In a survey conducted in August 2023, technology buyers in Asia/Pacific Excluding Japan (APEJ) ranked AI and its derivatives as the number one most useful innovative technology to meet their sustainability/ESG objectives. Furthermore, 46% of APEJ enterprises find GenAI particularly useful in ESG data analysis.

AI is predicted to remain a critical technology in the operationalisation of ESG in 2024 and beyond:

• Responsible AI: By 2025, 25% of ESG review boards in APEJ will include ethical and responsible oversight of AI efforts in their purview.

• Sustainable Supply Chain Management: By 2026, AI-powered demand forecasting will reduce excess inventory levels by 20% minimizing waste and lowering carbon emissions from excess production.

In addition to the growing role of AI in meeting sustainability/ESG objectives, IDC also noticed that APEJ organisations are in a cusp of a great shift which will lead to more demand for sustainability and ESG-enabling technologies and related business services.

IDC’s sustainability surveys reveal accelerated adoption of sustainability/ESG in the region in the last 12 months, much faster than anywhere else in the world.

Important sustainability/ESG topics in 2024

• Decarbonization: By 2027, 50% of large organisations in APEJ will require a carbon neutrality strategy as a standard part of enterprise technology procurements and RFPs as compared with 40% today.

• Circularity: By 2024, 50% of APEJ organisations will require OEMs/ODMs to provide detailed circularity metrics about design, manufacturing, life cycle, repair, reuse, and disposal in dashboards to facilitate reporting.

• Social Sustainability: By 2028, 30% of APEJ companies will track social capital KPIs (e.g., human rights management) to reflect the increasing demand from external stakeholders to address social sustainability topics.

• Biodiversity and Nature Positivity. By 2027, 25% of APEJ companies will consider biodiversity a material ESG issue for their business and will have implemented concrete impact mitigation strategies and data management tools.

• ESG Services: By 2027, due to increased focus on climate risk, 80% of all sustainability-related services engagements will include a climate risk component, a 30% increase from the present.

• Sustainable data centres: By 2026, 35% of all data centre energy consumption in APEJ will be powered by renewables.

• Chief Sustainability Officer: By 2028, companies most advanced with sustainable business transformation (~10–20%) will have sustainability embedded across the organisation, and CSOs will have only a coordination role.

“Over 90% of enterprises in the region are navigating their sustainability journey, responding to global and local regulatory pressures and the need to stay competitive. Manufacturing, logistics, ICT, and financial services sectors, and public sector institutions, such as government, education and healthcare, increasingly rely on digital technology solutions and ESG-related consultancy services to get them started or help them advance in sustainability maturity. IDC foresees a rapid expansion of sustainability tech applications in the near term, expanding use-cases and scope of material topics,” says Melvie Espejo, a research director for sustainability strategies and technologies at IDC Asia/Pacific.

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"With buildings accounting for over one-third of global energy consumption, the real estate sector is under mounting pressure to embrace net-zero," explains Dominique Bonte, vice president of end markets at ABI Research. "Governments, corporations, and society at large recognise the pivotal role buildings play in reducing emissions and energy use."

Despite currently representing just 0.023% of global buildings, the net-zero segment is gaining strong momentum. The report projects over 5,500 commercial and residential net-zero buildings globally by 2027, up from 1,200 in 2022. While still a niche, this growth signals the accelerating transition toward high-performance real estate.

The evolution is enabled by progress across renewable energy, efficiency software, and sustainable materials. Solar photovoltaics, geothermal heating, and battery storage make onsite zero-carbon energy generation achievable.

Digital twin systems and building management software from companies such as Siemens, Schneider Electric, and Univers optimise performance. Carbon-storing materials and circular construction techniques reduce lifecycle impacts.

Regions leading the net-zero building charge include North America, Western Europe, and progressive urban centres in Asia Pacific. Supportive policies, technology leadership, and climate awareness drive these markets.

Upfront, net-zero buildings carry a 5-19% premium for commercial and 5-15% for residential. However, the investment pays back over decades of operations through dramatically lowered utility and maintenance costs. Demonstrating positive value impacts for owners and occupants remains a priority.

Bonte concludes that technologies now exist to make net-zero energy feasible at scale.

"But the real estate ecosystem must continue collaborating across construction, policy, finance, and technology to make it accessible and attractive for owners globally."

Dominique Bonte

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The International Energy Agency (IEA) outlines key strategies to cut carbon emissions in cement production include improving energy efficiency, switching to lower-carbon fuels, promoting material efficiency (to reduce the clinker-to-cement ratio and total demand), and advancing innovative near-zero emission production routes. The latter two contribute the most to direct emission reductions in the Net Zero Scenario.

Cement producers are now publishing their Environmental, Social, and Governance (ESG) credentials concerning energy use in their operations, Greenhouse Gas (GHG) emissions, and water usage.

Digital technologies will enable companies to collate and analyse the data to identify process improvements. Investments in optimising their production equipment and cement quality will also drive investments in digitalization. ABI Research forecasts total spending on digitalization is forecast to reach US$3.54 billion in 2033 (a 5.5% compound annual growth rate (CAGR)).

“With all of the above in mind, cement producers are developing risk frameworks that present opportunities for technology suppliers to help firms assimilate information for presenting credentials and performing scenario planning exercises,” says Michael Larner, industrial and manufacturing markets research director at ABI Research.

Cement production accounts for 4% of global warming. However, concrete, from which cement is the main element, is the key material used in the construction industry and will continue to be required for buildings, roads, and infrastructure projects.

“This is the dilemma for the industry and can be considered an opportunity for both engineers and technology suppliers to devise solutions to develop cement that can fulfil industries’ requirements while not decimating the environment,” Larner explains. Digital technologies will have a role to play at the production level, and companies are developing and commercializing their expertise, with both TITAN Cement Group and Heidelberg Materials already commercializing their digital expertise in predictive maintenance and application development, respectively.

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Companies are adopting carbon management tools to address the potential 18% GDP loss from climate change by 2050. These tools, used to calculate, manage, monitor, and report emissions, help measure operational emissions throughout the supply chain.

ABI Research projects the carbon management software market to grow at a CAGR of 19.7%, reaching US$5.5 billion by 2032.

Scope 3 emissions, which can be 5 to 25 times higher than Scope 1 and Scope 2 emissions, constitute up to 90% of the overall environmental impact, according to the Carbon Disclosure Project (CDP).

Accurate measurement of Scope 3 emissions is crucial for businesses to enhance resilience and efficiency throughout the supply chain.

Rithika Thomas, sustainable technology analyst at ABI Research says only what is measured can be managed. She added that taking responsibility for carbon emissions is the first step to mitigating catastrophic climate-related disasters.

“Accurately measuring Scope 3 emissions provides invaluable insights which will equip organizations to increase resilience and efficiency over the entire supply chain, future-proofing the company, and de-risking value chain from climate-related financial threats.” Rithika Thomas

The carbon management market is shifting from voluntary to mandatory reporting due to regulations, heightened climate change awareness, digitization of production, customer and investor pressure, and the pursuit of transparency for a competitive advantage.

Currently, the sustainability software market is a mixed bag with overlapping features and functionality with ESG, carbon management, smart building management, lifecycle analysis, and allied sustainability features.

According to Thomas, “As international and country-specific policies stabilize, there will be a significant growth shift post-2026 in the software suppliers and user base in Asia-Pacific and emerging markets.”

A robust ecosystem will develop around carbon software tools with dedicated expert solutions for each reporting aspect to address credibility, accuracy, and auditability.

Software developers should focus efforts on automating calculations, building industry-specific solutions with data assurances, and integrating AI and predictive capabilities to create value with actionable insights for end users to truly thrive in the current fragmented landscape. “As forward-looking companies and larger corporations are applying carbon management tools at scale, long-term strategic goals on sustainability become more evident with tangible short-term metrics,” Thomas concludes.

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ABI Research forecasts that automobile manufacturers will spend US$83.3 billion on digital technologies in 2023, growing by a CAGR of 8.5% to surpass US$188 billion in 2033.

“The transfer to EVs is driving demand for software, as manufacturers need to design new vehicles and simulate the vehicles' performance,” says Michael Larner, industrial and manufacturing markets research director at ABI Research.

He added that the new production lines will also need to be simulated before launch. Manufacturers are realizing the potential of digital twins to enable teams to collaborate to bring the new operations to life. 

Larner added that before creating digital twins, automobile manufacturers will need to remove data silos and create digital threads with suppliers such as Amazon Web Services (AWS), Google, NVIDIA, and Siemens standing to benefit.

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