biden Global 28% even among leading companies. There is
omits any mention of carbon
pricing >$60 EU ETS urgent need for binding carbon-accounting
and reporting standards
Sources: Bain analysis; IPCC; Prices of EU ETS are in line with
Range required by 2030 to
CAT; ECIU; Ember; Reuters;
Reuters (2); SBTi
Paris goals (high enough to $50 - $100 be Paris 1.5C compatible
trigger fuel switching)
30
 01
ROAD TO NET ZERO
The plan for Net Zero must be crystallized –
few SEA countries have all the elements of a robust plan

Unlike global benchmarks, most SEA countries have not SEA countries can strengthen their commitments by setting
materially improved ambitions, nor set Net Zero targets absolute targets and having full sector coverage

Global benchmarks
Elements of an effective Net Zero plan1 Lacking Leading
Annex I Non-Annex I

Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam EU USA Colombia China2 Best-in-class

Notes: 1. Elements adapted Improved

from Climate Action Tracker’s ambition Material Slight No NA3 Slight Material Slight No No No Material Material Material Slight Material
Net Zero evaluation
methodology and IPCC Net Zero 2060 2050
No No No No No No No No 2050 2050 2050 2060 Achieved
guidelines. None of the target year
countries listed had separate
reduction and removal targets; Legal status Policy Policy Policy Policy Policy
NA NA NA NA NA NA NA NA In Law In Law
(Net Zero) Document Document Document Document Document
2. China categorization based
on latest NDC proposal at 2020 2030 reduction
Climate Ambition Submit – Relative Relative Relative Relative Intensity Absolute Relative Absolute Relative Relative Absolute Absolute Absolute Intensity Absolute
target type
latest NDC has yet to be
officially submitted; 3. Not Coverage (sector
and gases) Partial Partial Partial Partial Complete Incomplete Partial Complete Partial Partial Complete Complete Partial Partial Complete
applicable as Laos’ previous
NDC targets not comparable Uncond- Uncond- Uncond- Uncond- Uncond- Uncond- Uncond- Uncond- Uncond-
with latest targets; 4. Intl. Conditionality Conditional Both Both Conditional Both Both
itional itional itional itional itional itional itional itional itional
aviation and shipping refers to
accounting of all emissions Intl. aviation and Not Not Not Not Not Not Not Not Not Not Not Not Not Full
Partial
from intl. bunkers (beyond shipping4 specified specified specified specified specified specified specified specified specified specified specified specified specified coverage
Carbon Offsetting and
Reduction Scheme for Use of removals Not Not Intend to Not Not Intend to Not
outside borders Limited No Limited No Limited No No No
International Aviation [CORSIA] specified specified use specified specified use specified
and International Marine
Organization [IMO]); Removal Not Not Not Not Not Not Not
Partial Partial Partial Partial Partial Partial Partial Full
transparency specified specified specified specified specified specified specified
5. EU’s ambitious “Fit for 55”
package and plan has been
Review process Non-legally Non-legally Legally Not Not Not Legally
proposed, but not yet NA NA NA NA NA NA NA NA
(Net Zero) binding binding binding specified specified specified binding
submitted; 6. Based on whether
latest NDCs include explanation Pathway and Not
Limited Quantified Limited Quantified Limited Quantified Limited Quantified Limited Limited Limited5 Limited Quantified Quantified
on why targets are fair measures specified
Sources: IPCC; ECIU; Country Consideration of Not
NDCs; CAT; Bain analysis Included Included Included Included Included Included Included Included Included Included Included Included Included Included
fairness6 included

31
 01
ROAD TO NET ZERO
SEA faces specific challenges for change…

SEA-specific nuances present multiple challenges

Reliance on natural resource extraction such Need to balance transition with Significant risk of stranded assets – for example,
as fossil fuels and forestry for livelihood of socioeconomic growth while protecting jobs ~$60 billion1 in stranded value from coal assets in
communities and workforce and livelihoods, with regional GDP forecasted to Indonesia, Vietnam, and the Philippines, which
grow by 5.5% in 2021 make up ~75%2 of SEA’s coal-power capacity

Diverse regional populations and Challenge in measuring carbon footprint

socioeconomic needs as a loose federation of due to longer and more complex supply
Notes: 1. Estimated by
countries with uneven pattern of development chains (small, geographically siloed suppliers
CarbonTracker in 2018, using a across the region, unlike the EU such as smallholder farms)
cost-optimized asset-level
methodology and scenario
analysis which phases out coal
power in a manner compatible
with the temperature goal in the
Paris Agreement;
2. Based on International Energy
Agency (IEA) data for 2019
Sources: Brunswick Group;
Carbon Tracker; IEA; Industry
interviews

32
 01
ROAD TO NET ZERO
…that are exacerbated by Covid-19

Covid-19 has further diverted focus from sustainability to survival

Because of Covid-19, many SMEs are

struggling to stay open. In the near-
term post-Covid-19 world, SMEs are still
likely to prioritize recouping profits
over their sustainability ambitions.
Significant strain on the economic environment:
SEA Country SME Council Leader
SEA GDP growth in 2020 was 7.8% pt. lower than forecast due to Covid-19
lockdowns and disruptions

(SEA) businesses are fighting their

own existential issues. With cash flow
Many businesses, especially SMEs, are focused on staying afloat:
suffering from Covid-19, survival is the
SMEs (~75% of total employment and ~40% of total GDP in SEA), who were resource-constrained
first order of business - sustainability is
to begin with, have been worst hit by Covid-19 and are fighting for survival
not top of mind.
Managing Director,
SEA investment group

Sources: Brunswick Group;

Carbon Tracker; IEA; Industry
interviews

33
 01 There is no reason for inaction – there is significant upside Curious to find out more?
Read the deep dive here

for SEA if we get it right

ROAD TO NET ZERO

Significant opportunities present in SEA…

High potential value in Abundant renewable Significant infrastructure Streamlined/top-down A generational shift is Opportunity to accelerate
protecting SEA’s natural energy resources still to be developed, corporate structures changing consumption R&D1 and innovation
capital such as forests, such as geothermal, solar, especially in less position family-run habits, with the younger with increasing
peatlands, and mangroves and offshore wind – developed countries businesses to play a population being more entrepreneurial spirit,
opportunity to scale (~$2 trillion investment pivotal role in SEA’s cognizant of sustainability willingness for cross-
capacity of low-carbon need over the next decade sustainability transition imperatives sector collaboration and
energy amid falling prices for the region’s capital interest in green
sustainable transition) opportunities

Establish SEA as a global Accelerate the transition Leapfrog to Accelerate adoption of Leverage shift to Propel SEA to the
leader in supplying by removing regulatory development of sustainability initiatives “conscious forefront of
high-quality carbon hurdles, collaborating sustainable infrastructure by leveraging the consumption” sustainability
credits to help accelerate regionally, and and practices with green inherent strategic to catalyze change in innovation
decarbonization, leveraging decreasing construction, advantages that SEA purchasing habits as to accelerate the region’s
preserve SEA’s natural costs to scale capacity electrification, modern businesses possess early movers have the Net Zero transition and
capital and generate and establish new grids, etc. potential to reap rewards build position on a global
socioeconomic co- baseload energy source stage (e.g., as an
benefits (e.g., cleaner air alternative-protein hub)
and water quality)

…that are ripe for action

Notes: 1. Research and
development
Sources: Industry interviews;
Bain analysis All actors in SEA need to come together to capitalize on SEA’s distinct advantages to drive the shift to a green economy
34
 35

02

Catalyzing the
Journey
Energy transition, valuing nature,
and a sustainable agri-food system

Curious to find out more?

Read the deep dive here
 02
CATALYZE THE JOURNEY
Energy, land use change and forestry, and agriculture
are the biggest emitting sectors in SEA
Three sectors contribute to ~90% of SEA emissions

• 02 carbon emission volume (MtCO2e)

2018
Global SEA
INDUSTRIAL
SEA
Middle East
~7% PROCESSES
WASTE
Africa AGRICULTURE 15%
South America
North America 14% LAND USE
CHANGE AND 27%
FORESTRY
Europe 15%

Asia-Pacific ex. SEA 41%

ENERGY 46%

Brunei,
Cambodia,
Laos, and
Sector content examples
Singapore
Energy: Land use change and forestry: Agriculture:
Emissions from energy generation and Emissions and removal of carbon Emissions from enteric fermentation
consumption across all industries, e.g., from human-induced land use from livestock, fertilizer application,
transport and heating in manufacturing/ e.g., urbanization, deforestation manure management, etc.
industrial/agriculture processes

Waste: Industrial processes:

Notes: Sectors based on IPCC Direct emissions from landfills, Non-energy-related emissions such as
definitions wastewater treatment, sewage, etc. release of embodied carbon in cement
Sources: Climate Watch

36
 02
CATALYZE THE JOURNEY
Building blocks on SEA’s Net Zero journey

• CATALYZE THE JOURNEY

Decarbonize

Energy Valuing Agri-food system Others:

transition nature transformation Waste and
Address growing energy Assign value to and protect the Empower smallholders to industry emissions
security and demand
through cleaner sources
region’s natural capital as carbon
sinks and biodiversity banks
adopt sustainability while
building out SEA as the management
alternative-protein hub

Leverage enablers
Voluntary carbon markets
Compensate for hard-to-abate emissions, scale decarbonization solutions by pricing carbon, and protect SEA’s natural capital
while leveraging its potential to serve global need and contributing to the region’s socioeconomic development

Data and digital

Catalyze innovation and scale sustainability impact through the "green data revolution"

37
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CATALYZE THE JOURNEY
Energy transition: SEA must transition to cleaner energy sources
while maintaining energy security
Fossil fuels are the largest source of SEA’s energy emissions and are projected to remain dominant
despite national and regional renewable energy targets
Non-exhaustive

DECARBONIZE • 02 Only

108% 77% 3
Projected growth in Projected energy SEA countries above
ENERGY TRANSITION SEA energy demand supply from fossil the global average
by 2040 (from 2017)1 fuels in 20401 in energy transition
readiness2

Key imperatives for SEA:

SEA’s energy value chain
requires an overhaul to
Reduce Substitute Scale Remove
Energy efficiency Clean energy and fuel Grid modernization and CCUS maintain energy security
switching electrification while promoting the
Low-hanging fruit Favorable physical Improvements in regional Important for transition toward non-
with mature tech environment for grids and battery transition industries
(e.g., district cooling, renewables but need to technology can address in SEA (e.g., fossil
fossil fuel baseload
smart energy solve for intermittency variability in supply and fuels) sources (e.g., geothermal),
Notes: 1. Based on ASEAN Centre
management), but issues and develop more support the ~45 million
Some early activity other renewables (solar,
minimal regulatory conducive legal and people without grid access
for Energy’s ASEAN target
incentives limit regulatory frameworks to
in the region, with offshore wind),
scenario (Phase II: 2021 – 2025) EV3 market is growing 7 projects identified
that assumes member states’ adoption attract investment.
cautiously, but underlying by MNCs
electrification (such as
renewable energy targets are
met, in the progressive scenario, Abundance of biomass infrastructure is required EVs) and improved grid
energy demand is still expected feedstock for use in to scale adoption connectivity and
to increase 83% between 2017 modern biofuels
and 2040; 2. Laos and Myanmar Early SEA movers: efficiency
were not included in the
assessment; 3. Electric vehicle
Sources: ASEAN Centre for
Energy; Company websites; IEA; Smart energy Solar photovoltaic (PV) Solar PV, battery, Carbon capture,
IRENA; ERIA; ERCE; Black and management smart grid, and utilization, and
Veatch; Numbeo; World Bank; system energy management storage
WRI; The Economist

38
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CATALYZE THE JOURNEY
Energy transition: Efficiency solutions, renewables adoption, and grid improvements are
viable today, while more advanced options may be unlocked as unit economics improve

DECARBONIZE Commercial opportunities

1 2
ENERGY TRANSITION

Here and now Over the horizon

0-5 years

Energy efficiency technologies EV ecosystem

Relatively mature “quick-win” opportunities with Shifting customer demand and increasing tax
positive ROI for businesses to assess and adopt incentives favor the shift to EVs, but enabling
infrastructure required

5-10 years

Solar energy with battery storage CCUS

Highly scalable solutions benefiting from declining Unit economics limit opportunities today but can
tech costs and growing SEA governmental renewable be alleviated with subsidies. Direct air capture could be a
energy targets game changer but is further from commercialization

5-10 years

Grid infrastructure overhaul Low/no-carbon hydrogen

Increasing renewables capacity and improving Low-carbon hydrogen can unlock opportunities in energy
Sources: ASEAN Centre for grid interconnectedness will unlock investment storage, chemical feedstock, and transport fuels. No-
Energy; Company websites; IEA; opportunities carbon hydrogen has even more potential but requires
IRENA; ERIA; ERCE; Black and
Veatch; Numbeo; World Bank; significant cost decline (~$2/kg) for commercial viability
WRI; The Economist

39
 02
CATALYZE THE JOURNEY
Surbana Jurong leverages Internet of Things (IoT) and data to improve electrical
efficiency of buildings and cities while reducing their carbon footprint
Global urban, infrastructure, and managed services consulting firm headquartered in Singapore,
with over 70 years of experience delivering projects in more than 30 countries

DECARBONIZE THE JOURNEY

Digital facilities management
ENERGY TRANSITION Digital platform using IoT sensors to improve building Launch of 24K integrated platform to operationalize
operations efficiency IoT sensor data
Legacy telemonitoring of 24,000 lifts spurred Surbana Jurong’s push toward
smart buildings and city management. Through the 24K platform, users can

>32,000 44% savings visualize real-time monitoring data on an integrated dashboard, enabling better
management of energy consumption and indoor air quality
IoT sensors installed and in energy consumption in
managed across buildings in Surbana Jurong’s new campus Surbana Jurong’s new campus at the core of
Singapore since 2000 sustainability ethos
STUDY

Slated to launch by the end of 2021, the campus embodies sustainable design
principles such as use of precast materials, rooftop solar panels, and smart
energy-management systems to minimize the building’s carbon footprint
CASE

Smart city-management service

City management as a service using digital twins and LEARNINGS
predictive modelling to increase efficiency and climate
Demonstration of value critical for adoption of sustainability solutions
resilience
Surbana Jurong helps clients quantify the impact of embodied carbon in tangible terms (e.g.,
equivalent to the number of cars on the road) and provide sustainable alternatives that minimize
any potential negative cost impact

30% reduction 80% increase

in resident complaints in user feedback through
natural language processing Data and technology underpin our entire sustainability journey. With our
algorithms 24K platform, clients can elevate their sustainability journey and achieve their
goals through close energy efficiency monitoring and granular scope 1 and
Sources: Company website; 2 emissions data capture
Company interviews
40
HOW IT WORKS WHAT’S NEXT
Digital facilities management Smart city-management service Singapore-wide Create an AI/ML-powered predictive engine that
digital twin uses real-time data from IoT sensors to create
operationalized digital twins, better anticipate climate incidents
IoT sensors collect data from building IoT sensors across the city collect data for climate (e.g., floods), and facilitate rapid response to
mechanical and electrical systems for predictive modeling resilience minimize disruptions

Integration of Provide banks and insurers more transparency

24K platform and data on building and operational emissions
Data (e.g., temperature) is collected A digital twin is created, and its to improve to better enable green debt and insurance
and aggregated to generate usage- performance is simulated with access to underwriting (i.e., improved financing terms,
pattern reports different scenarios (e.g., day vs. night) green financing reduced premiums) while reducing
“greenwashing” risk

Affordable, Provide affordable and sustainable housing to

Building managers use reports to City operators preemptively calibrate
sustainable lower-middle income families in the region that
optimize system operations and city’s systems to operate at optimum
housing with are more energy efficient by leveraging
electricity consumption levels in different scenarios
biomimetic design biomimetic designs

Use cases: Use cases:

We are pushing aggressively to break the norms of

Energy Security and Indoor air-quality Energy Climate and Traffic design; our ambition is for all our projects to be
management surveillance monitoring management flood modeling monitoring sustainable while incorporating more
digital innovations
Eugene Seah, Managing Director,
Smart City Solutions, Surbana Jurong

41
 02
CATALYZE THE JOURNEY
Nature: SEA holds the world’s most valuable natural capital

SEA’s natural carbon sinks have the highest global climate mitigation potential:

Globally, SEA holds Non-exhaustive

• 02
DECARBONIZE Blue carbon2
Terrestrial forests Peatlands
ecosystems
NATURE financially viable and tropical peat blue carbon
~25% investible carbon stock ~97% carbon sinks1 19-46% storage
in pantropic regions potential

Key imperatives for SEA:

Conserve Restore Manage

Avoid land use change from Restore forests, peatlands, Remotely monitor health
SEA must address rapid
agriculture and illegal logging and blue carbon ecosystems of natural forests and deforestation and land use
Notes: 1. Based on recent
working lands change, which causes LUCF
estimates that SEA’s tropical
peatlands feature 50.4 Gt of
~80% of forest loss in SEA due to SEA is experiencing rapid With ~200 million ha of to be a net emitter instead
commodities such as palm and rubber, deforestation, peatland forests in SEA, telemetry
carbon storage, compared to
global total of 52.2 Gt. By area, and 50% of timber in Indonesia is degradation, and mangrove loss. using remote sensors and of a carbon sink
SEA represents ~56% of tropical logged illegally. Remote monitoring Geospatial mapping and drone autonomous data
peatlands and ~6% of all can be used to identify deforestation tech can be utilized for large- processing using ML will
peatlands (inclusive of boreal
risk, while spatial productivity tech scale, automated seeding, make natural capital
The region contributes to
and temperate peatlands);
2. Blue carbon refers to carbon reduces the need for land conversion replanting, and reforestation management more feasible ~70% of global LUCF
stored in coastal and marine
ecosystems (mangroves, tidal
emissions vs. ~7% of
marshes, seagrasses), % based overall emissions
on estimates that SEA contains
Provides financing mechanism and revenue streams for otherwise unviable nature-based
4.8 Gt of blue carbon storage Scale voluntary
potential, out of a global projects and incentivizes sustainable working land management (e.g., timber). Find out more
carbon markets
estimate of 10.4–25.1 Gt; about carbon markets as an enabler here
3. Rainforest
Connection projects began in Early SEA
Indonesia and expanded to the
Philippines and beyond SEA movers:
Sources: Nature; Ecosperity; Terrestrial ecosystem Drone-based reforestation IoT forest management
Peatlands; Industry interviews; monitoring in SEA3
Bain analysis
42
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CATALYZE THE JOURNEY
Nature: Mitigation today will focus on terrestrial forests and peatlands, while digital and
data advancements will enable new opportunities in blue carbon and automation

DECARBONIZE Commercial opportunities

1 2
NATURE

Here and now Over the horizon

5-10 years

Forest conservation projects Advanced/automated reforestation

High scalability of projects and potential to generate Advancements in drone and geospatial technologies
high-quality carbon credits with premium from can drastically reduce cost and improve ROIs
co-benefits such as biodiversity

Peatland maintenance or rewetting projects 0-5 years (mangroves)

5-10 years (seagrass)

Strong carbon credit potential, with 10-20x more Blue carbon restoration and conservation
carbon sequestration than a typical mineral forest
Newly established methodologies to
Remote monitoring technologies measure wetland carbon may make carbon
crediting more viable
Significant demand for risk mitigation from illegal
logging, land use conflicts, and forest fires

Spatial productivity for working lands

Technologies that enhance agricultural yield can

reduce need for forest conversion
Sources: Bain analysis;
Reuters
43
 02
CATALYZE THE JOURNEY
Jejak.in protects Indonesia’s forests by using a wide array of technologies to
measure, report, and verify (MRV) carbon sequestration
Seed stage start-up focused on carbon measurement in forest areas
Based in Jakarta, launched in 2018 with 1-10 employees to date

DECARBONIZE
THE JOURNEY
NATURE
Digital forest monitoring program
Devices developed in-house to monitor forests and Better impact monitoring for conservation programs
collect critical data (e.g., soil and air quality)
Corporate conservation initiatives have faced challenges from manual monitoring,
double counting, and the inability to accurately measure the carbon sequestration
10 million 28,400 ha1 potential and impact of projects. Jejak.in’s platform enables accurate impact
measurement and forest monitoring while augmenting on-the-ground verification
trees are registered under of land are registered under personnel (e.g., mobile upload of environmental data, augmented reality tree
Jejak.in’s monitoring Jejak.in’s monitoring program measurement). Leveraging IoT and light detection and ranging (LiDAR) sensors,
program drones, and satellites, environmental data (e.g., carbon storage and sequestration,
STUDY

biodiversity) are collected. They are then automatically analyzed with AI/ML
models, thereby reducing reliance on manual efforts and increasing the reliability
of measured impact
CASE

Online carbon offset marketplace Development of an end-to-end solution to streamline

Enables individuals and businesses to purchase climate action
carbon credits to offset their carbon footprint
Leveraging Microsoft’s AI for Earth grants and technical resources, Jejak.in has
developed a holistic solution that enables businesses to independently calculate
emissions, offset carbon via forest conservation programs, and remotely monitor
>15,000 >3,000 20 partners forest conservation efforts

tons of carbon individuals planting today supported by

sequestered through trees via online more than 1,000
online marketplace marketplace forest caretakers When we started, we realized that corporate forest conservation programs
Notes: 1. Represents 0.03% of lacked the ability to accurately monitor and measure their carbon
Indonesia’s total estimated forest Jejak.in helps passengers calculate their sequestration potential. With Jejak.in, corporations now have more visibility
acreage (92.1 million ha) carbon footprint and offers carbon credits
for purchase via its online marketplace
on their impact and consequently a better way to evaluate their programs
Sources: Company website;
Company interviews

44
HOW IT WORKS LEARNINGS WHAT’S NEXT
Forest conservation monitoring Government During the development of Jejak.in’s Expansion into Expand and launch products and
engagement platform, engaging with Indonesia’s new markets services in other countries in SEA,
IoT sensors in the forest, drones, and satellites critical to establish Ministry of Environment and Forestry by the end of 2021
collect detailed environmental data in forests (e.g., ecosystem was critical as they provided large
carbon stock, biodiversity) that allows for accurate fundamentals reliable environmental databases
carbon stock monitoring and the generation of while research institutes were crucial
high-quality carbon credits in providing the expertise to
accurately measure carbon emissions
and sequestration potential

High-quality Generating high-quality verifiable Establishment of Launch Indonesia’s first digital

Emissions Online carbon offset Forest MRV carbon offsets carbon offsets through an automated Indonesia’s first blockchain-based carbon offset
accounting marketplace crucial to reduce monitoring platform that have carbon offset marketplace, to more accurately
greenwashing risks additionality, no leakage, and marketplace prevent double-counting issues
permanence1 is critical to reduce the
risk of “greenwashing." As such,
Jejak.in’s founder recognized early on
the need to hire those with deep
sustainability expertise to develop the
Measures scope Provides a Carbon impact
platform
1, 2 and 3 carbon marketplace to reports generated
emissions for allow the purchase and visualized
companies and of forests to offset through interactive
individuals carbon emissions MRV dashboards
Access to reliable data was a big challenge The climate crisis we are facing is real
for us. By partnering closely with various and we need to do something about it.
key stakeholders, we were able to tap into Indonesia and its natural capital has the
their databases and expertise to build an potential to play a leading role
Notes: 1. Additionality ensures carbon reduction that would not have happened in the accurate and reliable AI/ML model
absence of offset, no leakage ensures that the offset does not result in redirection of
emissions and permanence ensures carbon removed does not re-enter the atmosphere Arfan Arlanda, CEO & Founder, Jejak.in
45
 02
CATALYZE THE JOURNEY
Agri-food: SEA must empower smallholders while establishing the region
as a global food tech hub
SEA is heavily reliant on agriculture, with increasing associated emissions as the sector expands to meet growing needs

~10% 17% >5X 60%

DECARBONIZE • 02

AGRI-FOOD GDP contribution in expected growth in emissions intensity of rice (~80% of agriculture
SEA overall agriculture production1 of region’s cereal production) vs. products are from
by 2029 average cereal crops smallholders

Key imperatives for SEA:

Sustainable Optimize Traceability Dietary SEA’s growing nutritional

production protein mix and waste shift needs must be met in a
Diffusion of innovative Alternative protein Advanced digital Education
practices and tools tools and data and access
sustainable manner
standards
Drip irrigation, genome editing, Increased supply of Rising internet Shift in demand
Steps must be taken to
and precision farming can increase protein alternatives penetration (~60% in toward more increase sustainability
productivity and sustainability. can help meet SEA’s SEA) and data sustainable adoption among
However, smallholder farmers lack growing needs democratization consumption
climate awareness and base decisions sustainably while enable sophisticated required, such as smallholders, who are
on tangible financial benefits. fulfilling SEA’s supply chain sourcing locally critical to agricultural
potential as food- traceability tools (e.g., and consuming
Education, carbon credit generation,
tech hub blockchain-enabled less emissions-
change in the region
subsidy conditions, asset-leasing
traceability) intensive proteins
models, and PPPs2 can incentivize
Notes: 1. Based on Indonesia, smallholder adoption
Vietnam, Thailand, and
Philippines; 2. Public-private
partnerships
Sources: ASEAN, FAO; OECD;
Early SEA IoT, monitoring, Cell-based IoT and Conscious-
Oxford Economics; Vijay et al.,
2016; The ASEAN Post; movers: and analytics to protein process/tracking consumption
Company websites; 2020 SEA support production digitalization platform
e-Conomy Report

46
 02
CATALYZE THE JOURNEY
Agri-food: Precision farming, digitalization, and plant-based proteins are feasible today,
while enhanced upcycling and cell-based alternatives hold promise for the future

DECARBONIZE Commercial opportunities

1 2
AGRI-FOOD

Here and now Over the horizon

0-5 years

Advanced production tools Upcycling technologies

Innovative financing (e.g., asset leasing models) Evolving suite of new tech can unlock significant
can drive adoption of smart farming tools value from food loss along value chain
to boost productivity and sustainability
Digital supply chain solutions 5-10 years

Democratization of data and visibility across Cell-based alternative-protein

the supply chain can lead to tangible cost savings
and enhanced sustainability and resilience Lab-based proteins can benefit from the sustainable
consumption movement and fulfil SEA’s potential as
Digital service platforms for farmers a global food tech hub
Increased connectivity allows smallholders to
access sophisticated services (e.g., remote
analytics and advisory)
Plant and fermentation-based alternative-
proteins
Plant-based protein alternatives are ready to scale, while
bio-fermentation can radically reduce land use needs
Sources: Bain analysis

47
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CATALYZE THE JOURNEY
eFishery uses data and IoT to improve smallholder fishery
productivity and sustainability
Series B agri-tech start-up ($20 million raised) focused on aquaculture intelligence in Indonesia (pilots in Thailand and Vietnam)
Based in Bandung, launched in 2013 and has more than 250 employees

DECARBONIZE
THE JOURNEY
AGRI-FOOD
Feeders as productivity tools to empower
underserved smallholders
Few innovations address smallholder farmers’ needs due to the
perception of unattractive economics. As such, smallholders
typically still feed by hand, resulting in sub-optimal feeding,
water pollution (nitrogen from excess feed), and wastage. The
IoT fish and Smallholder eFisheryFeeder helps farmers optimize feed costs (~70-90% of all
shrimp feeders fishery services costs) by improving productivity while reducing wastage and
STUDY

optimize feed quantity and automate host an online marketplace to water pollution, thereby empowering farmers to be more
feeding time for smallholder farmers market produce and provide sustainable while improving their profitability and livelihoods
smallholders access to financing
CASE

Smallholder farmers’ needs at the core of the

innovation process
>15,000 farmers Up to ~2x increase eFishery’s design process focuses on developing products that
have purchased feeders in farmer annual net profit farmers can afford and understand. For example, eFishery uses
vibration-based sensors (fish movement correlates with hunger)
over more sophisticated underwater cameras and acoustic

>30% reduction Up to 35% increase

sensors because they are more affordable and easier to operate

in production lead time by optimizing in production yield by reducing feed

feeding schedule and frequency waste
As a former fish farmer, I knew that if the feeder was too expensive
or complex, farmers would not be able to afford or understand it. As
Notes: 1. Buy-Now-Pay-Later; Up to ~35% reduction such, my biggest aim and challenge was to design a feeder that
Sources: Company website; in feed waste kept the complexity and costs as low as possible
Company interviews

48
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CATALYZE THE JOURNEY

HOW IT WORKS LEARNINGS WHAT’S NEXT

eFishery platform By 2025:

Community building and education

~1 million
eFisheryFund critical for smallholder adoption
Provides farmers increased financing Building a personal relationship and educating
access through BNPL1 loans farmers to move away from entrenched
underwritten by smart-feeder data traditional methods (e.g., hand feeding) were farmers with eFisheryFeeders
critical for early adoption

~10
Important to ensure fair value distribution
across supply chain
eFisheryFeeder
Including incumbent distributors into the
The feeder and mobile app marketplace allowed eFishery to create a mutually
collect fish yield and beneficial system that leveraged distributors’ supply countries (which hold ~80% of
harvest profit data through chain capabilities to expand farmers’ reach while global aquaculture production)
IoT sensors and farmer creating incremental value for all stakeholders with eFishery presence
eFisheryFresh inputs, combined with eFisheryFeed
AI/ML, to calibrate feed
Farmers can eFishery’s BNPL
dosage and underwrite
sell their produce loans enable
loans to farmers You cannot ‘hack’ smallholder penetration – it’s all about relationship building. What
via an online farmers to
marketplace for purchase lower mattered to farmers in the early days was not our tech but the quality of our relationship
more profit enabled cost feed through and trust with them. The positive word of mouth from our first customers then helped
by eFisheryFeed’s bulk purchase us generate more traction
lower cost feed programs

Notes: 1. Buy-now pay-later Gibran Huzaifah, CEO & Co-founder, eFishery

49
 01
ROAD TO NET ZERO

Our ambition is to become the world’s largest

aquaculture cooperative, to empower smallholder farmers
with sustainable practices and encourage consumers to
transition from higher-emission meats (e.g., beef and
lamb) to fish, which has a lower carbon impact

Gibran Huzaifah, CEO & Co-founder, eFishery

50
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CATALYZE THE JOURNEY
Building blocks on SEA’s Net Zero journey

• CATALYZE THE JOURNEY

Decarbonize

Energy Valuing Agri-food system Others:

transition nature transformation Waste and
Address growing energy Assign value to and protect the Empower smallholders to industry emissions
security and demand
through cleaner sources
region’s natural capital as carbon
sinks and biodiversity banks
adopt sustainability while
building out SEA as the management
alternative-protein hub

Leverage enablers
Voluntary carbon markets
Compensate for hard-to-abate emissions, scale decarbonization solutions by pricing carbon, and protect SEA’s natural capital
while leveraging its potential to serve global need and contributing to the region’s socioeconomic development

Data and digital

Catalyze innovation and scale sustainability impact through the "green data revolution"

51
 02
CATALYZE THE JOURNEY
Scaling the voluntary carbon markets can accelerate SEA’s Net Zero transition

LEVERAGE ENABLERS Developing a robust carbon market will allow SEA to:
CARBON MARKETS
Enable and scale Net Zero levers

Balance climate targets with Scale decarbonization by Operationalize mitigation

economic growth pricing carbon as quickly as possible
While emissions reduction should remain the Voluntary markets can help to establish a Nearer-term solutions to decarbonize
priority, SEA’s economic growth and energy carbon price (especially in the absence of will have a more significant climate
needs mean that fossil fuels cannot be cut compliance schemes or carbon taxes), enabling impact relative to a perfect solution
out overnight. Carbon markets will allow firms to better internalize the cost of emissions, that is still years from deployment -
countries to compensate for these hard-to- while revenues from carbon credit generation carbon markets can facilitate
abate emissions while facilitating the gradual can encourage smallholders to adopt more mitigation while buying time for
transition to a Net Zero economy sustainable practices further technological development

Meet global need while contributing regional socioeconomic benefits

Propel the region on a global stage Generate socioeconomic co-benefits

SEA’s wealth of natural capital makes the region an ideal front-runner to Carbon crediting activities often result in preservation of biodiversity,
meet the market needs, but supply and infrastructure will need to be improvements in ambient air and water quality, and protection of economic
developed quickly before the world meets its needs elsewhere sectors such as agriculture, fisheries, forestry, and ecotourism

Spur green finance by improving bankability

Carbon credits provide an additional revenue stream to incentivize development of nature-based projects and decarbonization technologies that
may be economically unviable today (e.g., direct air capture, etc.)

52
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CATALYZE THE JOURNEY
SEA voluntary carbon markets are nascent but growing quickly

Significant headroom for SEA’s carbon markets to grow, especially given the region’s outsized potential for nature-based solutions

LEVERAGE ENABLERS SEA voluntary markets transactions are mainly made of forestry credits today
CARBON MARKETS
35% Total CAGR1
(since 2012)
2012

2020 1259

SEA contribution

9%
to global:
Voluntary offsets
transactions of ~$300 million global market

Annual investible
carbon potential
25%
Notes: 1. Compounded annual of ~1.8 billion MtCO2e global carbon
growth rates; 2. Based on credit potential in pantropic forests2
estimates of investible carbon
stock in terrestrial forests in
global pantropic regions; 3. By 2030 Debt financing Project Audit Registries Assurance Trading Purchasing Consulting
Revenues across value chain development and MRV (nonprofits) (across value

~$10 billion
from interest payments, offset
>$10B chain)
sales, audit and monitoring fees, Potential
registry fees, assurance fees, Further upside from derivatives
offset resale, and commissions,
revenue
respectively In annual revenue pools ~$5B upside and
~$4B ~$500M
across the value chain3 ~$600M ~$50M ~$40M cost avoidance
Sources: Koh et al.; Allied ~$40M
Offsets; State of Voluntary
Carbon Markets; Bain analysis

53
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Key enablers to scale the region’s carbon markets

LEVERAGE ENABLERS
While SEA holds immense potential for nature-based solutions, the carbon
CARBON MARKETS markets are held back today by low trust in the quality of offsets from this region
Scaled-up supply of high-quality and low liquidity, among other issues. Digitally-enabled technologies such
credits with improved transparency as blockchain tokenization and remote monitoring provide opportunities to
improve confidence cost effectively and attract the investors/buyers and capital
and integrity required to scale. Favorable government policies are also required to incentivize
project development

Strong demand signal from Carbon pricing mechanisms that factor in the true cost of carbon, combined
governments and plan for voluntary with the acceptance of (high-quality) offsets by governments, will drive a big shift
markets to coexist alongside in capital and demand into the voluntary carbon markets. California, Japan, and
China are examples of regions that allow use of offsets (within boundaries) in ETS
compliance markets or carbon taxes

To truly scale SEA carbon markets on a global level, the region’s countries
will need to avoid carbon nationalism. Instead, policymakers from each country
Notes: 1. Corresponding Regional framework to establish need to work together to establish a standard set of objectives, rules, and
adjustments are a tool designed
to promote the integrity of credible cross-border markets at scale terminology that communicates clearly the role of offsets in the region’s overall
emissions accounting under the Net Zero agenda, with regionally-centralized registries and a system for
Paris Agreement, preventing corresponding adjustments1
“double counting” of emissions
Sources: WRI; Brookings

54
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The "green data revolution" is a major catalyst for innovation
and scaling sustainability impact
Thematic developments in data and digital innovations are supporting scale-up of solutions

LEVERAGE ENABLERS
Instrumentation for Accuracy and granularity De-averaged data improves specificity and
IoT sensors, precision monitoring Co-innovation
GREEN DATA REVOLUTION de-averaged data equipment, etc at the base of data source root cause analysis capabilities

Democratization Interoperability across Increasing collaboration

data sources Expertise sharing between cross-sector
of data
and intergovernmental working groups
Ubiquitous data collection Standardized definitions methods is accelerating the flywheel of data
Telemetry through satellite imaging, drones, LiDAR, smart SpatioTemporal Asset Catalog for standardized spatial impact in sustainability, from measuring
sensors, camera traps data mapping and tracking to optimizing and
Complete supply chain data visibility Improved techniques/tools for data harmonization innovating
Materials to products, factories to stores
Private-public good datasets, data crowdsourcing
Measure
Emergence of global environmental datasets and Pre-processed datasets freeing time up for analytics
meta-registries (what used to take months can now be done in hours)

Optimize/ Track and

Intelligent data Powerful computing innovations innovate forecast
Exponentially smarter models, with increased
processing and Advanced processors, quantum computing,
training from volume of data processed
analytics AI/ML, real-time data testing, etc.

Integrated data ecosystems allowing concurrent

Improved access and
Large-scale contribution and access, and efficient complex
collaboration
cloud computing Cloud and API1 integration modeling with powerful compute capabilities (AI,
ML, etc.) being moved closer to where data is stored
Notes: 1. Application
programming interface
Sources: Datacenter News;
Datacenter Knowledge; Bain
experience; Industry interviews;
Empowering leaders to jointly solve problems at scale with sharpened, data-driven insights
Company websites and intelligent decision-making models
55
 02
CATALYZE THE JOURNEY
Large-scale data collaborations are poised to increase adoption
of sustainability solutions globally
Data collaborations between global stakeholders such as ecologists, climate scientists, data scientists, and governments
are driving game-changing outcomes by democratizing data and insights for businesses and decision makers
Non-exhaustive

LEVERAGE ENABLERS

GREEN DATA REVOLUTION

Use case Energy Energy Energy Energy Nature Nature

Agri-food Agri-food Agri-food
Nature Nature

Description Open platform digital Open-source platform Comprehensive single- Datasets, industry- Largest open-source Provider of ready-to-
twin technologies to to aggregate data, access-point ecosystem leading AI, and cloud satellite imaging and use, future climate
optimize urban modeling and for environmental data computing tools to spatial mapping data for impact studies
planning, energy computing for climate- solve environmental platform for and risk assessment
efficiency, and disaster integrated investing problems management of natural
planning assets

Features Integrated data on Physical-economic Harmonized data from AI for Earth multi- Real-time satellite Projections of rainfall,
environment, buildings, models multiple sources using petabyte planetary imaging wind speeds,
transport, drainage, APIs computer temperatures, and solar
Global data Analytics on changes in
traffic, etc. radiation using
compendium Statistical and Hyperscale cloud, AI, forest cover, land use,
advanced statistical
Simulations and analytical packages and IoT digital twins climate, and biodiversity
Scenario-based processing
scenario analysis
predictive analysis

Users/
Sources: Microsoft; Geoportal; Partners
CrunchBase; 51World; OS-
Climate; Regrow; Global Forest
Watch; The Climate Data
Factory

56
 02
CATALYZE THE JOURNEY
Huge potential for SEA to leverage global data and digital innovations
to accelerate the Net Zero journey
While potential is significant, it is critical to scale use of data innovations sustainably

Non-exhaustive

Key watch-out:
LEVERAGE ENABLERS

GREEN DATA REVOLUTION Data center (DC)

management

As data/digital penetration grows,

sustainable management of DCs
will be critical:

Image credits: 51World, YouTube Image credits: Global Forest Watch

of SEA DCs use inefficient
>95% air-based cooling systems
Singapore’s Digital Twin Geospatial mapping of forests in SEA
by 51World by Global Forest Watch
of Singapore’s energy will be
Enables city operators to monitor various aspects and make Enables remote monitoring and management of natural capital 12% consumed by DCs1 by 2030
better decisions by providing data and scenario modeling by providing real-time geospatial data via satellite imaging

Potential use cases: Potential use cases: Microsoft

Monitor building Simulate floods and other Alert on illegal Monitor and ensure Aiming to power all data centers with
characteristics and sunlight climate events for disaster deforestation activities at deforestation-free supply 100% carbon-free energy by 2030
to plan for solar planning project sites chains
installations Liquid cooling to increase energy
efficiency

Large batteries to replace diesel

Notes: 1. Singapore accounts
for 60% of SEA’s data center generators as backup energy assets
supply
‘Temporal Matching’ of clean
Sources: Unreal Engine; NRF;
energy purchases with consumption
Global Forest Watch; 51World; Image credits: 51World, YouTube Image credits: Global Forest Watch
Datacenter News; Datacenter on hourly basis
Knowledge

57
 02 Emerging Net Zero activity by SEA companies Curious to find out more?
Read the deep dive here

CATALYZE THE JOURNEY

Decarbonization efforts by leading SEA players

Baseline
SBTi target set (<2°C) SBTi committed Electric and hybrid fleet
and ambition
Reduce scope 1 and 2 emissions by 28% 28% emissions reduction by 2030, Full fleet running on clean energy by 2030;
and scope 3 from capital goods by 22% vs. 2007 baseline Net Zero targets and roadmap to be
(per m2) by 2030, vs. 2019 baseline announced next year

Levers Higher energy efficiency and green Increasing use of biomass and renewables Partnerships with governments to develop
building certification with multiple solar PV projects/pilots and grow infrastructure for electric vehicles

Use of digital tools such as Building AI solutions to manage energy in production

Information Modeling and Intelligent Building units, reducing emissions by 1,600 tons of Pilot feature for users to choose EV rides and
Platform CO2/year offset carbon emissions on app

Use of more sustainable and Roll-out of low-carbon cement and greening Investments in carbon offset and
locally sourced materials of supply chain solarization projects

Promotion of water and waste circularity Investments in forest rehabilitation New EV business models piloted

Enablers Sustainability council established, reporting Sustainable development committee Sustainability Steering Committee
to board of directors and supported by established, reporting to President and CEO established, reporting to Executive
group Chief Sustainability Officer and comprising multiple subcommittees (e.g., Committee and supported by regional
circular economy, climate change, etc.) sustainability teams
Notes: 1. Key performance index Systematic KPIs1 tied to renumeration

Sources: CapitaLand Sustainability

Internal carbon price across global portfolio Internal carbon price piloted at rate of $18
Report (2020); SCG Sustainability
in progress per tCO2 and used for evaluation of rooftop
Report (2020); Grab ESG Report
solar project
(2020); Nikkei; Company website;
Bain interviews Sustainability X Challenge set up

58
 59

03

Unlocking Capital
for Sustainability
Increasing flows, but
sizeable headroom

Curious to find out more?

Read the deep dive here
 03
UNLOCKING CAPITAL
Fundamental shifts have taken place in the past ~18 months

1 SEA investor sentiment is shifting from risk avoidance

to opportunity seeking Climate risk modeling is a key part of our strategy
now – this was not conceivable even 12 months ago
No sustainability Negative Sustainability Impact seeking
focus screening integration SEA Senior VP,
International PE Fund
2019 – 20211: -7% pt. +12% pt. +5% pt. +19% pt.

2 Heightened pressures and demand from stakeholders

Regulators are increasingly enforcing compliance with reporting and investing
Sustainability interest and queries reached a tipping
point in the last year, especially from high-net-worth
standards (e.g., Task Force on Climate-Related Financial Disclosures [TCFD], UN PRI) clients and investors
Former Head of Sustainable Investing
Demand from clients and LPs,2 especially high-net-worth individuals (HNI), for Global Investment Management Co
sustainable products and practices is accelerating the shift
Public scrutiny and reputational risk of unsustainable practices is on the rise

3 Emerging recognition of value from sustainability

There is increasing evidence that sustainability is associated with improved tangible
Investors have started to realize that there is real
fundamental value to be gained by early movers
financial returns through (in sustainability)
VP,
Value creation (cost reduction and revenue growth) Asia-Pacific PE Fund
Value preservation (mitigation against risk of financial externalities)

4 Increasing regulatory support

Notes: 1. Change in percentage
of SEA funds indicating that
they adopt the said strategy. Governments are now trying to create conditions
Adoption of multiple strategies State machinery is mobilizing capital support to spur businesses to action through in which private investments in sustainable assets
is possible; 2. Limited partners Grants/co-investments are commercially viable
Managing Director,
Sources: Bain Asia-Pacific PE Tax incentives SEA SWF Co
Survey 2019; Bain Asia-Pacific Guarantees
PE Survey 2021; Industry
interviews

60
 03
UNLOCKING CAPITAL
Green capital is beginning to flow in SEA, though still at early stage

• UNLOCKING CAPITAL

Green fundraising has been on a strong While share of capital deployment into green assets is
upward trajectory over the last 3-5 years increasing, overall growth is less strong compared to fundraising

Capital Annual Capital Annual Share of total

raised growth deployed growth value3
2020 2020 Since 2016 2020 2016

$11.9 billion
Debt debt issued 151% since 2016 Corporates4 $4.9 billion 22% 11% 3%

$1.4 billion
IPO IPOs 45% since 2016 PE/VC5 $1.9 billion 50% 19% 5%

Notes: 1. No green funds raised

$0.5 billion
in 2016; 2. Includes funds
raising capital for environmental
PE/VC funds raised 53% since 20171 Infrastructure $1.9 billion -18% 36% 23%
and social objectives; 3. Total
value only includes SEA
countries with available data for
each asset category in SEA; 4.
Excludes investments <$15
$0.6 billion
million;
5. Excludes deals <$10 million
Public funds2 total AUM 40% since 2018 Total $8.7 billion 6% 15% 7%

Sources: Bain analysis

61
 03
UNLOCKING CAPITAL
Key sectoral themes attracting capital today

Energy solutions, green buildings and construction, waste and water, and sustainable materials are currently center stage

Sectors
attracting
capital
Energy solutions Green buildings and Waste and water management Sustainable materials
Low-carbon energy (e.g., solar, hydropower, construction Waste and water management and Recyclable plastic alternatives, sustainably
geothermal, wind), energy efficiency and treatment and innovative solutions to designed packaging, and low-carbon
Smart buildings that optimize energy
grid solutions reduce waste building materials
consumption, use sustainable materials,
and embrace on-site renewable energy

Share of sector of Debt: 31% | IPOs: 45% | Corp.: 89% Debt: 49% | IPOs: 27% Debt: 9% | IPOs: 2% PE/VC: 18% | Infra: 14% IPOs: 23% | Corp: 2% | PE/VC: 3%
total green:1 PE/VC: 72% | Infra: 78%

Drivers SEA energy transition agenda Government financial support Rapid growth of waste volume, SEA’s worsening plastic waste
~33% renewable energy capacity target
and incentives for sustainable and rising adoption of Waste- crisis and increasing consumer
by 2025, vs. ~24% today infrastructure development to-Energy (WTE) discernment
Regional unconditional target to reduce Estimated ~$400 billion in investments >90 WTE plants to be operational by 4 out of the 5 countries responsible
emissions by 26% by 2030 needed for sustainable buildings 2022 in the region, with combined for ~60% of ocean plastic are in SEA
between 2021 and 2030 capacity of ~800 MW

Nascent Sustainable food systems Conservation and restoration of nature

but Alternative proteins, aquaculture, controlled environment agriculture, Nature-based solutions to conserve and restore ecosystems
promising and sustainable production
Limited private investments today but poised for change
Notes: 1. 2020 figures
shown apart from IPOs Share of sector of Corp.: 7% | PE/VC: 3%
(2016-2020 cumulative) total green:1
and PE/VC (2011-2020
cumulative)
Opportunity Prioritization of food security in the region, rising consumer Rising trend of carbon prices, new carbon crediting methods (e.g.,
Sources: ADB; e-Conomy preference and demand (for protein and rice staples), and the for blue carbon), and emergence of catalytic financing (which
SEA; The Straits Times; thesis advent of technologies to increase yield and lower costs absorbs risks from private capital)
Science Magazine; The
ASEAN Post

62
 03
UNLOCKING CAPITAL
While a promising start, a lot more is needed

There is plenty of headroom to grow

Globally, SEA
3.6% of GDP 2.6% of green debt issuance
But only
contributes to
7.2% of emissions <0.1% of sustainable1 public fund AUM

Notes: 1. Includes funds raising

capital for environmental and
social sustainability objectives;
The scale of investment required2 to
~$2 trillion
2. Energy investments needed
sustainable infrastructure investment required between 2021 and 2030,
based on IRENA’s Transforming
Energy Scenario (compatible deliver SEA’s green transition is massive which can be seen as an obstacle or an opportunity
with well below 2°C, and toward
1.5°C Paris agreement targets).
Water estimated based on G20
Infrastructure Outlook (inclusive
of investment needed to meet Clean energy
Sustainable Development Goals
[SDGs]), includes wastewater,
water collection, treatment and Grids Transport
Renewable power Buildings
processing, transmission and (storage, (EV, EV infra,
generation (solar, (on-site renewables
distribution assets including delivery, and and fuel Water
hydropower, wind, etc.) and energy efficiency)
desalination, excludes land system flexibility) efficiency)
purchases. Rail investments
include Metro and high-speed
rail (HSR) investment needs ~$50 billion investments
only. Waste investments
estimated for total waste
in nonrenewable energy

40%
management sector, inclusive of
WTE, landfills, composters, of infrastructure investments will need to come from
recycling and other waste Everyone is needed the private sector, according to ADB forecasts
infrastructure

Sources: Bain analysis; Global Governments cannot do this alone. Public-private partnerships and catalytic mechanisms
Infrastructure; IRENA; World like blended financing will play a critical role to meet the investment needs of the region
Bank; IFC; ADB; DBS

63
 03
UNLOCKING CAPITAL
Several barriers impede green capital flows today

Macro challenges Immature ecosystem Low quality and high risk Organizational hurdles
Lack of sponsorship from
Inconsistent government High transaction Limited quality assets
leadership and
policies and compliance costs and project developers
organization inertia
(Clean energy) investments The cost of environmental There is a surplus of interested Organizational change will
are heavily infrastructure-related, compliance in SEA today capital chasing scarce quality assets not happen without alignment
and lack of predictable policies is too prohibitive in the region and focus from senior management
and government support make
Senior MD SEA, Sustainability Director Senior MD SEA,
investors hesitate to put capital in Global PE fund SEA Government Investor Co Global PE fund
Director, Energy Investments
SEA Government Investor Co

Long lead times Unclear capital allocation

Complex and evolving
and volatility associated principles with misaligned
standards and expectations
with returns incentives
We need better advocacy from SEA Every organization has its own Investments in sustainable assets We need a GAAP-style1 global
governments – they need to lead framework where the definition often have longer horizons and standard to account for and price
the sustainability agenda of green varies… hard for new uncertain returns, which is climate outcomes… only then will
adopters to get it right inconsistent with the largely you see actual action
Chief Procurement Officer, Executive Director SG, impatient capital in the private sector Senior MD SEA,
Global Consumer Products Co Global Business Coalition Director of AI, Global PE fund
Global Development Org
Lack of consistent
measurement and value
of co-benefits
Mapping and valuing co-benefits are
extremely challenging, with multiple
schools of thought… but are critical
Notes: 1. Generally Accepted
Accounting Principles in making the market more efficient
Professor of Conservation Science,
Sources: Industry interviews
SEA University
64
 03 Critical enablers required to unlock full potential Curious to find out more?
Read the deep dive here

UNLOCKING CAPITAL

• Consistent government signals and policies to strengthen investor confidence and attract more capital into
Strong government support the green economy (e.g., corporate tax benefits and land use incentives, etc. for solar energy in Vietnam)
and consistent policies • Financing and incentives aligned with achieving national green goals, and initiatives to support the
transition of impacted sectors

• Use of creative financial instruments through public-private partnerships such as blended financing and take-
Blended financing out facilities (TOFs) to align different stakeholder objectives and incentives, de-risk investments and attract
more private capital
• Mobilization of private sector green infrastructure financing to reduce burden on pandemic-strained
government budgets (e.g., ADB’s ASEAN Catalytic Green Finance Facility [ACGF] supports SEA governments
to finance sustainable infrastructure)

• Digital infrastructure and automated, data-enabled processes to minimize friction, optimize processes, and
Digital platforms scale sustainability measurement and reporting while reducing transaction costs and efforts (e.g., SGX and
and data-enabled solutions Temasek partnership to develop a blockchain-based digital asset infrastructure)

• Ecosystem-wide guidelines to define sustainability impact and materiality (e.g., ASEAN Taxonomy)
Ecosystem fundamentals • Short-term debt instruments to mobilize working capital and trade facilities for green projects
and infrastructure • Buildout and scaling of liquid, regional sustainable asset markets (e.g., regional carbon markets)

• Recognized metrics to assign value to social and environmental factors, in addition to financial return, to
Fit-for-purpose fund allocation enable systematic allocation of funds to achieve highest impact
and operating principles • Established operating principles to mitigate misaligned incentives that underpin impatient capital
Sources: ABS; Industry
interviews; Bain IP

65
 66

Conclusion

Leading by Doing
Collective vision and efforts
are required to achieve a
sustainable SEA
A sustainable SEA needs both individual and collective action

Communities Governments
Crystalize the shift to “conscious consumption” Set favorable national policies, remove
while proactively engaging and lobbying regulatory impediments, and establish
stakeholders (e.g., governments, corporates, incentives for new sustainability investments
investors) for systemic change while managing the impact of stranded assets

Collective
action

Investors Businesses
Unlock green and transition capital through Decarbonize all scopes of emissions, treat
intentional investments, catalytic financial sustainability as a value creation transition
instruments and novel financial products, and (vs. pure risk management), and invest
adoption of internationally recognized strategically in innovation to create commercial
investing frameworks and standards value from low-carbon business models
67
 Investors can play a critical role in unlocking green or transition capital

01 02 03
INVESTORS
Embed sustainability Set KPIs and targets for Develop novel financing
imperative, strategies, and portfolio companies to solutions (e.g., outcomes-based
practices throughout portfolio measure and report against, payments, blended financing),
adopting internationally and data-driven models to price
recognized standards sustainability outcomes and
facilitate capital efficiency

04 Develop green, sustainability-

linked, and transition products
that align returns to performance
05 Raise green and transition
capital and actively pursue
thematic investments in such
06 Lower barriers to and
incentivize financing for
green and transition sectors
against agreed outcomes to drive sectors and assets
incremental allocation to this
space (not just re-labelling)

68
 SEA governments have a leadership role to play in SEA’s transition

01 02 03
GOVERNMENTS
Develop a comprehensive Net Assign price to carbon Establish national policies and
Zero plan including dedicated through an ETS or carbon tax incentives to remove regulatory
state funding to green while fostering the region’s impediments, create investible
infrastructure development and voluntary carbon markets environments for sustainable
detailed, interim milestones and assets and manage impact of
targets that account for the stranded assets
country’s development needs

04 Rally government-linked
enterprises to action while
supporting and building
05 Incentivize foreign direct
interest to contribute to
building out SEA’s sustainability
06 Ensure a just climate
transition for local
communities and at-risk
capabilities of SMEs ecosystem (e.g., IOCs with workers with robust policies
renewables opportunities) and regulations

69
 For the CEO, a few key takeaways

BUSINESSES

01 Act now – do not let perfect be

the enemy of good 02 Treat sustainability as part
of the core 03 Measure, measure, measure – what
you don't count won't get counted

It can seem like a complex system – but inaction Integrate sustainability into the core business Invest in data and digital technology infrastructure
is worse than getting some things wrong strategy – it is not a separate corporate social to improve visibility, reporting, and ultimately,
responsibility (CSR) consideration performance

Start simple and evolve – sustainability is a multi- Regularly assess and integrate climate-related risks Adopt internationally recognized standards of
year journey and you will need time to invest in into business continuity planning and align ambition measuring and reporting (e.g., TCFD, GRI1), establishing an
and build up the right capabilities to what is needed – not just what is feasible informed and evolved process (beyond ticking boxes)

Capture quick-win opportunities – many Go beyond risk management to think of sustainability Leverage materiality assessments to set goals
decarbonization levers can also save costs as a value creation transition and prioritize resources
through efficiencies
Notes: 1. Global reporting
initiative

70
04 Make decarbonization
everyone’s responsibility 05 Use sustainability as a
catalyst for innovation 06 Drive transformation
at scale 07 Lead a
just transition

Lead from the top – it is critical to have Unlock innovation and accelerate Create two-way communication channels Actively engage suppliers and explore
C-suite champions execution by creating new incentives for influential third-party providers, innovative models to support their
for decarbonization customers, and employee groups transition

Translate decarbonization goals to KPIs Develop new products and business Proactively engage key stakeholders Establish lasting economies for local
and cascade goals to the line to motivate models (e.g., carbon-free, circular) to and partner across the ecosystem to learn, communities and incorporate net job
action, while establishing a systematic link accelerate Net Zero beyond the core grow, and amplify transformational impacts creation and fair labor metrics
to the bottom line, e.g., through an internal
carbon tax

Integrate sustainability as a key pillar Adopt a systematic approach to drive Aim to exceed the minimum standard
of employee culture to build business value from sustainable innovation and establish a dialogue with internal
“sustainability DNA” and external stakeholders
(especially local communities)
71
 Ultimately, scaling SEA’s green economy will need collective action…

COLLECTIVE ACTION Key ingredients:

Ecosystem Regional
Transition support
co-innovation collaboration
State of play in SEA

Greater cross-sector connectivity on a regional Large reliance on fossil fuels like coal and oil, and Diverse region with disparate level of development,
and global level significant risk of stranded assets needs, and circumstances across nations

Increasing entrepreneurial spirit and capital High concentration of siloed smallholder farmers Country-level differences in terms of access to
interest in the region and SME suppliers with low sustainability awareness renewable energy resources and natural capital

Building awareness and recognition among Low sustainability expertise in workforce and
business leaders that collaboration is critical increasing importance of digital and data literacy

We know we cannot achieve our Net This shift, especially for businesses in A transnational framework to
Zero target alone, and not with SEA, cannot be done overnight. It is collectively address emissions will go
current technologies – therefore we are not helpful to be hardline ‘green’ – we much further than localized solutions
working with the government, partners, need transition support
and start-ups to innovate
Sustainability VP, Director, Sustainability Director,
SG Multinational Co Indonesia Energy Co SEA Government Investor Co

Sources: Industry interviews

72
 …at an ecosystem level

COLLECTIVE ACTION Key ingredients:

Ecosystem Regional
Transition support
co-innovation collaboration
Imperatives for the region

Cross-sector innovation collaboration Transitioning “hard-to-abate” sectors Regional Net Zero transition plan
for start-ups, corporates, think tanks, etc. to jointly and mitigating impact of stranded assets through that accounts for diverse nation states and
accelerate commercialization of low-carbon catalytic instruments like blended financing and development needs and emphasizes cross-
technologies that meet SEA-specific needs (e.g., TOFs to de-risk and incentivize private capital (e.g., border cooperation
food tech, CCUS) ADB and banks’ Asian coal plants closure plan)

Alliances for action SMEs and smallholders’ support Cross-border carbon trading system
across value chains to facilitate co-investments for by reducing transaction costs and frictions to with a common framework and credible,
scaled solutions and increase data, standards, and green capital (e.g., asset leasing models, functioning market dynamics that assigns value
knowledge sharing for better visibility and impact incentive schemes) and building capabilities to SEA’s natural capital while meeting regional
need for high-quality offsets

Valuing SEA’s natural capital Workforce upskilling and retraining Interconnected grid for clean energy
by mobilizing private and public sector capital to build up regional human capital through capacity to address regional imbalances in renewables
through innovative partnerships to realize SEA’s building programs co-developed by employers, resources by connecting demand with supply and
natural capital carbon sink potential while SEA higher-learning institutions, and government solving for variability in renewables generation
transitions away from fossil fuels
Sources: Industry interviews

73
 Leapfrog to leadership

By 2030, SEA’s
The sustainability journey holds immense potential for SEA to

Decarbonize
transform locally and make a measurable contribution globally
Green Economy
will contribute

Energy Valuing Agri-food system

transition nature transformation
$1 trillion Economic
opportunities
Leverage enablers

Voluntary carbon markets

5–6 million New jobs

Data and digital

Our future depends on today – the time to A.C.T. is now

6–8% GDP from new
growth areas

Aim high with bold ambitions

Commit resources and investments needed

Sources: Bain 2020 SEA Green Track and report against clear targets
Economy Report
 Glossary of acronyms
Acronym Acronym
ADB Asian Development Bank IMO International Marine Organization
AI Artificial intelligence IoT Internet of things
AI/ML Artificial intelligence/machine learning KPI Key performance index
API Application programming interface LiDAR Light detection and ranging
ASEAN Association of Southeast Asian Nations LP Limited partners
AUM Assets under management LUCF Land use change and forestry
BAU Business-as-usual ML Machine learning
BNPL Buy-now pay-later MNC Multinational corporation
CAGR Compounded annual growth rate MRV Measure, report, and verify
CCS Carbon capture and storage. See also CCUS NDC Nationally determined contributions
CCUS Carbon capture, utilization, and storage. See also CCS P&L Profit and loss
CORSIA Carbon Offsetting and Reduction Scheme for International Aviation PE Private equity
DC Data center PRI Principles for Responsible Investment
ESG Environmental, social, and governance PV Photovoltaic
ETS Emissions trading scheme R&D Research and development
EU European Union ROI Return on investment
EU/AM Europe and Americas rPET Recycled polyethylene tetraphyte
EV Electric vehicle RSPO Roundtable on Sustainable Palm Oil
GAAP Generally Accepted Accounting Principles SDGs Sustainable Development Goals
Southeast Asian nations, including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar,
GDP Gross domestic product SEA Singapore, Thailand, the Philippines, and Vietnam unless otherwise stated
GHG Greenhouse gases SME Small and medium enterprises
GRI Global reporting initiative TCFD Task Force on Climate-Related Financial Disclosures
HNI High-net-worth individuals TOF Take-out facilities
HSR High-speed rail UNFCCC United Nations Framework Convention on Climate Change
ICAP International Carbon Action Partnership VC Venture capital
IEA International Energy Agency WTE Waste-to-Energy

75
 Glossary of terms
Term
Developed countries and countries undergoing the process of transition to market economy, with specific limitation targets for greenhouse gas emissions. Example countries
Annex I countries include the industrialized countries that were members of the OECD in 1992
Bonds Senior unsecured bonds, senior secured bonds, subordinated unsecured bonds, perpetual bonds, Sukuks, and medium-term bonds
Catalytic mechanisms Mechanisms to spur further green investments by mitigating risks through innovative finance structures. Examples include ADB's ASEAN Catalytic Green Finance Facility (ACGF)
Climate risk modeling Building and running models to evaluate the negative impacts of severe weather events on businesses
Co-benefits Positive benefits related to the reduction of greenhouse gases (according to IPCC)
Conditional targets Reduction of emissions dependent on availability of international support, such as technology transfer or financial aid. See also unconditional targets
Conscious consumption Consumption with the awareness of how it affects society at large
Debt Bonds, loans, private placements, and project finances. See also bonds and loans
Family-run businesses Businesses with more than half of their shares controlled by (more than 1) members of the same family
Green business/investment Businesses/investments that protect or improve the environment
Green debt Bonds, loans, private placements, and project finances that protect/improve the environment or reduce emissions.
Green funds Funds that have positive environmental outcomes/objectives
Green infrastructure Infrastructural spending, such as power plants or waste management facilities, that protect/improve the environment or reduce emissions
Green IPO Initial public offerings that protect/improve the environment or reduce emissions
Green PE/VC Private equity/venture capital funds or deals that targets startups that that protect/improve the environment or reduce emissions. Excludes fixed asset/property investments
Impact seeking Having dedicated impact investing fund which focuses on maximizing environmental, social, and financial returns
Loans Term loans and bridging loans
Negative screening Avoiding certain sectors given ESG risks
Outcomes-based payments A payment model in which the performance-related incentive payments depend on achieving certain (sustainable) KPIs
Public funds Open-end mutual funds and exchange traded funds. Money market funds, feeder funds, and funds of funds are excluded
Public-private partnership Collaboration between a private company and public entity, in the context of financing or operating a project
Scope 1 emissions Direct emissions from company-owned and controlled resources
Scope 2 emissions Indirect emissions from the generation of purchased energy from a utility provider. See also scope 3 emissions
Scope 3 emissions All other indirect emissions that are not included in scope 2 that occur in the value chain of the company. See also scope 2 emissions
Social business/investment Businesses/investments that increase access to basic resources/services or improve social mobility
Sustainable business/investment Businesses/investments that have both positive environmental and social outcomes/objectives
Sustainability integration Inclusion of sustainability as a consideration in investment thesis
Sustainable finance The practice of integrating ESG criteria into financial services to bring about sustainable development outcomes
Sustainable funds Funds that have both positive environmental and social outcomes/objectives
Unconditional targets Unconditional reduction of emissions, independent of external support. See also conditional targets

76
For any queries, please reach out to:

Dale Hardcastle (Dale.Hardcastle@Bain.com)

Gerry Mattios (Gerry.Mattios@Bain.com)