Ramping up sustainable supply-chain finance

SUSTAINABLE transition finance is a phrase now in vogue to describe the multi-trillion-dollar efforts to massively decarbonise the world’s fossil fuels-based energy systems within a few decades. At the COP28 climate summit in Dubai, this was a major focus and large sums were committed to it – the first time “transitioning out of fossil fuels” was set as a global goal.

Energy alternatives such as hydroelectric, geothermal, green hydrogen or safe nuclear are some of the substitutes being developed in a hurry. Carbon capture and storage (CCS) and geoengineering are among emerging technologies that are seen as an outside hope. There is no doubt that energy transition will prove to be technologically challenging, if not an existential issue facing the world. Apart from the requisite trillions of dollars of sustainable transition financing, many innovative pathways will have to be found to achieve this within a rapidly narrowing time horizon to 2050. A combination of new tech and innovative financing on an unprecedented scale will clearly be required.

Greening the global supply chains – challenges and risks

Supply chains – which account for more than 80 per cent of greenhouse gas (GHG) emissions and over 90 per cent of the impact on air, land, water, biodiversity and geological resources – are a critical part of any business’ climate strategy. Globally, supply chains today are tiered, dispersed, and mostly owned and operated by small and medium-sized enterprises (SMEs) that form the backbone (in terms of employment) of any economy. Hence, the successful restructuring of SMEs is critical for Asian economies to move to greening supply chains. Moreover, supply chain diversification is now seen as essential due to inherent geopolitical risks or public health emergencies – a development that will require SMEs to restructure themselves or their business models for resilience.