Thailand

Asia Pacific’s Time
Responding to the new reality

November 2022

www.pwc.com/asiapaciﬁc

Foreword
Raymund Chao
PwC Asia Paciﬁc and China Chairman
Just over two years ago our message in Asia Paciﬁc’s
Time was unambiguous: the region stood at an importantjuncture and the time to act was now. The fundamentals
contributing to past prosperity could no longer be relied
upon and a more proactive approach was needed tosecure the region’s future. Since then, this message has
withstood tectonic global shifts, and profound changes in
our world are spurring an updated call to action for theregion. Asia Paciﬁc is evolving rapidly, balance andstability is no longer a given, and the guiding principles togrowth are no longer obvious. Businesses must act
quickly to build trust, create value and deliver sustained
outcomes.
Our new world is anything but simple. While the global
economy has rebounded from the lows of 2020, we
continue to see environmental, ﬁnancial and socialpressures converge to create new and more complex
challenges across Asia Paciﬁc. Business leaders arefacing increased market dynamism and uncertainties.
These are not merely a series of one-oﬀ temporary events- we are seeing enduring, structural changes that impact
economies, social systems, risks and stakeholder
expectations. In order to rebuild trust and deliver
sustainable growth in this environment, it requires similar
structural shifts in strategy and operational priorities - amaterial transition towards stakeholder capitalism and a
reset of priorities towards the associated long-term
outcomes. From this uncertainty will come great
opportunities for businesses to diﬀerentiate and thrive in
Asia Paciﬁc.
The world has changed and will continue to do so. Asia
Paciﬁc’s Time: Responding to the new reality sets out
how businesses can best navigate this change. We buildon the ﬁve growth pillars previously identiﬁed in Asia
Paciﬁc’s Time in 2020. We also dive deeper, extracting
more nuanced drivers and success factors for creating
value, increasing diﬀerentiation and deliveringtransformation aligned with the forces underpinning thefuture of the region.
We all know the challenge. We need to come together
in new, interconnected ways, to deliver sustained
outcomes for the new reality in Asia Paciﬁc.

China

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Contents
Executive Summary

4

Business success factors

6

Supply Chain
Regional Enterprise Growth
Digital Economy
Workforce
Environmental, Social and Governance

Conclusion

19

Contacts

20

PwC | Asia Paciﬁc’s TimeSingapore3

Executive Summary
Time for action
In mere months COVID-19 altered the world. It accelerated workforce transformation and digital adoption
which has now become central to our lives. It led to a permanent shift in consumer and business behaviours
that dramatically changed the trajectory of economies and societies. The lingering eﬀects of the pandemic,
compounded by unexpected global and regional shocks, have created a state of disequilibrium in Asia
Paciﬁc. Volatility in prices, demand and supply have coalesced to create a fragile platform for growth. Agitatingthese imbalances are elevated tensions and rising stakeholder pressures which are driving fundamental
changes in the operating environment, forcing companies to focus upon outcomes that matter.

External variables that are destabilising the business landscape
Altered economic mood: Rampant inﬂation andweaker economic prospects are creating greater
uncertainty and reinforcing inequalities.
Fractured global geopolitical backdrop: Spillovers
from the war in Ukraine and heightened inter andintra-regional geopolitical tensions across Asia
Paciﬁc have created pervasive uncertainty and risk,
while increasing operational and compliancecomplexities for business.

New workforce challenges: Employees across Asia
Paciﬁc are newly empowered, have greater
expectations of their employers and talent is on themove to a degree not seen before.
Accelerating pressure for action
on Environmental, Social and Governance (ESG)
issues: The market is moving from acceptance topurpose-led action.

Exposed supply chain fragility: The
pandemic-induced breakdown of global supply
chains has been further aggravated by extreme
weather events and labour shortages. The brittle
nature of ‘just-in-time’ sourcing networks has been
exposed and their importance elevated.

China

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The reality of the opportunity
Asia Paciﬁc can no longer hope growth and gradual change will be suﬃcient to steer it through these turbulent
times. Stakeholders must adjust their posture to become more proactive and self-determined. They must adopt
new and more nuanced strategies which position them for success in a more dynamic and interconnected Asia
Paciﬁc. Based on our discussions with business leaders and experts in the region, we believe there are ﬁvealigned and mutually reinforcing success factors that will drive diﬀerentiation and competitiveness forbusiness and governments to prosper.

1

Supply Chain

2

Regional Enterprise Growth

Transform regional supply chains to rebuild trust and resilience

Take a capabilities-driven lens on acquisitions to create value

3

Digital Economy

4

Workforce

5

Environmental, Social and Governance (ESG)

Embrace digitalisation to drive insights, reduce risk and stay relevant

Rethink upskilling, embrace ﬂexibility and deliver on purpose-driven work tobuild trust

Accelerate progression of ESG priorities to diﬀerentiate in the market forcapital and talent

These ﬁve success factors are interconnected and interdependent. Each is mutually reinforcing. Actions in
one will impact the others. For example, ESG will be a supply chain consideration. Digitisation will be key
to rebuilding trust in the eﬃcacy of sourcing networks. It is vital to consider the success factors holistically,
while also considering local maturity and the environment when customising or adapting.

Considering these enduring and interwoven success factors sets a new baseline for how business canovercome diﬃcult challenges, achieve far-reaching impact, and drive long-lasting growth and competitiveness.
At this decisive point in history, there is an opportunity to solidify Asia Paciﬁc’s place in the world as the centreof resilient and inclusive growth beneﬁting the full range of stakeholders, and a hub for digital innovation and
ESG progress that is optimised for greater connectivity.

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Supply Chain

1 Transform regional supply chains to rebuild
trust and resilience

The world’s supply chains have been tested in recent
times. Trust has been eroded and their brittle nature
exposed. However, many emerging issues havebeen years in the making. A decades-long drive
toward reducing costs and increasing eﬃciency has
spread supply chains across the globe. Thateﬃciency has come at a cost of its own — leading tofragility, limited transparency, and ‘just-in-time’systems that have little capacity to rapidly absorb
unanticipated shocks. Recent rebalancing of supply
chains to a hybrid of ‘just-in-time’ and ‘just-in-case’approaches (by intentionally building in redundancy),
is proving diﬃcult in the current environment where
slack in supply lines is limited.
Disruptions have shone a light on the necessity torebalance global supply chains toward more diverse,
regional networks. Further, rising costs and evolving
regulatory frameworks in various markets are
resulting in companies exploring avenues to diversify
their supply chains and manufacturing bases withmany developing a China plus strategy. While
re-aligning regional sourcing footprints by buildingout a China plus strategy is an increasingly attractive
approach, it adds challenges due to the variability insupply chain maturity across the region. Thisintentional fragmentation of supply chains in Asia
Paciﬁc introduces new operating frameworks andnew complexities around managing local issues —from navigating the logistics infrastructure to thestrength of Intellectual Property (IP) protection to thereliability of local suppliers. As companies look forfurther growth beyond China, they need to consider
how they select the right suppliers, production sites,
talent pools and distribution networks in acomparatively diverse region.

ThailandPwC| Asia Paciﬁc’s TimeAs supply chains are brought closer together
geographically, regional hubs of interconnectedeconomic activities are emerging - often based on
sectors in which governments have identiﬁed
unique inputs that collectively help establish
competitive advantage. Coordinated andcomplementary hubs in the region can enable
shared prosperity by increasing productivity andexport competitiveness, while decreasing therivalry pressures that restrain growth. For example,
Thailand’s automotive and Malaysia’s healthcare
focus. Yet, these regional hubs generally do notoccur organically, and provincial or national
government coordination is crucial in building thisecosystem.* As businesses navigate the risks ofpotential targeted decoupling scenarios of supply
chains in certain industries between the US andChina, they will need to consider how and where to
expand their existing supply chain footprint tobalance proﬁtability, growth and risk.

* Currently, Vietnam is a prominent destination
for supply chain relocation, but it is alreadyapproaching the upper limits of the capacitytransfer (Vietnam's 2.6% unemployment rate
in 2022 is less than half of Asia Paciﬁc's5.7%). This is creating opportunities for other
Southeast Asian countries to facilitate
investment through infrastructuredevelopments and policymaking that makes it
easier to conduct cross-border business.

6Adding to supply chain concerns across thisever-evolving landscape, is an urgent need to better
manage ESG issues and mitigate risk. Recent
research by PwC reveals responding to regulatorychanges and identifying supplier risks are top ESG
concerns for leaders. However, the ﬁndings also
reveal fewer companies are focusing on ESG
reporting and metrics. Further, without signiﬁcant
investment into management capacity and plant
infrastructure, smaller local players risk being frozen
out of international supply chains if they cannot
meet the ESG expectations and stringent rules ofglobal buyers (for example, net-zero, social
performance, etc.) This may inadvertently increase
supply chain risks due to the unforeseen
concentration of production within deeper tiers of
supply chain, potentially fuelling the erosion ofcustomer trust should there be a disruption in
supply.

The pandemic is only thelatest disruption to uncover
the fragility of global supply
chains, reinforcing the need torebuild for the future. Asia
Paciﬁc is poised to become
the world’s growth engine but
will need businesses toprioritise supply chaintransformation for resilient
growth.
David Wijeratne
International Growth Practice Leader,
PwC Singapore

Vietnam

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The increasing
sophistication of supply
chain partners will beof critical importance tomanage long-term
reputation, legal anddecarbonisation risks.
Jeremy Prepscius
Asia Paciﬁc ESG Sustainable Supply
Chains, PwC Hong Kong

Converging action now
Under more scrutiny and with their vulnerabilities
exposed, it is now imperative for companies totransform their supply chains. Businesses must
simultaneously manage the challenges of the global
supply chain, while harnessing the opportunities it
presents. To achieve this, focus needs to pivot fromsupply chain basics of increasing eﬃciency andmanaging costs, to developing more resilient
supply chains, and rebuilding trust in and acrossthem through greater ﬂexibility and adaptability.
Switching focus to resilience and trust will likely see
broader value creation opportunities across the
supply chain, particularly in digitisation,
sustainability and transformation.
Managing the complexities of this pivot, anddiversifying, is not as simple as reallocatingproduction to new suppliers operating acrossmultiple jurisdictions — especially with many supply
networks reliant on China for critical inputs. Building
trust necessitates creating a latticed supplier
network, ﬂexible and adaptable to negative shocks
such as civil unrest, extreme weather and supplier
operational distress. It requires digitising to increase
eﬃciency, transparency and traceability, whilst also
having the vision to align sourcing with customer
and consumer demand patterns.

PwC | Asia Paciﬁc’s Time

Lastly, integrating ESG into supply chain strategy
should be less about reactively managing risk fromextreme weather events (such as drought-induced
factory shutdowns and shipping delays in China) or
increasing sourcing proximity to decrease carbon
footprint. It should be more about the opportunity tosource from suppliers operating more sustainably
who can help manufacturers lower their Scope 3*
emissions targets and meet net-zero commitments
while managing social performance and ensuringlocal right to operate. Businesses that candemonstrate accelerated progression against bothclimate and social targets (such as worker safety,
modern slavery) will be diﬀerentiated.
Building supply chain resilience and trust oﬀers newopportunities. But it will not be achieved by building
walls to fortify the existing supply chain and defend
against short-term risks. Eﬀectively handling the
intricacies of a pivot away from cost eﬃciency
requires a long-term view and will take a proactive
plan to build an optimised and distributed supply
base in Asia Paciﬁc.

* Scope 3 emissions are all indirect emissions(not included in Scope 2) that occur in the value
chain of the reporting company, including both
upstream and downstream emissions.

8Regional Enterprise Growth

2 Take a capabilities-driven lens on deals
to create value

After decades of above average growth andsigniﬁcant market returns, Asia Paciﬁc now stands
at a crossroads. Companies in the region, including
Private Equity (PE), are reconﬁguring theirbusinesses and capabilities, relying on Mergers &Acquisitions (M&A) activity rather than organic
growth to quickly establish competitive
diﬀerentiation or simplify their portfolio.
M&A activity overall in Asia Paciﬁc has increased
more than three-and-a-half times in the past 16
years. The region’s share of global deals has grown,
buoyed by sizable PE dry-powder of USD$600+
billion — itself a validation of the market’s
attractiveness. Asia Paciﬁc remains the ‘sweet spot’for global growth: burgeoning intergenerational
wealth transfers, accelerated sector modernisation,
growing intra-Asian trade ﬂows, international
investment and presence, as well as a nascentfocus on ESG. Each presents compelling
opportunities.
However, despite M&A activity increasing, PwC
Value Creation research shows close to half thedeals analysed in Asia Paciﬁc have destroyed
value and/or underperformed their industry
peers: 41% of buyers and 63% of divestors
underperformed their peers over a ten-year
period. In this environment, deals are becoming
inherently more complex to identify, structure andexecute.
The case for value creation as a priority is strong,
especially at a time where typical conditions can nolonger be relied on to drive value. It necessitatesbuilding resilience and considering the full suite ofvalue drivers — not only the traditional elements ofﬁnancial engineering and operational synergies(including tax beneﬁt analysis). Research reveals a
direct correlation between value creation and taking
a strategic ‘capabilities-driven’ approach(capabilities being the speciﬁc combination ofprocesses, tools, technologies, skills and purposethat allows companies to create value).

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This outcome is no accident. Focussing on key
operational qualities, or capabilities, helps
dealmakers channel valuable time and investment
into the most diﬀerentiating elements of the deal:transacting to transform. That is, the elements which
reinforce each other to drive value. For example,
using a deal as a catalyst to accelerate businessmodel digitalisation by acquiring technologies totransform how value is delivered through building
capabilities such as artiﬁcial intelligence, customer
experience design and the Internet of Things.

It’s time for businesses with strong balance sheets
to capitalise on the value reset and acquire thecapabilities needed to generate long-term returns.
To do so, dealmakers should focus on a series ofpragmatic actions.
1

Clearly link Value Creation to strategy and,with discipline, follow a consistentmethodology/blueprint to select, execute andintegrate acquisitions.
When taking a capabilities lens, ensure thisis applied end-to-end including deal
hypotheses, execution priorities, capitalraising and transformation initiatives.

Equally, ESG maps broadly onto a range ofcapabilities that companies may seek to build
inorganically and subsequently elevate premiums.
Being clear on where gaps lie — and being
disciplined on capabilities to acquire (such as
decarbonisation, intellectual property, and reporting
infrastructure) and when to deploy them along a
company’s ESG journey — will be crucial in meeting
net-zero commitments, broader stakeholder
expectations and to de-risk regulatory compliance.

2

Our research shows, when businesses prioritise
scaling through geographic expansion as a deal’s
primary strategic driver instead of taking acapabilities-driven approach, 35% of the time thetransactions create little or destroy value.

4

Continually uncover value from data,
including from third party sources, across thedeal lifecycle.

5Consider how ESG can elevate premiums
both in capital markets and for pricing andpositioning of products and services.

This indicates buyers regularly underestimate what it
takes to succeed outside of their home geographic
market and overestimate how far their existing
capabilities can travel.

3

6

Ensure dealmakers commit time and eﬀort
to understand which elements of culture,business norms and market practices areneeded to drive a diﬀerentiated people
strategy.

Invest appropriately in integration — ouranalysis indicates spending 6% or more ofdeal value on integration is considered the‘sweet spot’ to deliver returns.

Taking a capabilities-driven
lens to acquisitions
outperforms deals that are
made for other reasons (suchas economies of scale,lucrative assets, protecting
the existing market position,or diversiﬁcation) byapproximately 14% in total
annual shareholder returns.
David Brown
PwC Asia Paciﬁc Deals Leader

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Digital Economy

3 Embrace digitalisation to drive insights,
reduce risk and stay relevant

Capitalising on the digital revolution is morepressing than ever. How, where and why we workand operate has fundamentally changed.
Digitalisation is increasingly the key to economic
resilience, ﬂexibility and eﬃciency across the entire
value chain. Transforming is a must to turnoperations into a competitive advantage and remain
relevant.
The pace of digital adoption, transformation anddelivery in recent years has accelerated andprogressed exponentially. Whilst some companies
rose to the challenge better than others, there
remains room to evolve. In Asia Paciﬁc, 79% ofCEOs are changing their investment focus over the
next three years to digital transformation. However,businesses must act now to seize opportunities byapplying digital practices and technology across themost critical parts of the value chain — at the rightpoints, at the right times. Digital and technologicaltransformation should not be a one-size-ﬁts-all
endeavour and greatly depends on investment
appetite, digital skills and operating constraints ofthe business.

Digitalisation enables enterprises to oﬀer a
diﬀerentiated value proposition to customers,
suppliers and employees. With one in threecompanies across Asia Paciﬁc predicted to generate
more than 30% of their revenues from digitalproducts and services by 2023, governments are
increasingly recognising the importance of thedigital economy as a key lever of corporate andcountry competitiveness. Many territories in Asia
Paciﬁc have released national digitalisation
strategies to attract talent and investment, forexample Singapore’s Smart Nation 2025 Blueprint,
Malaysia’s digital economy blueprint, Indonesia’s
roadmap and Hong Kong SAR’s Smart City
Blueprint. These strategies are foundational andsignal a widespread recognition at government level,that a thriving digital economy aids social equity,
facilitates a resilient future, and provides synergies
for cross-border collaboration and investment.

Case study
Human-led and tech-powered, PwC transformed BHP's shared services model into asingle operating business. Working globally with BHP's people, culture and technology,
PwC mapped and analysed BHP's end-to-end process to identify opportunities for
optimisation and automation, both in the short and long-term. By analysing BHP'sprocesses, PwC was able to uncover variation and waste reduction opportunities,
resulting in improved frontline safety and productivity.

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Embracing digital to stay relevant
Embracing the opportunities digital brings, fromautomation to emerging technology, is necessary
to respond to the increasing complexity andcompetitiveness. Digital can enable businesses
and governments to counter the disequilibrium with
better data, deeper insights and more eﬃcient
processes that empower new business models andcreate new revenue streams.
Successful digital transformations are integral to anorganisation’s strategy and must meet market,
customer and employee expectations. While there
is an opportunity to digitise nearly all aspects of anorganisation (from products and processes toculture and operating model), it is vital tounderstand and prioritise the areas within abusiness that will maximise value propositiondelivery and increase market relevance. ESG
initiatives and reporting can come alive withhigh-quality data and analytics for benchmarking,enabling smarter decisions and easing complianceburdens. Supply chain convolutions and challenges
can be made manageable through the thoughtful
application of technology.
People, processes and technology are required todrive and sustain digital transformation. Addressing
the current technology talent shortage can beachieved through digital upskilling and reskilling
programs, which can be a diﬀerentiating factor fororganisations and can unlock operationaleﬃciencies and resiliency. There is also an
opportunity for governments to play a role indriving the upskilling agenda throughpublic-private sector partnerships.
Lastly, culture and change management arefoundational to any successful digitaltransformation. For example, employees will needto adopt new ways of working that integratetechnological skills, while business leaders mustfully embrace a digital mindset by accepting
data-driven decision making and increasing cyberawareness. Radical change necessitates a clear
organisational priority and change management
program.
The question is no longer whether digital can
provide value, but ‘how can digital increase
resilience and agility, and reducecybersecurity and data privacy risk in an
increasingly complex environment?’
For Asia Paciﬁc, embracing the digital revolution
presents the opportunity to thrive in a digitally
focused future. Rising to this opportunity
positions businesses and governments to
respond to today’s challenges and build
resilience and agility to proactively engage withthe challenges of tomorrow.

Case study
Central to global trade are goods travelling by ship. In the new reality, this has beentested by congestion and container shortages. Coordinating shipments, representing
90% of the world's traded goods, is a mammoth task. Rising to this challenge, across-functional and globally networked team from PwC advised on a platform tosupport the creation of the Global Shipping Business Network, which is powered byblockchain. Having cleared antitrust and regulatory hurdles, the platform reduces cargo
processing times from days to hours. This project demonstrates that tough problems
require a diversity of capabilities and a deep commitment to collaboration.

PwC | Asia Paciﬁc’s Time

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Workforce

4 Rethink upskilling, embrace ﬂexibility and deliveron purpose-driven work to build trust

Today’s workforce challenges are complicated andrequire something more from employers thanpreviously expected. Employees across Asia Paciﬁc
are rethinking their lives, with work topping the list.
Talent is on the move to a degree not seen before.
Thousands of expats continue to shift around theregion — some countries seeing fewer expat
numbers, others burgeoning. Many locals havereturned home, and millions of workers have quit orchanged jobs. Most want ﬂexibility in a manner notpreviously demanded or oﬀered.
According to PwC’s Asia Paciﬁc Workforce Hopesand Fears Survey, the balance of power between
workers and their employers is shifting. Employees
say they want more meaningful work, to bring theirauthentic selves to work, and to trust their employer.
They want a better deal around fair pay. Simply
raising wages to retain and attract talent isunsustainable in the long run. Employees arehoping for greater transparency, equity andﬂexibility at work.

And with four generations now in the workforce,
employers are challenged to understand and meet
the wide variance of employee expectations. With
one third of the workforce planning to ask for a raisein the next 12 months and one in ﬁve intending toswitch to a new employer, these results — against
the backdrop of previously outlined issues acrossAsia Paciﬁc — should be a wakeup call forcompanies across the region, many which havegrappled with skill and talent shortages for years.
Leadership of today’s workforce requires a more
people-centric approach. One that is representativeand inclusive, that trusts and empowers, iscollaborative and empathetic. Traditional models ofhierarchical leadership are out-dated and no longer
eﬀective. Despite this, research indicates anasymmetry between CEOs and their people
regarding changing workforce dynamics. In PwC’s
Asia Paciﬁc CEO survey, CEOs were asked how the
top threats (health risk, cyber risk, macroeconomic
volatility, climate change, geopolitical conﬂict andsocial inequality) could inhibit growth. Except forsocial inequality risk, they were most concerned
about the near-term impact to revenue. Attracting
and retaining talent appeared less concerning in thecontext of delivering short-term top line growth.

The voices of employees havebecome stronger, andemployers need to listen. The
culture and values of anorganisation must align with its
workforce, otherwise people
will vote with their heads andhearts, and ultimately theirfeet.
Norah Seddon
People & Organisation Leader,
PwC Asia Paciﬁc and Australia

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This disconnect highlights asigniﬁcant area of opportunity.
How leaders respond to thechanging dynamics of theirworkforce will play a major part inshaping long-term strategic
success. An interlinked response toaddress the skills shortage,embrace hybrid work, and deliveron societal purpose (ESG) is key.

Address workforce planning
Many employees are looking for short tomedium-term career plans (one-two or three-ﬁve
years), while also expecting their employer to teachthem the digital and technical skills they need tosucceed long term. When employees and employers
reach a mutual partnership, skilling is one area thatcan see real return during short to medium-term
periods. Yet too often companies see upskilling as ashort-term ﬁx for plugging immediate capability
gaps, rather than a way to develop a strategicallycompetitive workforce. To build a future-readyworkforce, employers must holistically consider theskills they need (from employees and the company)in the longer term, then build a mutually beneﬁcial
program to deliver them.

Delivering on societal purpose (ESG)
Money matters, but so does meaning. Although
workers want to be rewarded fairly, they also value
other things: 64% want work that provides a senseof fulﬁlment and meaning, 62% want to bring theirauthentic selves to work. While companies areembracing ESG shifts, they could be leveraging thismore to gain a competitive advantage, especially to
attract specialised workers. One of the mostpowerful ways to nurture meaning and fulﬁllment is
to create a clear link between what people do every
day and broader societal purpose. Thosebusinesses succeeding will have clarity on what
employees want by gathering data on employee
sentiment, segmenting people, and prioritisingaction plans for key groups. They will make ESG realby breaking down what it means for their people,aligning purpose, and outlining the role employees
can play in delivering on these agendas. And bypromoting what is being done, employees can havegreater clarity about how the organisation’s purposealigns with their own values.

Embracing ﬂexibility and trust
Flexible work is here to stay, with 90% of theworkforce in Asia Paciﬁc preferring to work remotelyor hybrid. In a future where hybrid work is the norm,
balancing retention risk is essential, and a dictatorial
approach —such as mandating speciﬁc in-oﬃce
days — is likely to fail. Instead, empowering people
to inﬂuence the way they work and when is likely tobetter resonate — especially among employees within-demand skills who have gained notablebargaining power with employers. Companies alsoneed to be careful not to overlook the 38%
non-hybrid workforce who are signiﬁcantly lessengaged and less satisﬁed than people who canwork from home. The key is for leaders tounderstand their employees’ preferences and givethem a say in shaping what their jobs look like.
Ultimately it comes down to leaders trusting andempowering people to know what works best forthem and the company, and then reaching apartnership that works.

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5

Environmental, Socialand GovernanceAccelerate progression of ESG priorities todiﬀerentiate in the market for capital and talent

Regional progress against the UN’s Sustainable
Development Goals (SDGs) remains challenging for
Asia Paciﬁc. A combination of crises, impacts oflegacy fossil fuel-dependent economic development
priorities, and ongoing geopolitical challenges place
Asia Paciﬁc further behind to achieve SDG targets.
ESG is therefore fast becoming not just a priority,
but a diﬀerentiator in society’s collective goal toaccelerate progress across a range of complex andinter-related issues. Creating meaningful change
and measurable value, ESG is smarter business fora stronger world. It is a key consideration that drives
decisions across supply chains, enterprise growth,
digital adoption, workforce, overall social impact
and associated investment. There has been a shift
from viewing ESG as a reporting exercise focusedon risk mitigation, to seeing it as a major value
creation opportunity throughout the business cycle.
Businesses demonstrating accelerated progression
against both environmental and social targets,
underpinned by transparent data and governance,
are diﬀerentiated. This diﬀerentiation can be seen
not only in public and private company valuations,but also in the competition for talent where‘meaning’ (purpose, authenticity and wellbeing)leads the way when choosing an employer.

Environment
Momentum has not declined when it comes to Asia
Paciﬁc’s business leaders doubling down on theirpath to net zero. 60-69% of Asia Paciﬁc CEOs havecommitted to either a net-zero or carbon-neutral
target — well above global peers by 9-13%
respectively. As businesses’ and governments’
net-zero ambitions scale up, Asia Paciﬁc needs toaccelerate its annual decarbonisation rate by 13
times to reach the 15.2% global rate required.
Encouragingly Asia Paciﬁc countries outperformed
their global peers in reducing their carbon intensity
in 2021 led by Australia, China, Indonesia, Malaysia,
New Zealand, South Korea, Thailand and Vietnam.
Collaborative actions between government,
business and investors — including across borders— is more important than ever to continue thismomentum. Increasingly, a key pillar of thedecarbonisation journey needs to include innovation
by business in driving both a fair and circular
economic transition. Through longer product life
cycles (for example a reduction in virgin material
usage), targeted innovation and service-based
business models, there is the potential to generateover USD$324 billion in Asia Paciﬁc economic
output and 1.5 million jobs in the next two decades.
Meanwhile, pressures are increasing from regulators,
investors, and more eco-friendly Asia Paciﬁc
consumers who collectively are demanding
businesses show demonstrable progress towards
net-zero targets, whilst the focus on biodiversity andother environmental issues ampliﬁes. Shareholder
activism is signiﬁcantly on the rise in Asia Paciﬁc,adding pressure to perform and leading to regulatory
reform and increased governance. As emissions
regulations emerge, there is momentum around
Scope 3, energy transition, supply chain anddigitalisation impacts. Value is evolving in line withthe maturity of stakeholder capitalism. Businesses
complying with regulation and aligned to leading EU
taxonomies are diﬀerentiating themselves — andincreasingly attracting market valuation premiums of
20-30%.

New Zealand

PwC | Asia Paciﬁc’s Time15

SocialA turbulent global geopolitical and economic
backdrop in Asia Paciﬁc is creating greater
uncertainty and reinforcing inequalities acrossnations. This is compounded by the dynamics
between stakeholder groups including employees,
employers and supply chain workforces. Businesses
are faced with both a signiﬁcant challenge andopportunity: creating inclusive business models
while maintaining commerciality of their products
and services. Recent data suggests that if available
and armed with the right information, consumers will
be willing to pay a premium for sustainable products
and services. Social impact should therefore not bethought of in a vacuum— the consideration ofdiverse cultures, vulnerable groups, and the welfare
of local communities must be central to the productdevelopment lifecycle.
Two priorities emerge to pragmatically action thisambition. Firstly, businesses on their journey to net
zero must also consider how to deliver a Just
Transition — ensuring inclusive opportunities for
those stakeholder groups most impacted by a shift
away from carbon intensive activity. Secondly,
businesses that deliver on their social purpose canuse this as a ‘premium’ for their employee value
proposition — which is critical in attracting andretaining talent who are actively choosing
employers whose activities are aligned to theirconscience, not just compensation.

Indonesia

Governance
In Asia Paciﬁc, amidst the pandemic the hierarchy oftrust has ﬂipped. Governments became moretrusted than business. Faced with a trust deﬁcit,
businesses need the right level of transparency,
competency and standardisation of high-quality data
to build back conﬁdence in stakeholders, including
employees and investors. However, there is a lack ofclarity around what to do regarding trust andtransparency. Data in relation to climate and social
impact remains fragmented, immature and diﬃcult
to source and analyse. This makes creating abaseline for improving targets — and reporting onthem — especially challenging. Governments andregulators around the world continue to drive
regulatory changes which scrutinise operations andsupply chains in the region, particularly in the areasof workforce, social impact and human rights.
Businesses that master transparency and data, inthese areas — and who understand and act upon aconstantly evolving global regulatory environment —can leverage this to access capital on beneﬁcial
terms and take the lead on trust with theirstakeholders.

PwC | Asia Paciﬁc’s Time16

From ‘Good Intention’ to ‘Value Creation’The growing interest in broader ESG issues across the region presents signiﬁcant opportunities to embed ESG
improvement levers into business resilience, climate initiatives, and visions for transformation. Businesses who
can proactively prepare for increased transparency will have improved market diﬀerentiation and an increased
ability to impact climate and social issues. In doing so, leaders should direct commitment and action into themost eﬀective and practical activities:

Set an ESG vision, link it to an employee value proposition, and take apublic stance
ESG is a diﬀerentiator. It’s also a way businesses can ensure stakeholder needs are
addressed. Moving from acceptance and vision to implementation and action necessitates
understanding where you are, where you’d like to be, and how you’ll get there.
Understanding this, and communicating to employees what is being done, will help
businesses embrace the competitive talent market and act as a catalyst to reﬁne its vision.
A vision will aid in developing an employee value proposition, supporting an operating
model and organisational structure that will be purpose led. A public stance on the most
relevant social values demonstrably linked to products, services, and the employee value
proposition is vital to managing and upholding stakeholder expectations.

Use climate tools to understand risk, invest in a data ecosystem, andmake portfolio adjustments
As much as 80% of an organisation’s supply chain emissions come from as few as 20% of
its purchases. Businesses need to commit to understanding and cutting these emissions,
often through portfolio adjustments and working proactively throughout their supply chains.
Companies with energy transition underway, or a portfolio of businesses already on the
net-zero path, can use data to look for enablers and accelerants. Also key, is a proper
evaluation of risks, especially physical risks from climate changes. Impact assessment tools
bring together economic and operational data. They determine the eﬀects of a decision —such as portfolio changes — on ESG criteria including pollution outputs, CO2 emissions,labour practices and social welfare. This granularity helps leaders make strategic decisions,
understand trade-oﬀs and identify opportunities. Orderly and high-quality data ecosystems
bring conﬁdence and clear reporting, which enables businesses to better meet regulatory
requirements, increase awareness of risks, and ultimately build trust and transparency with
communities and the market.

Realise the ability to attract premium returns and sought-after talent
A successful transition to net-zero can be signiﬁcantly accelerated by leveraging capital
investment from the private sector. Businesses exhibiting ESG capability — and deliveringon environmental and social impact — have a lower cost of capital, a better chance of being
prioritised by investors, may earn the right to price their products and services at apremium, and are attracting and retaining premium talent through their employee value
proposition.

The ESG revolution is here. Societal needs and business opportunities are converging to transform the way
companies design their strategies, drive performance, diﬀerentiate in capital investment markets, and securetalent. ESG can help reshape uncertainty into opportunity, complexity into clarity, problems into potential. Withit we can move forward with measurable success and create sustained outcomes that fuel responsible growth.

PwC | Asia Paciﬁc’s Time

17

Asia Paciﬁc businesses remain
at a critical transition point: theshift needs to be away from
reporting to ‘look good’, into a
more focused, transformativemindset around Value Creation— combining ESG andinnovating the portfolio of
products and services to ‘dogood’ and deliver sustainablepremiums.
Ivy KuoPwC Asia Paciﬁc ESG Leader

Australia

PwC | Asia Paciﬁc’s Time18

Advancing
together, now
For many years Asia Paciﬁc has beneﬁted from a strong set of regional
fundamentals. It has shown great resilience in the face of past
challenges, and its burgeoning economy has lifted fortunes across theregion. However, faced with threats to growth and the current state of
disequilibrium, it is now incumbent upon businesses in Asia Paciﬁc to
be much more deliberate and proactive in decision making, and morestrategic in planning — to drive equitable growth and enhance regional
competitiveness and resilience.
The challenge for business leaders is a daunting one. They must
create value and sustained outcomes for multiple stakeholders whose
interests are not always aligned. They must quickly decide where to
optimally deploy time and resources and in doing so, understand theimpacts of these decisions across the entire value chain. Success intoday’s world needs leaders to be bold. To adapt and evolve at speed.
To collaborate, and build trust and resilience, focussing attention
across supply chains, regional enterprise growth, digital economy,
workforce, and the evolving ESG landscape. These ﬁve aligned andmutually reinforcing areas are key challenges for leaders, yet also
represent the areas of greatest opportunity. They are success factorsthat can diﬀerentiate and have lasting impact.
Rarely in history have business leaders had to deal with this many
challenges, each coinciding and uniquely complex. And never haveleaders had to respond to them all at once. We face a new reality, anda complicated road ahead with twists and turns that underscore theneed to come together. Businesses must transform to drivecompetitiveness and prosperity, and lead Asia Paciﬁc to a future as
the world’s most resilient and sustainable economic powerhouse.
It’s Asia Paciﬁc’s Time to respond to the new reality.
We must act now!
India

PwC | Asia Paciﬁc Hopes
Time and Fears Survey 2022

19

Contacts
Lead Authors

Subject Matter Experts

Asia Pacific Leaders

Michael McKenzie

David Brown

Raymund Chao

Director | Global Alignment
michael.k.mckenzie@pwc.com

Asia Pacific Deals Leader
d.brown@hk.pwc.com

PwC Asia Pacific and China Chairman
raymund.chao@cn.pwc.com

Kelly Garayoa Sánchez

Kirsty Haymon

Christopher Kelkar

Director | Asia Pacific Strategy
kelly.a.garayoa.sanchez@pwc.com

Asia Pacific ESG, Social
kirsty.haymon@pwc.com

PwC Asia Pacific Vice Chairman,
Operations and Global Alignment Leader
christopher.s.kelkar@hk.pwc.com

Michelle Arnold

Ivy KuoManager | Global Alignment
michelle.l.arnold@pwc.com

Asia Pacific ESG Leader
ivy.ws.kuo@cn.pwc.com

Sridharan NairPwC Asia Pacific Vice Chairman, Markets
sridharan.nair@pwc.com

Vishy Narayanan
Asia Pacific Chief Digital &Information Officer
vishy.narayanan@pwc.com

Jeremy Prepscius
Asia Pacific ESG, Sustainable
Supply Chain
jeremy.prepscius@hk.pwc.com

Sean Purdie
Asia Pacific ESG, Energy
Transition
sean.purdie@pwc.com

Norah Seddon
Asia Pacific People & Organisation
Leadernorah.seddon@pwc.com

Richard SkinnerAsia Pacific Deals, Strategy &Operations Leader
richard.skinner@pwc.com

Luke Soon
Asia Pacific Digital Products
luke.soon@pwc.com

David Wijeratne
International Growth Practice Leader
david.wijeratne@pwc.com

PwC | Asia Paciﬁc’s Time

20

Contacts
Australia

Japan

South Korea

Tom Seymour

Koichiro Kimura

Hoonsoo Yoon

Chief Executive Officer
tom.seymour@pwc.com

Group Chairman
koichiro.kimura@pwc.com

Chief Executive Officer, Samil PwC
hoonsoo.yoon@pwc.com

Pete Calleja

Yukinori Morishita

Daniel (Sang-Soo) Yoo

Markets Leader
pete.calleja@pwc.com

Markets Leader
yukinori.morishita@pwc.com

Markets Leader, Samil PwC
sang-soo.yoo@pwc.com

Malaysia

TaiwanSoo Hoo Khoon Yean

Joseph Chou

Territory Senior Partner
khoon.yean.soo.hoo@pwc.com

Chairman & Chief Executive Officer
joseph.chou@pwc.com

Sundara Raj

Patrick Tuan

Markets Leader
sundara.raj@pwc.com

Markets Leader
patrick.tuan@pwc.com

Chairman
raymund.chao@cn.pwc.com

New ZealandThailandThomas LeungMark Averill

Chanchai Chaiprasit

Markets Leader
thomas.w.leung@cn.pwc.com

Chief Executive Officer
mark.averill@pwc.com

Chief Executive Officer
chanchai.chaiprasit@pwc.com

Joanne Robinson

Paiboon Tunkoon

General Manager, Markets
jo.n.robinson@pwc.com

Markets Leader
paiboon.tunkoon@pwc.com

Chairmansanjeev.krishan@pwc.com

Philippines

Vietnam

Vivek PrasadRoderick Danao

Van Dinh Thi Quynh

Chairmanroderick.danao@pwc.com

Country Senior Partner
dinh.quynh.van@pwc.com

Mary Jade Roxas

David Tay

Markets Leader
jade.roxas@pwc.com

Markets Director
david.tay@pwc.com

David McKeering
Markets Leader
david.mckeering@pwc.com

Kristin Stubbins
Markets Leader
kristin.stubbins@pwc.com

China
Raymund Chao

India
Sanjeev KrishanMarkets Leader
vivek.prasad@pwc.com

Indonesia
Eddy Rintis
Territory Senior Partner
eddy.rintis@pwc.com

Singapore

Ay Tjhing Phan

Marcus Lam

Markets Leader
ay.tjhing.phan@pwc.com

Chairmanmarcus.hc.lam@pwc.com

Kok Weng Sam
Markets Leader
kok.weng.sam@pwc.com

PwC | Asia Paciﬁc’s Time21

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