Climate action is urgent since the ASEAN region is acutely vulnerable to the various impacts of climate change. Its long coastlines, heavily populated low-lying areas, and high dependence on agriculture expose it to the threat of rising sea levels, severe floods, and prolonged dry seasons. Germanwatch’s Global Climate Risk Index noted that five of the world’s 20 most at-risk countries are from ASEAN.
Climate action is also crucial to maintaining ASEAN’s economic growth. Climate-related regulations such as the Carbon Border Adjustment Mechanism (CBAM) introduced by the European Union in 2006 will impact trade and investment in the region, given the tariffs imposed on carbon-intensive products. Additionally, investors are increasingly considering climate action when deploying new investments and large corporations are demanding more access to renewable energy supply before committing to investments or capacity expansions. An analysis by the Boston Consulting Group (BCG) highlighted that pursuings a carbon-neutral future holds the potential to create a value-add of between USD 3,0 and USD 5,3 trillion to ASEAN’s GDP by 2050. This can attract USD 3,7 to USD 6,7 trillion green investments, and generate between 49 and 66 million additional jobs in ASEAN.
Recognising this potential, the ASEAN Economic Ministers endorsed the ASEAN Strategy for Carbon Neutrality on 19 August 2023, a visionary strategy that provides a springboard to propel forward ASEAN’s green transition while unlocking huge economic opportunities in the region.