Discussing Global ESG Response and Changes from Human
Climate Action
The United Nations Framework Convention on Climate Change (UNFCCC) has issued a critical warning stating that the impact of climate change has not only worsened significantly with natural disasters such as volcanic activity and glacial activity, but more importantly, the human element contributing to climate change has also increased significantly. The frequent reports of extreme weather around the world have caused countless social losses, including heavy rainfall in New York in 2021, 7 billion tons of precipitation in Greenland, flooding in Western Japan, flooding on the Rhine River, flooding in Zhengzhou, China, high temperatures exceeding 50°C in Spain, and many others.
People are beginning to think about the crisis action goals they should take in response to climate change, with more than 100 countries having jointly declared the goal of reaching net-zero carbon emissions. Taiwan, which ranks 23rd in the world in terms of carbon dioxide emissions, is also considering amending the Greenhouse Gas Reduction and Management Act in August 2021 to include the goal of reaching net-zero carbon emissions by 2050. The Executive Yuan, the Legislative Yuan, the Ministry of Economic Affairs, the Ministry of Science and Technology, and other Energy-related government departments have all contributed by proposing new directions for sustainable development.
The sources of greenhouse gas emissions in Taiwan include energy industry operations such as electricity production, oil refining, coking, and other fuel production conversion processes, direct emissions from manufacturing industries which include fuel combustion and other greenhouse gases, and household and business-related electricity consumption. International clean emission standards have also affected Taiwan. Examples of this include Apple now requiring its global suppliers to achieve carbon neutrality, the European Union planning to implement carbon border tax by 2023, and the U.S. aiming to pass the Platform Competition and Opportunity Act by 2024 targeting the steel, iron, cement, aluminum, and fossil fuel industries. Since Taiwan is an export-oriented country and an important link in the international supply chain, these measures will undoubtedly make the country climate vulnerable.
ESG affects aspects of corporate governance.
Corporations should respond by naturally adapting to the various ESG demands such as sustainable development, resource use efficiency, environmental management, career development, product and service quality, operational risk assessment, supplier management, corporate social responsibility, etc.
One of the major ESG trends is the increase in supply and demand of green power. DNV’s 2021 Energy Transition Outlook points out that by 2032, half of all vehicles sold worldwide will be electric. With a 22% population growth and 111% global economic growth projected in the next 30 years, the global energy demand will not be able to cope with the increase in energy demand. For this reason, improving energy efficiency is still the core to energy transformation as well as the best tool to combat climate change.
The International Energy Agency (IEA) took stock of more than 400 emerging technologies and found that nearly one-third of them are still at the concept stage. In the face of the 2050 net-zero emissions target, reliance on a large number of immature prototypes and concept technologies is inevitable, promising great and exciting changes in technological innovation that should be closely followed. The UK’s ten point plan for a green industrial revolution includes zero carbon emission vehicles, advanced offshore wind power, green transport, green buildings, zero emission air and sea transport, carbon reuse, low carbon hydrogen energy, advanced nuclear energy, green financing, and environmental protection. What can Taiwan learn from such an extensive plan?
With ESG becoming one of the core competitive measures in 2030, how should Taiwanese companies achieve carbon neutrality? What should we do? How do we develop a viable economic model in response to this? Even Bill Gates can’t figure out an answer.
It is about owning up to the responsibilities together. The establishment of ESG/SRI indicators and indices in various countries will increase significantly while ESG investment will also become more and more popular. According to estimates from Morningstar, ESG investments will reach US$1.65 trillion by the end of 2020.
