In November at the Lux Forum Amsterdam “Beyond Decarbonization: Rethinking Sustainable Innovation Strategies for Europe,” I saw some familiar faces, met many new innovators, and had some very interesting conversations that will certainly become future Innovation Matters podcasts. One point of conversation at the forum was about consumers in Asia, particularly the emerging economies of South and Southeast Asia. The sentiment was generally that people in America or the EU were happy to pay for more sustainable products, but people in these parts of Asia were not for seemingly unknown reasons. I heard a few explanations, including cost, as well as different attitudes and values toward sustainability. I’ve heard some flavor of this idea a lot over the last few years even in the region; for example, when I was in India earlier this year, I heard a lot of skepticism about the industrial energy transition occurring in that region.
Perhaps you can tell, but I don’t buy this argument at all. To my mind, there’s no real reason to think that South and Southeast Asia won’t be leading the sustainable transition! My argument is based on the following:
There’s much less difference between consumers in the West and Southeast Asia than you might think. My colleague Cheryl Auger did a great presentation on what motivates consumers to buy sustainable products, and the key takeaway is that actual sustainability impacts (reducing CO2 emissions, for example) are just one factor among many. Consumers are motivated by a complex web of desires — to be healthy, to feel close to nature, and to have more functional products. This idea that western consumers are willing to pay more for sustainable products isn’t really true — or at least it’s incomplete. They may be, but generally only if there’s some other benefit aligned to these desires: Companies in the West have to do a lot more than just offer sustainability. While the details are different, people in Asia are no less motivated by a complex set of desires and aspirations, and companies will be able to position products (even premium, sustainable products) against those.
The region has a pretty good sustainability innovation track record. This point might be a little controversial, but countries in South and Southeast Asia have been pretty good at scaling sustainable tech. India has the one of the lowest costs for solar power, for example, and adoption of EVs is booming across the region — for cars as well as two wheelers. There’s a fair amount of investment in Indonesia for EVs as well, and it could be a future export hub for vehicles as well as battery materials and other resources. There’s a fairly well-trodden path here: Manufacturing technologies mostly developed outside of Asia are brought into the region, to export products initially, but pretty quickly find a market close to home as prices come down. Obviously, there have been failures: The Indian government has been extremely ineffective at curbing the utilization of single-use plastics, for example. Still, there’s no reason to think consumers won’t adopt new technology when the market positioning and pricing are right.
Regulation will continue to evolve. One other comment I heard was that South and Southeast Asia were behind the EU on regulation, which will slow adoption. This is true, especially in consumer-facing areas like chemicals safety and recycling. However, governments in the region are getting more active with industrial policy — Indonesia’s export restriction on raw nickel and the Indian government’s support for green hydrogen are good examples. These industrial policies will be crucial to building a domestic sustainable industry, a prerequisite for domestic adoption. If these interventions are successful, there’s a good chance that more sustainable policies will follow.
So, while it’s true that South and Southeast Asia have their challenges, there are reasons to be optimistic about the sustainable transition there. And it’s not as if Western countries don’t have their own challenges, from lack of fiscal support for investments in the transition to regulatory regimes that can make building the necessary new infrastructure really burdensome and expensive. Not to put too fine a point on it, but the biggest emitters in the world on a per-capita basis are Americans, Russians, and Australians. Western innovators should focus a little more on getting their own domestic sustainability efforts in order and worry a little less about consumers in Asia.