Companies & Climate Change Report:
Companies in APAC are in the process of integrating Paris objectives
but physical risk assessment needs to be improved
to better assess adaptation to climate change
19th March 2024 London 00:00am / Beijing 08:00am The Asian Infrastructure Investment Bank (AIIB), Amundi and Climate Bonds Initiative (CBI) announce the publication of the second edition of the Companies and Climate Change report, developed by CBI and Fitch Solutions. This report is an updated research application of the Climate Change Investment Framework (CCIF) created in 2020 by the AIIB and Amundi to tailor investment portfolios that actively consider alignment with the Paris Agreement. The CCIF translated the three key objectives of the Paris Agreement into fundamental metrics essential for investors to select climate champions.
Despite some progress, the report reveals a concerning trend regarding adaptation metrics and physical climate change risks. Among the three objectives outlined in the Paris Agreement—climate change mitigation, adaptation, and contribution to the transition to net-zero—adaptation receives the least attention from entities, particularly in the form of physical risk assessment and risk management.
The report evaluates country, sector, and entity-level performance against the Climate Change Investment framework (CCIF) developed by AIIB and Amundi, highlighting areas for improvement in aligning investment portfolios with the goals of the Paris Agreement. The Paris Agreement calls for ‘making finance flows consistent with a pathway towards low greenhouse gas (GHG) emissions and climate resilient development’. To achieve this, all sectors of the global economy, and in particular hard-to-abate industries, must rapidly decarbonise.
Sean Kidney, CEO, Climate Bonds initiative: “The Asia-Pacific Region is home to both huge nations with big economies and smaller nations who are particularly vulnerable to impacts of climate change. It is of monumental importance to the region that they are acting to decarbonise and adapt at every level of the economy to avert catastrophic effects of climate change.”
Nick Jotischky, Global Head of Advisory, BMI: “There is still a shortfall in data being reported by companies on ESG. There needs to be more of a move towards an integrated policy-driven approach to the imposition of data reporting standards. A regional framework could help governments take a more uniform approach to data reporting.”
Jean-Jacques Barbéris, Head of Institutional and Corporate Clients Division & ESG, Amundi: “A central aspect of our responsible investor’s role is to encourage and accelerate the transition of the companies in which we invest on behalf of our clients towards a low-carbon economy. We are pleased to see that the AIIB-Amundi Climate Change Investment Framework – launched in 2020 – is increasingly being adopted by institutional investors to tailor investment portfolios that actively consider alignment with the Paris Agreement. This report, together with the Framework, offers both issuers and investors unique insights on transition and physical risks faced by countries and companies in the Asia-Pacific region, and the levers they have to mitigate and adapt to these risks.”
Regional & Country-Level Analysis
- High-emission power types remain dominant in the regional power mix, accounting for almost 60% of power generation between now and 2032. This presents significant opportunity for low-carbon power as energy transition accelerates in APAC.
- Newer technologies such as EVs and green hydrogen are still limited in the region. Electrification efforts are supporting these new technologies, which should drive an increase in electricity consumption.
- The energy trilemma of cost, sustainability, and security presents a challenge for APAC markets in terms of energy policy. There needs to be a balanced approach to energy policy across the region
Sector-level analysis.
- The automotive sector provides an example of a sector that needs to shift its whole business to new product ranges, and this process is already well underway for most entities operating in the sector.
- Despite not being material GHG emitters, the healthcare and technology sectors have an important role to play in a net-zero economy. Indeed, the technology sector can deliver new solutions to help the rest of the economy become more energy efficient.
- There is a shortfall in data being reported on ESG across these four sectors. A regional – or even sub-regional – framework is required so that governments take a more uniform approach to data reporting.
Company-Level Analysis
Automotive companies are actively transitioning.
- All 26 companies except one are including EV/batteries in their product offering and board oversight of the transition is standard for most. Despite venturing into EV production, most manufacturers’ product offerings remain ICE-dominant, particularly in Asian and developing markets.
- The auto sector has a major role to play to accelerate the decarbonisation of its supply chain but despite 75% of companies having a green procurement policy, yet no concrete engagement to procure green steel had been announced among the sample studied.
Tech-electronics:
- Half of the sample has identified the opportunities generated by climate change and made changes to the product offering.
- Half of the companies have announced a green procurement policy but there is no indication yet that their effort is having a material impact on the supply chain.
Healthcare: Climate change isn’t a priority for the 30 companies analysed but sustainability matters.
- The main potential contribution that the healthcare sector can make to the transition is through its supply chain engagement, particularly with the chemical sector. Climate Bonds analysis demonstrated that a majority (19) of the companies have already green procurement in place.
Basic industry: Climate change is being integrated into the strategy of most of the 27 companies analysed
- Most companies have identified the opportunities presented by the climate transition for their business and incorporated it into their product range. However, climate mitigation efforts varied a lot.
- The contribution to the transition extends to other sustainability needs like building water conservation projects, seawalls, and desalination plants.
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Climate Bonds contact: |
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Liam Jones |
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Communications Specialist |
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Amundi contact: Aude HUMANN Tél. : +33 6 71 32 12 57 |
Climate Bonds Initiative: is an international organisation working to mobilise global capital for climate action. Climate Bonds Standard and Certification Scheme is a labelling scheme for bonds, assets, and whole entities. The scheme is used globally by bond issuers, governments, investors, and the financial markets to prioritise investments which genuinely contribute to addressing climate change.
About BMI, a Fitch Solutions Company: In an uncertain macroeconomic environment, BMI's systematic, independent and data-driven market insights, analysis and forecasts enable clients to recognize and assess risks and opportunities across 200+ markets and 20+ industries. For 40 years, BMI has provided impartial and transparent analytics, data and research across themes, countries and sectors, with deep insight into emerging markets. Detailed intelligence is frequent, consistent and systematic, enabling clients to easily make comparisons and interrogate data to support strategic plans and investment decisions.
About Amundi:
Amundi, the leading European asset manager, ranking among the top 10 global players[1], offers its 100 million clients - retail, institutional and corporate - a complete range of savings and investment solutions in active and passive management, in traditional or real assets. This offering is enhanced with IT tools and services to cover the entire savings value chain. A subsidiary of the Crédit Agricole group and listed on the stock exchange, Amundi currently manages more than €2 trillion of assets[2].
With its six international investment hubs[3], financial and extra-financial research capabilities and long-standing commitment to responsible investment, Amundi is a key player in the asset management landscape.
Amundi clients benefit from the expertise and advice of 5,500 employees in 35 countries.
Climate Bonds would also like to thank Amundi, Asian Infrastructure Investment Bank (AIIB) and BMI a Fitch Solutions Company, for their support in producing the report.
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