Expanding Sustainable Mindsets in Southeast Asia

• Southeast Asian countries are disproportionately exposed to climate change risks, but they also lag behind the rest of the world in making the sustainability transition.
• Many leaders in the European Union, United States, and Japan view sustainability strategically, while leaders in other Asian countries view it in terms of tactical compliance and risk management.
• Business schools can help countries in Southeast Asia meet sustainability objectives by helping organizations upskill their talent, collaborating with governments, and presenting the sustainability transition as an opportunity for growth.

Sustainability is becoming mainstream in the developed economies of the Global North. As of June 2023, more than 45 percent of the largest publicly listed companies in the Forbes Global 2000 had made net-zero commitments. According to Zerotracker.net, 79 percent of large companies in the European Union and 49 percent of those in the United States have net-zero targets in place. 

But in the developing economies of Southeast Asia (SEA), investment in sustainability is lagging. According to 2021 data collected by the Carbon Disclosure Project, only 8 percent of companies in the Asia Pacific (APAC) report that they prioritized net-zero strategies. Not surprisingly, Western multinationals with big sustainability commitments are struggling to reconcile the more positive attitudes toward sustainability in their home countries with those in SEA.

Business schools play a pivotal role in bridging that gap. They have long been upskilling leadership talent for organizations worldwide, but their efforts will be even more crucial in SEA. Through their programs and partnerships, business schools can help Asian countries meet their climate commitments, while capturing unprecedented opportunities that the sustainable transition represents.

A Region With Much to Lose—and Gain

SEA’s late arrival to the sustainability transition could have a negative impact across the region. This is primarily true because many SEA countries are disproportionately exposed to climate change risks.

According to Deloitte, 43 percent of the SEA workforce is employed either in “climate-vulnerable sectors” such as agriculture or in heavily fossil-fuel-reliant industries such as manufacturing, construction, and transportation. That percentage is almost double that of the rest of the world.

Meanwhile, 20 percent of the world’s biodiversity is concentrated in SEA, and a large part of SEA’s population lives in coastal areas at risk of sea level rise. The world’s largest insurer, Swiss Re, estimates that, if our current trajectory continues, the GDP of SEA countries could be reduced by up to 37 percent because of climate change. 

In other words, the region has much to lose.

The good news is that sustainability funding is growing faster in APAC countries than in any other region in the world. According to PwC, sustainable assets under management (AUM) in APAC countries are expected to triple to 3.3 trillion USD by 2026. Although this number still represents less than 10 percent of sustainable AUM globally, it is a clear indicator that investors anticipate that Asia will soon be joining the transition to more responsible practices.

Leaders of Asian corporations have long been waiting for policymakers to make the first move, but too many policymakers in the region still hold the belief that sustainable practices will hinder short-term economic progress.

APAC countries might have no choice. As a critical part of the world’s principal supply chains, the APAC region will likely see increased regulation and disruption over the coming decade. Its industries will have to comply with the more demanding environmental, social, and governance (ESG) guidelines and policies in other parts of the world, such as the Carbon Border Adjustment Mechanism that will go into effect in the EU in 2026. However, a recent study from EY reveals that while investors expect companies to focus on ESG, even if doing so impacts short-term profits, APAC business leaders still are hesitant to focus on or disclose their ESG activities.

Why? The fact remains that while many progressive business leaders and policymakers in the EU, the U.S., and Japan view sustainability as an opportunity for growth, those in Asian countries (other than Japan) often consider it primarily in terms of compliance and risk management. This is in spite of research showing that consumers in Asia are more likely than those in the EU and the U.S. to express a willingness to spend more for environmentally responsible products. The research also shows that Asian consumers still purchase fewer sustainable options due to supply-side limitations.

Leaders of Asian corporations have long been waiting for policymakers to make the first move, but too many policymakers in the region still hold the traditional but erroneous belief that sustainable practices will hinder short-term economic progress. They aren’t yet aware that while measures such as climate change mitigation might require upfront investment, the proactive adoption of these measures has an unprecedented financial upside. A full commitment to the sustainability transition in SEA represents an economic opportunity of more than USD 1 trillion annually by 2030, and adopting net-zero strategies could create 180 million additional jobs in APAC by 2050.

If policymakers adopt integrated and holistic approaches to systemic transformation, they might see more clearly how sustainable initiatives could help them achieve both short- and long-term objectives. For example, for every job that might disappear from fossil fuel industries by 2050, ten new jobs are expected to emerge in new energy sectors.

Many of these jobs, such as the installation of solar panels, could be filled by people living in the most climate-vulnerable populations, including those now working in small-scale farming or carbon-intensive construction. The energy transition could produce a wide range of simultaneous benefits, including domestic energy security, climate change mitigation, new job creation, economic equity and inclusion, and rural resilience.

A Growing Leadership Shortage

Closer collaboration among policymakers and businesses—and among governmental departments—will be critical if SEA countries are to implement more informed holistic policies and find blended finance mechanisms to support green initiatives. But such collaboration relies on leaders who are prepared and willing to make it happen. Unfortunately, such leaders are currently in short supply.

LinkedIn’s 2023 Global Green Skills Report shows that demand for sustainability talent has grown steadily by 9.2 percent each year over the last five years, but supply is growing only by 5.4 percent per year. A global shortage of talent across the ESG-enabling ecosystem is expected by 2026. This shortage will hit sectors differently, depending on the country. In New Zealand, for example, one of the biggest hirers of sustainability talent is government. In China, it’s the finance sector; in Singapore, it’s education, auditing, and advisory services.

The shortage is likely to hit the startup scene as well. Most of the billions of dollars in venture capital funding raised worldwide by sustainable startups over the past five years has gone to those in the U.S. and the EU. But as a hotspot of environmental and societal challenges, Asia is now seeing a surge in homegrown impact-focused entrepreneurs.         

To capture new growth opportunities, most businesses will need leaders who can develop coherent green strategies and initiatives, drive impact culture, and integrate sustainability throughout organizations. And this activity is increasingly moving into executive positions—the chief sustainability officer is one of the fastest growing roles this decade. Currently, 28 percent of sustainability leaders worldwide are at the executive (C and C-1) level. That’s three times as many as there were just five years ago. Many of these individuals have backgrounds in strategy.

In contrast, only 14 percent of sustainability leaders in APAC countries are at the executive level. Of this group, 70 percent have communications backgrounds. This perhaps reflects a tendency to see sustainability as “window dressing” rather than a basis for strategy.

Our Pivotal Role

Business schools can address the shortage of sustainability talent by prioritizing five fundamental objectives:  

Delivering a new breed of future-fit leaders. Just as business schools instilled Milton Friedman’s shareholder primacy theory in leaders we educated in the last decades of the 20th century, we can now equip future leaders with mindsets, skills, and tools to transition the world to more sustainable models. To accomplish this, we must deliberately teach systemic thinking and multistakeholder collaboration skills. In this way, we can lay the foundation for the decisions that leaders will make in the future.

At the Sasin School of Management in Bangkok, we integrate sustainability throughout our curriculum and teach transformational leadership for positive societal impact. We deliberately integrate stakeholder empathy, systems thinking, and collaboration into our courses. Our objective is to develop purposeful leaders who possess contextual mindfulness, who know what frameworks to use to drive positive impact, and who understand how their interventions play out across countries and generations.

Enabling ecosystems. Business schools also can alleviate the “war for sustainability talent” by building capacity across local ecosystems in collaboration with industry associations and supply chain champions. One way to achieve this goal is by supporting transformational collaborations through our faculty’s research and thought leadership.

The decisions that leaders make in the next five years will determine the health of our businesses and communities over the next 50 years.

For example, Sasin’s Sustainability and Entrepreneurship Centre works with the Thai Supply Chain Network to promote impact-focused entrepreneurship in Thailand and beyond. In addition, for the last 20 years, our school has run the Bangkok Business Challenge, which we believe is Asia’s longest-running global student startup competition. So far, nearly 1,700 teams from around the world have competed in the challenge; of these, 30 percent have incorporated as businesses and have collectively raised close to 230 million USD. Each year, judges choose four teams to compete for a sustainability award and trophy.

Upskilling the workforce. Two-thirds of sustainability leaders are hired from within their companies, and according to data from Microsoft, 60 percent of people who join sustainability teams do not hold degrees in the field. This indicates that companies have a great need to upskill their existing talent as a way to strengthen their sustainability cultures.

Organizations could turn to a variety of learning partners for dedicated training, including online training providers, apprenticeship programs, and educational institutions. For instance, in a bold strategic move, Big Four accounting firm EY has partnered with Hult International Business School, headquartered in Boston, to offer the EY Master’s in Sustainability by Hult. Any of the company’s 312,000 employees worldwide can pursue the credential at no cost to them.

Acting as regional partners for multinationals. In addition to deeply understanding their local contexts, SEA’s top business schools are quickly developing their sustainability expertise. This makes business schools ideal partners who can take the skills and mindsets of their SEA partners to the next level.

In early 2024, Sasin is launching a 28-day blended-learning Post-Graduate Diploma in Corporate Sustainability designed to train executive managers to integrate responsible practices across functions and drive transformation across their organizations and industries.

Collaborating with government. Business schools cannot grow the sustainability leadership talent pool on their own. They will need the support of proactive government policies that encourage faster development of green skills.

That’s why our schools will need to act as neutral facilitators between business and civic leaders. Business, governmental, and educational sectors can work together to set national targets for reducing greenhouse gases, upskilling the workforce, and securing government funding for training programs. Together, these sectors also can conduct research that captures the potential benefits of green business practices.

The Greatest Opportunity of Our Time

Accelerating the sustainability transition is simultaneously the greatest challenge and the biggest commercial opportunity of our time. But if SEA countries do not address their local socioeconomic and regulatory contexts, they won’t just lose out on that opportunity. They will put the livelihood of their citizens at risk.

Business schools can help local organizations, multinationals, and governments in SEA meet their climate and sustainability objectives, at both operational and managerial levels. We not only can grow the talent pool, but also can help SEA business leaders and policymakers shift from mindsets focused on compliance and risk to mindsets focused on strategy, growth, and new opportunities.

The decisions that leaders make in the next five years will determine the health of our businesses and communities over the next 50 years. Let us not allow a shortage of sustainability talent to limit the growth of our companies, the well-being of our society, or the health of our planet.