Goh Swee Chen shares her views on the impact of COVID-19 on sustainability initiatives and the evolving transition to a low carbon energy future.
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It has been said that the world will not remain the same post COVID-19. What impact, if any, will there be on the sustainability movement? How will it affect how businesses view corporate sustainability?
We are in the midst of a perfect storm. Across the world, nations are facing rising geopolitical tensions, increasing sense of social injustice, weakening economy and a global pandemic. Never in my lifetime, have I experienced this vortex of turbulence. COVID-19 has widened the fault lines that otherwise may have been obscured under normal circumstances, and its socio-economic impact is massive.
While there is little doubt that COVID-19 has shaken and more likely disrupted many businesses, there is broader recognition that climate change will result in far more lasting damage. Investors are continuing to hold conversations on decarbonisation, and the resolve to tackle climate change appears to be stronger than ever. Case in point, the Solar Impulse Foundation recently released a commentary, “Business Leaders Commit to A Clean Economic Recovery”, co-authored by 12 CEOs of eminent European corporations.
Sustainable investments have seen a rise from modest levels 15 years ago to an estimated US$30 trillion this year. In the first four months of 2020, a record of $12.2 billion was poured into funds that invest in Environmental, Social and Governance practices. The way corporations respond to this crisis will be remembered, and importantly their impacts will be felt for many years to come. The pandemic is a global crisis, but it also offers opportunities for a corporation to rethink a new climate economy.
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With the recent collapse in oil prices and economic slowdown, will carbon footprint and sustainability initiatives remain top of mind for businesses and consumers alike? How does the fall in prices affect the push for a more sustainable energy mix?
To decarbonise, the world will have to transition from a dominant fossil fuel-based energy system to a low carbon one. We are seeing a disorderly energy transition at this moment. Widespread lockdowns, closure of borders restricting international travels and literal shutdown of the economy are expected to result in annual energy demand drop by 6% in 2020, wiping off the last five years of demand growth, according to IEA’s Global Energy Review 2020. Global CO2 emissions will reduce by 8% in 2020 vs 2019. These are unusual times, and businesses and societies alike know that decarbonisation with such draconian measures cannot be realistic.
The demand for cleaner energy will persist – and consumers will demand more energy services and reductions in emissions at the same time. Oil prices will not stay at these depressed levels. These two factors combined, on top of regulatory pressures, will keep the feet on the accelerator to transitioning to lower carbon energy systems.
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Given the diversity of markets across ASEAN, how can we galvanise countries in this region to adopt meaningful targets in pursuing a cleaner energy mix?
With one in ten of the world’s population living in ASEAN, the region’s electricity demand growth has been amongst the fastest in the world according to IEA’s 2019 report. ASEAN countries have diversified their energy mix; most countries in the region have set national renewable energy targets. The region has an aspirational renewable target of 23% by 2025. While the potential for renewable energy is considerable, progress in terms of the energy mix and electrification of the transport sector have been slow.
The ASEAN Ministers on Energy Meeting (AMEM) progresses energy transition on several fronts – regional market and infrastructure integration (Gas & Power) and development of energy capabilities and technologies. Political leadership will need to be resolute in making meaningful advancements in these areas.
Regulatory frameworks aside, funding remains a barrier. Until recently, the sector lacks public funding support making it a relatively unattractive sector to invest in. There is also a shortage of experience and expertise in evaluating the economics of renewable energy investments. Deepening this expertise in ASEAN can be a starting basis to build private investor confidence in the sector, which to date has been predominantly funded by development banks.
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What role does Global Compact Network Singapore (GCNS) play in helping businesses achieve a low carbon energy future?
While 2020 marks the start of a new decade, it also marks the ten years we have left to meet the United Nations' Sustainable Development Goals. Given how the actions and investments that businesses make today will have impacts for the years to come, we need to make this the “Decade for Decisive Action”.
A leading voice on corporate sustainability, GCNS takes a multi-stakeholder approach in supporting businesses in their social and environmental commitments. Actions include convening meaningful conversations to inspire sustainable ambitions or collaboration opportunities, deepening knowledge and capability and increasing access to resources and tools.
Through CPLC Singapore, our joint initiative with the World Bank Group's Carbon Pricing Leadership Coalition (CPLC), we facilitate dialogue, knowledge sharing, and collaborations on carbon management and pricing. For businesses new to such conversations, our in-house Carbon and Emissions Recording Tool can help them measure and monitor their emissions, paving the way for them to lower their carbon impact, in line with Singapore’s decarbonisation agenda.
Collectively, we can drive a decade of business action and impact towards a low-carbon energy future.
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The theme for SIEW 2020 is Creating Our Low Carbon Energy Future Together. What do you look forward to discussing at SIEW this year?
To cite a recent market development for reference: For the first time in its 143-year history, the London Metal Exchange will launch a platform to trade a metal, low-carbon aluminium, based on its emission footprint. Other than the disclosure of suppliers’ carbon footprint, the trading platform could also establish consumers’ willingness to pay a premium for low carbon aluminium.
While the principle behind the idea is not new, it is now becoming increasingly clear that an integrated market-based approach could be an effective lever to drive a lower carbon future.
Oftentimes, countries apply a carrot-and-stick approach to incentivise or punish heavy carbon emitters; this is a slow path towards achieving a ‘well below 2C’ goal. Other than technology innovations, I would like to see the upcoming SIEW 2020 discuss market-based strategies necessary to accelerate decarbonisation.
The investor is instrumental to holding corporations accountable for their climate actions. The consumer’s role, their sustainable lifestyle practices, must also be in the equation in any discussions on the creation of a low carbon future, TOGETHER.
Swee Chen joined Shell in 2003 and retired as Chairman of Shell Companies in Singapore in January 2019. She was previously with Procter & Gamble and IBM. A global leader, she has lived and worked in Singapore, Malaysia, Netherlands, Australia, USA, Japan and China. Swee Chen has a diverse professional background, having led significant businesses in Oil & Gas, Consumer Goods and IT sectors.
Swee Chen is on the Boards of CapitaLand, Singapore Airlines, Singapore Power Ltd. and Woodside Energy (Australia). She chairs the National Arts Council, Institute of HR Professionals and Global Compact Network Singapore. She also sits on public service boards including Legal Services Commission. Swee Chen is a Trustee on the Board of Nanyang Technological University.
Swee Chen had previously chaired/sat in the Boards of Shell Joint Ventures in China, Korea and Saudi Arabia.
Swee Chen graduated with B.Sc. - Victoria University and MBA - Chicago Booth, University of Chicago. She was named Distinguished Alumni, Chicago Booth, in 2018. She is married with three children.