Environmental, social and governance (ESG) issues are becoming increasingly important to companies, investors and consumers in Southeast Asia. That is why we are now including an ESG score and section in our quarterly reports. We are also publishing three articles looking at each aspect of ESG. Adrian Ashurst, CEO of Worldbox Intelligence, kicks off by looking at the latest trends in terms of the environment.
Southeast Asia is a highly diverse region, and its environmental challenges also vary widely. Singapore, for example, ranks as the fourth most sustainable city in Asia, according to the 2022 Sustainable Cities Index, while Laos and Cambodia face immense problems, including dam construction and wild-animal poaching.
One of the most pressing environmental issues facing Southeast Asia is mass deforestation. The main causes are land clearing for agricultural purposes and logging. Between 2001 and 2019, approximately 235,500 square miles – an area larger than Ukraine – was deforested in Southeast Asia. Half of it was cleared in Indonesia. According to the website World Population Review, Indonesia and Myanmar are among the top ten countries affected by deforestation, with declines in forest area of 22.28% and 27.22%, respectively, between 1990 and 2020. Experts have warned that if deforestation continues at this level, Southeast Asia could lose 40% of its biodiversity. Meanwhile, the smoke from fires lit to clear forested land will continue to cause thousands of premature deaths.
It is, however, possible that we are already seeing the tides of change. Deforestation for palm oil, which was found in a 2022 study to account for one third of Indonesia’s cleared forests, saw a 50% decline in Southeast Asia between 2020 and 2021, from 38,000 hectares to 19,000 hectares. This was the second year in a row that deforestation for palm oil had fallen.
The disappearing river
The health of the Mekong River, which runs through China, Thailand, Laos, Myanmar, Cambodia and Vietnam, is under serious threat, putting at risk the livelihoods of some 70 million people, as well as 1200 freshwater species. The excessive building of hydro-electric dams across the river appears to be doing the most damage, preventing fish from completing their natural migrations and disrupting water and sediment flows, leading to droughts downriver. The proposed construction of nine more dams across the river will only worsen the already dire situation.
The Mekong is also under threat from overfishing, plastic pollution and climate change. Monsoon rains have become unpredictable, and in 2019–20 resulted in severe droughts in and around Tonle Sap, the region’s largest freshwater lake. This caused wide-scale fish deaths, and it was estimated that catches per community saw an 80% to 90% drop.
Downstream in Vietnam, the Mekong Delta, also known as the “rice bowl of Vietnam”, is at risk of being submerged due to dam building, over-pumping of groundwater, and sand mining, in tandem with rising sea levels. Annual floods during the wet season appear to be worsening, and in 2018 coastal flooding led to 91 hectares of crops being damaged and water levels reaching as high as 50 centimetres in the city streets. Experts warn that if sea levels rise by just 0.9 metres, 30% of the delta will be flooded, affecting the lives of 20 million people.
The Cambodian government appears to be the most mindful of the problems facing the Mekong: it has cracked down on illegal fishing and shelved plans to build two major dams. In addition, it has shown support for a proposal to turn part of the river in Cambodia into a UNESCO World Heritage Site to prevent further damage.
A nuclear risk
To limit their reliance on fossil fuels and engage in more eco-friendly alternatives, some countries in Southeast Asia, such as Vietnam, Indonesia and the Philippines, have been looking towards nuclear energy. Currently, 80% of energy in the region comes from fossil fuels and the remaining 20% from hydro-electric dams. Although nuclear power is a reliable source of clean, carbon-free energy, there is concern that the nuclear waste produced could be disposed of unethically, damaging the environment. In addition, as Indonesia and the Philippines reside on major fault lines, building nuclear power stations there could be extremely dangerous. A cautionary tale is Japan’s Fukushima plant. In 2011, following a major earthquake, it was the site of the most severe nuclear accident since Chernobyl.
The Garden City
Leading the way to a brighter future is Singapore, which, since gaining independence from Malaysia in 1965, has made innovative strides to become more sustainable and eco-friendly. With 95% of its electricity powered by natural gas, it is among the 20 most carbon-efficient countries in the world. Singapore has 50% green cover, 75 hectares of rooftop gardens and green walls, and four sprawling nature reserves, specially engineered to be more environmentally friendly. For instance, Gardens by the Bay, one of the country’s most recognisable parks, is home to a plethora of rare and endangered plant species. The park’s metal trees are fitted with photovoltaic cells to capture solar energy, and mangrove trees planted in its lakes provide shelter to plants and animals while acting as carbon sinks. The lakes also collect rainwater, which is cleaned by aquatic plants and then used to water the park’s gardens.
According to greenplan.gov.sg, the Singapore Green Plan 2030 is “a whole-of-nation movement to advance Singapore’s national agenda on sustainable development”. Within this, the government has set out several targets it intends to meet by the end of the decade. These include “planting 1 million more trees, reducing waste sent to landfill by 30%, and quadrupling solar energy deployment”. This is in addition to the government’s long-standing aspiration to reach net-zero emissions by 2050.
It is clear Southeast Asia faces significant environmental challenges. The region is often described as being on the front line of climate change. But to tackle these problems, it will need international support – not least in the form of foreign direct investment to help with, for example, the transition to renewable energy. The Association of Southeast Asian Nations’ (ASEAN) target of generating 23% of the primary energy supply from renewables by 2025 will require US$27 billion of investment every year, yet the ASEAN countries attracted no more than US$8 billion annually from 2016 to 2021. Mobilising the necessary capital will require more proactive, business-friendly policies in many countries. Greater public pressure would also encourage companies to respond more effectively to environmental issues such as the burning season, when farmers burn large areas of land to clear it for agricultural purposes, creating significant air pollution. Currently, however, green parties are notable by their absence in the region. That may well change as people become more prosperous and less focused simply on surviving. Until then, progress is likely to prove slow.
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