5 Trends For 2020: The Year Of The Rat

By Debra Tan, Dharisha Mirando, Dawn McGregor, Woody Chan 17 February, 2020

Will we sink like a Drowned Rat or will the Mighty Mouse help us navigate climate and water risks? Find out in our 5 trends

The Rat heads the Zodiac & heralds a new 12-year cycle. So expect new paths & disruptions ahead. Failure to cut carbon = must adapt for water; new exposure research = more action
Central banks will lead credit evolution as the sector is blind to systemic shocks triggered by water risks. Despite the virus & slowdown, China’s resolute on an eco-civilisation and will tai-chi there
Clean & circular consumer demands = greenwashing brands ratted out & new opportunities arise from waste. Given dangers ahead, Asia will step up innovation as its tycoons will want to stay rich

The Rat came first in the “celestial race” held to determine the order of the Chinese Zodiac. It won because of its cunning – the Rat tricked the Ox into carrying it across the river to the finish line where it leapt off the Ox’s head to win the race. As the leader of the pack, Rats in the Chinese horoscope are thus associated with being clever, quick thinking and successful, but like a mouse they are contented with living a quiet and peaceful life. So we are in for an easy year right?

The Year of the Rat kicked off with an ominous start with an outbreak…

…but Rats in Chinese horoscope are clever, innovative & successful – so is it ‘Mighty Mouse’ or ‘Dirty Rat’?

Well… the Year of the Rat has kicked off with an ominous start with face masks flying off the shelves around the world. We have long blamed rats for spreading diseases: think back to the Bubonic plague which killed an estimated 50 million people across Europe, Asia and Africa; we fear them. Indeed, it has been a fitting start to the year but will the dirty Rat portend more disasters and diseases with rising water and climate risks? Or will the flexible and innovative Rat herald a new era of success in navigating them?

But before we foretell whether it’s the ‘Mighty Mouse’ or ‘Dirty Rat’ that holds sway, let’s see how we fared with our trend predictions for the Year of the Pig…

What we said last year…

We said “the urge to protect piggy banks is strong” in the Year of the Pig and told banks & pension funds “to stop dilly dallying; assess the materiality of water and climate risks or risk a breach of fiduciary duties.” So, we are pleased to see The Network for Greening the Financial System (NGFS) comprised of 34 central banks and supervisory bodies recognise climate-related threats to the financial system in March 2019. By December, membership had ballooned to 54 members. Don’t just take our word for this, Mark Carney, the governor of the Bank of England does not mince his words:

“Climate change will affect the value of virtually every financial asset.”

 Mark Carney, Governor of Bank of England in statement (Dec 2019)

Last year we said “banks & investors will be seeking help with scenario analysis”…

We also warned that there would be “no more piggy back rides”; that financial institutions “want frank analysis of risks posed from water & climate change” and that the Pig would see science mingling with business to bridge gaps in understanding risks and impacts. We even went as far as to say “Who knows, if trends #1 and #2 are right, banks and investors will also be actively seeking their help with scenario analysis” resulting in more action and reports that highlight imminent threats and exposure explicitly.”

…so with Moody’s acquisition of 427 & Vigeo Eiris + BlackRock’s “Get Physical” report with Rhodium – it’s hard not to gloat

So with Moody’s acquisition of 427 and Vigeo Eiris, plus BlackRock’s seminal report “Getting Physical: scenario analysis for assessing climate risks” with Rhodium Group – it’s hard not to gloat. As for us, we wrote two reports on this front – one with AIGCC and Manulife highlighting water and climate threats to pension funds and another for CLSA highlighting various storm surge scenarios in the Greater Bay Area.

Momentum in the financial space is no doubt building – BlackRock and Ping An recently joined Climate Action 100+; Hong Kong’s monthly ESG drinks are increasing popular; plus Bloomberg started a new newsletter “Climate Changed” in 2019. Even BlackRock CEO Larry Fink is on board – read his annual letter. But the Youth for Climate France thinks BlackRock is not doing enough, vandalising their offices in Paris.


Finally, we said that businesses are still “hamming up business unusual” but that consumers will want to “stop pigging out”, so it’ll pay tochange our over indulgent ways”. Sustainability is trending – even across Asia, there was visible rise in sustainable business/green finance forums. This thirst for knowledge meant CWR ended up speaking at 50+ events last year across a wide range of topics/conferences from rare earths to fashion and water-nomic policy to green finance! A consumer moment driven by the youth globally has also emerged inspired by Greta at the helm. It’s all happening!

Momentum is building but actions could have been bolder & faster… perhaps the lazy nature of the pig did seep in after all!

Making moves to start assessing/adjusting to new risks/demand can help maintain prosperity. It’s a good start, but actions across the board could have been bolder and faster; perhaps the lazy nature of the pig did seep in after all! Now, enough about last year, enter the Metal Rat…


Metal Rat + water & climate = new hope…

Unlike the Pig, the Rat is a very hard worker. It will always use its ability, imagination and quick thinking to its advantage. It also yearns for success and coming first in races. Given the current state of climate complacency evidenced by the failure of COP25 in Madrid and the US’s formal withdrawal from the Paris Agreement, the Rat’s determination to succeed is much needed if we are to rein in emissions and ensure water for all.

Luckily, the innate characteristics of the Rat described above are reinforced by the Metal element. This means we can expect a more stable and reliable landscape than that of the Water element which prevailed last year. Phew!

Rats are the ultimate survivors – their flexibility & innovation bodes well & can be a turning point for the climate crisis

Rats are the ultimate survivors; eking out an existence in the crappiest of environments. Their flexibility allows them to find innovative ways to survive. Given that more radical thinking and solutions are needed to even meet the Paris Agreement (3+°C), let alone stay within 2°C of warming, the Rat year bodes well and could represent a turning point for the climate crisis.


Thankfully, Metal and its link to alchemy also means that even unlucky events can be turned into fortune. So even though we have started the Year of the Rat with a global health emergency, there is hope. On top of this, Metal Rats are more determined and goal-oriented than other types of Rats, so on the whole, we expect the momentum on tackling water and climate risks built by the Pig to grow more expansively this year.

The Rat heralds a new 12-year cycle…  

It’s important to make the right decisions in the Year of the Rat. As the first animal of the Chinese zodiac, the Rat sets the tone for the next 12 years. We should thus channel the Rat’s flexible nature and survival skills to fast track the conversation in adaptation which is desperately lacking. There is no time to waste as the consequences of inaction are dire.

Use the Rat’s survival skills to fast track adaptation & get rid of no-sense strategies

Let’s face it, we are in a funk. We are riddled with no-sense climate strategies. Our pet peeve here is planning to build resilience for 1.5-2°C but implementing mitigation strategies that only get us to at best 3+°C. Duh! This is definitely planning to fail.

And it’s not just governments, corporates are also culpable; individuals are not doing better either. Like a cat crying over the death of a rat, we say we are sorry but we are not and happily continue with our emissions-heavy lifestyles.


More carbon emissions = multiple water threats = systemic failure across multiple systems from nature to banking. Although, the prognosis doesn’t look good, as eternal optimists, we hope the Metal Rat’s single-mindedness and ability to make bold decisions will give us the courage to deploy aggressive action and bold innovations to usher out no-sense strategies.

The good news is that even astrologers are saying that the stars are aligned to deliver the promise of a new beginning; a way to break old patterns/habits. Who knows, the Rat may well herald the start of a new era of earnestness in dealing with the climate and water risks replete with truly out-of-the box solutions and new radical ways of solving them.

There is a Chinese saying: fortuitous rat arrives at your door…

…you must be proactive to tap its luck or face disastrous events ahead

Too optimistic? Well, rats are considered lucky and plentiful in the Chinese zodiac due to their ability to multiply. There’s a Chinese saying 福鼠临门 which roughly translates to fortuitous rat arrives at your door, but how you tap its luck is down to you. But beware: if we don’t take proactive action, the nasty side of the Rat may throw us so many disastrous events that we can no longer ignore the perilous road ahead.

Remember, to set forth on a new cycle/path, something has to give/break. Our 5 trends for the Year of the Rat thus all revolve around this theme. Pay attention and brace yourself, there are disruptive times ahead. Here are our five trends…

1. Smelling a rat… failure in cutting carbon = must adapt for water

2020 is the year when everyone starts to smell a rat that water and climate are intertwined. Climate change exacerbates water scarcity and most climate threats come in the form of water (floods, storm surges) or the lack of it (droughts/fires). Their links also present a vicious cycle that can constrain solution options for both water and carbon.

We are feeling the impacts: Australia burning, London running dry, no snow at ski resorts…

…we are only at +1.2°C of warming

A sneaking suspicion has been building because we are already feeling the impacts – Australia is bone dry and burning; California’s fire season is now all year long; Manila and Chennai faced severe water shortages; Cape Town almost ran out of water if not for extreme rationing and rain; and even London’s could run dry within the next decade. Many ski resorts had no snow last December… and we are only at +1.2°C of warming.

Governments and corporates are simply not doing enough to protect our assets and our water resources. Right now, we are plummeting into a 3°C-5°C world which has serious and severe impacts on our water resources.

World leaders are failing…

…yet, Asia’s carbon diet will grow

Unfortunately, President Trump like the Rat is a great survivor and the Rat will likely see him re-elected, which means the US will still stay out of the Paris Agreement and environmental laws in the US will become more lax. So it’s down to the people to make sure we survive the climate crisis. Greta vs Trump will be the norm.

We have to start talking about climate impacts on Asia’s limited water resources to break out of “development as usual”

While Thunberg is doing a great job on carbon shaming, in Asia, where hundreds of millions have low carbon footprints, the message is not resonating as effectively. Yet, Asia’s carbon diet will grow which is why we have to start talking about water, or rather the lack of, to provide the impetus to break out of “development as usual”.

Water guru Prof Biswas has some ideas on “How to Make World Leaders Focus on Water”, so we feel positive and see water seeping (and in some regions flooding) into the climate conversation this Rat Year.

Across Asia urgent action is required: our coastal cities face threats from sea-level rise and storm surges from more frequent and damaging typhoons.

One in two Asians could be affected as they live in 10 major river basins…

…which support significant GDPs – China (30%), India (42%), Pakistan (92%)

Changing monsoon patterns also bring intense droughts and affect river flows exacerbating water scarcity. Up to one in two Asians could be affected as they live in 10 river basins which start from the Hindu Kush Himalayas, the Third Pole – which like the North and South Pole is melting. These basins collectively also support huge economies – 30% of China’s, 42% of India’s and 92% of Pakistan’s GDP. Such levels of exposure could trigger systemic shocks if not managed well, kicking off other efforts as per the other four trends below.

If Typhoon Mangkhut came at high tide, water levels in Hong Kong will be at HSBC’s HQ…

…it’ll be a yearly storm by 2100 & storm tides will likely be +2m more

Risks will be higher if we do not scurry to take action in the Rat year. Take Hong Kong for instance, if Typhoon Mangkhut came at high tide, the storm tides would have reached past IFC, Mandarin Oriental and Hong Kong Club only to lap at the “shores” of HSBC’s headquarters. According to the Hong Kong Observatory Chief (ironically at a HSBC forum), not only will Mangkhut be a yearly storm by 2100, its storm tides will likely be +2m more.

The science is clear, Mangkhut was Hong Kong’s wake-up call in 2018 but it’s now 2020 and the government’s resilience plan is still not published. Beyond Hong Kong, Macao and other Greater Bay Area cities are at risk unless adaptation measures are in place.


Singapore, on the other hand is further ahead. Having set up its Centre for Climate Research Singapore in 2013, it introduced a carbon tax and announced the need for SGD100bn of adaptation finance to build resilience and protect the island nation in 2019.

Being the world’s #1 marine bunkering hub could sink Singapore…

…surely it should take the lead in new ways to cut marine emissions?

Yet, it harbours a lesser known dirty secret behind its clean image – it is the world’s #1 marine bunkering hub by volume, by far – its annual sales in 2016 were 5.7x that of Hong Kong which was #4. The whiff of this will surface and Singapore will have the opportunity to lead in innovating new ways forward in cutting global maritime emissions in the Year of the Rat, if it were to stay ahead of the curve.

It is difficult to make hard decisions today and align climate strategies when we cannot see the consequences of our actions. So we expect the Rat to carry in new research and reports that indicate exposure of assets to water and climate risks to catalyse action.

Expect publication of new exposure research & reports…

So beware, disruptions ahead will be deep… some C-suites will be caught off guard

Climate change action efforts on the carbon front will see a boost from the Rat with the injection of water into the climate conversation. Beware, disruptions ahead will be deep and some C-suites will be caught off guard. Reputations will suffer, but don’t burrow into your mouse hole. Instead, channel the Rat and think “adapt” and golden opportunities will unfold.


2. Three Blind Mice no more… regulators, banks & pension funds wake up

The financial sector is ripe for disruption thanks to rising risks; we’ve been saying this for years . But like the Three Blind Mice, regulators, banks and pension funds have failed to analyse these interlinked water and climate risks comprehensively, leaving them horribly exposed to water resource mismanagement and water day zeros, floods, droughts, storm surges and sea level rise.

Banks say they’re on top of climate risks with their TCFD scenarios…

…but they barely touch on water risks; leaving their loanbooks & collateral horribly exposed

There’s a Chinese proverb 鼠目寸光 which translates to “a rat can only see in inches”. We say the rats in this case are the banks which say they’re on top of climate risks with their TCFD scenarios but their TCFD disclosure focus is on carbon and barely touches on water risks. Moreover, they continue to lend to polluting industries – according to BankTrack, since the adoption of the Paris climate accord in 2015 just 33 banks have provided a shocking US$1.9 trillion to the fossil fuels sector (2016-2018).

Until now the climate conversation in the financial sector has focused on the carbon transition risk, which is great as staying within 2°C will contain the impacts of water risk.  But let’s be honest, other than a lot of noise there hasn’t actually been much change in how the financial sector operates. Even the world’s largest IPO (which took place last year) was in the oil & gas sector. Sadly, it seems they don’t give a rat’s arse!

Don’t give a rat’s arse?… US$1.9tn to fossil fuels since Paris Agreement + world’s largest IPO in oil & gas in 2019

So their lack of action to decarbonize and the continuation of finance-as-usual only means rising water and climate risks which in turn impact their loanbooks and collateral. And because they have yet to analyse and adjust for such tail risks, they are blind to the sad reality that the sector’s current risk mitigation strategies make zero sense.


Banks are doing a Mickey Mouse job of evaluating exposure so regulators will step in to avoid systemic shocks

We therefore see regulators stepping up action to avoid systemic shocks and protect our savings. They simply can’t leave it up to banks which are currently doing a Mickey Mouse job of evaluating risk exposure. Oh and pension funds aren’t faring better either as they too face clustered exposure – more here.

PBOC says climate change could “trigger declines in the value of collateral & tighten credit conditions”

…it is conducting studies on impacts to figure out policy response


BIS warns of “green swan risks” ahead

Regulatory action is ramping up. The BoE has been advocating action, the PBOC, has been quietly stress testing and trying to figure out how to value risks (we know as we were part of the China ERA task force). Recently, Chen Yulu, Deputy Governor of China’s central bank warned that climate change could “trigger declines in the value of collateral and tighten credit conditions.” He urged banks to stay ahead of the curve on climate risks as they could change both economic and financial systems. Chen said the PBOC is studying the impacts and exposure to figure out policy response and appropriate regulatory framework. Indeed the Bank for International Settlements warns of multiple “green swan risks” in its January 2020 report.

There are more bright spots – ESG winds are gusting…

…expect to see standardization efforts galore in the Rat year

There are more bright spots… ESG winds are gusting with the EU taxonomy on Sustainable Finance, which was given a firm boost in December by the European Parliament and governments. Funds wanting to look good with ESG creds would start exiting coal and oil like rats fleeing a sinking ship. Consistency is key if this is to be fully implemented by the end of 2022 so expect to see standardization efforts galore in the Rat year.

Already, a technical taskforce to harmonise this taxonomy between China and the EU has been set up. Also, you know its mainstreaming when there’s a push by the Big Four at Davos on consistent reporting of sustainable metrics. Elsewhere, China is reaching its deadline for mandatory environmental disclosure in 2020. These are all good omens for the start of this zodiac cycle and will no doubt provide momentum to divert their attention to assessing water risks in addition to carbon. See the recent spate of ESG-related reports in our Feb newsletter.

Another positive is that our research highlighting the vulnerability of the GBA to storm surge is bearing fruit. We have had good feedback from various stakeholders following the report we wrote for CLSA. If you have missed this, catch up and watch CWR on Bloomberg.

Moody’s says sea level rise poses a long-term credit threat to some sovereigns…

…a credit evolution is inevitable; banks’ CAR may also need reviewing

Thank god, it’s no longer only CWR ranting about the dangers that sea level rise pose to asset values, collateral and credit-worthiness. Last month, Moody’s released a report titled “Sea level rise poses long-term credit threat to a number of sovereigns”. It cannot be clearer than that. Last year, BlackRock’s research also stated that physical impacts of climate change will impact municipal bond issuers.

Such recognition and movement to adjust tail risks by both central banks and credit rating agencies will have clear impact on valuations across the board. Ultimately, a credit evolution is inevitable. We will have to re-think how we assess sovereign and corporate credit risk ratings, collateral value and equity valuations. The adequacy of current bank CAR ratios may also need to be reviewed.

The future of finance is at stake; the industry stands at a turning point. To thrive in this next 12 year cycle, it will have to evolve. To see more than a few inches ahead, banks, funds and insurers will have to start/step up geo-spatial analysis of credit and equity portfolios to see their clustered exposure and enable effective action to spread risk. Dare we also hope that consensus can be reached on valuation methods and what maps to use.

Industry can lead or be forced to act when financial shocks occur…

…all eyes on the NGFS gatheirng this April

The industry can either lead in managing this evolution or be forced to act when catastrophic events trigger systemic shocks in the system. Hopefully it’s the former – so all eyes on the annual NGFS gathering in Bangkok this April. Fingers crossed that its 54 members will leverage the ambitious Rat and prioritise water risks to ensure the industry’s survival.

Singapore’s SGD100bn of adaptation needs funds – there’s clear rich fee generation potential

Finance has a key role – it’s Asia’s most effective weapon

But remember, big risks bring big opportunities – Singapore’s need for SGD100bn of adaptation investment will need to be funded, as do the plans to protect Miami.

Think about it… 80 airports globally are threatened by just 1m sea level rise.There is clear rich fee generation potential in tackling risks already baked into the system.

The Global Commission on Adaptation highlights that adaptation investment of US$1.8 trillion globally in five areas from 2020 to 2030 could potentially generate US$7.1 trillion in total net benefits.

Also, as finance moves online with the likes of fintech, crypto-currencies and online only banks, it is worth remembering that these are all currently energy intensive and the Metal Rat brings prospects to green the current data centres powered by coal – see more on green clouds in Trend #4.

The financial industry plays a key role in greening our future. Don’t just take our word – Dr Ma Jun, the Chair of NGFS’s Workstream 1, China’s Green Finance Committee and HK’s Green Finance Association as well as Chaoni Huang, the APAC head of Sustainable Capital at BNP Paribas both believe that finance can be Asia’s most effective weapon.

The sooner the industry starts, the better. These risks are HUGE and the Year of the Rat will see more reports highlighting gaps in banks’ actions will emerge.

Black Death looms if the financial industry doesn’t clean up its act

知己知彼百战不殆 – know the enemy and know your weakness to never perish in hundreds of battles. Risks will gnaw at profits and collateral; Black Death looms if the financial industry doesn’t clean up its act. So wake up and be Three Blind Mice no more!

3. Who moved my Cheese? China continues to tweak goalposts & waternomic policies

China has always taken a top down approach. Its move to close off Wuhan over CNY was bold; very few countries would have even attempted a quarantine of this size.  In the Year of the Rat, radical events/positions will demand radical solutions. Luckily, the brilliance and ingenuity of the Rat when it comes to finding solutions will likely see a resolution to not only the virus, but also our water challenges.

Despite the economic slowdown + the current health emergency, do not expect a let up in China’s war on pollution

While the battle spotlight is very much on COVID-19., there are other real threats to China’s health from air, water and soil pollution. China’s war on pollution on these fronts has less limelight but it’s an important slog for long term well-being and prosperity. Indeed, ‘poor’ environmental conditions provide fertile breeding grounds for future diseases. Despite the economic slowdown compounded by the current health emergency, we thus do not expect a let up and actions will present as regulatory risks or fortunate subsidies across multiple sectors; but they may be delayed.

Pilots are the de rigueur for this next cycle from zero waste cities to water tax expansion…

…action taken is dynamic – by sector, by province, by region & by basin

Pilots are de rigueur for this next cycle in China; think Lab Rat but on a much grander scale. China will experiment with various laws and regulations, moving the cheese so as to achieve a Beautiful China. Transformation is tough but reform(s) will happen – gone are “one size fits all” shutdowns; the government will step in to help enterprises navigate the reform-transform maze by moving the cheese.

It is worth understanding here that action taken is thus dynamic – by sector, by province, by region and by basin.

Take solid waste for example. This has become a severe issue: every year there is an increase of 10 billion tonnes of solid waste, and China is still sitting on 60-70 billion tonnes of waste storage. Some cities are literally “surrounded by garbage”. As Rats and waste are likes peas in a pod, the eleven ‘Zero Waste Cities’ pilots selected to experiment with more effective measures to alleviate urban waste pressure will thrive. Rising urbanization will also provide a boost.


Another pilot that is ripe for expansion is the water resource tax. Piloted in Hebei in 2016-2017, this was expanded to 9 provinces in 2018. Armed with more experience and feedback, we expect further expansion in the Rat year. The fact that a there’s a place holder for a water resource tax in the China’s first-ever Resources Tax Law passed in August 2019 further signals indicates that it’s on the cards. Since Rats are hoarders, water tax collections will reap a generous bounty in this cycle.

Top polluters like Pulp & Paper, Textiles & Chemical industries will feel the pain…

…the virus revealed vulnerability of global supply chains to China

However, top polluters such as Pulp & Paper, Textiles and Chemical industries will feel the pain. Regulations in the paper industry have already led to production cuts in many provinces. So enforcement is not just a paper tiger – more on cuts in the paper industry here.

Textiles/fashion and chemical industries will also not go unscathed, due to continued focus on the Yangtze River Economic Belt (YREB).

Over three quarters of China’s pesticide and chemical fibre production is in the YREB and the region also makes over half of the world’s chemical fibre. Already, the virus has revealed the vulnerability of the global supply chains to China. What China does matter and rising enforcement will impact the fashion industry and accelerate the end of linear fast fashion – more on this later. Plus, expect stern reprimand and spring clean of wet markets and the wildlife trade; the MEE has already set technical guidelines for medical waste from COVID-19

The latest, a White Paper for the Green Development of the YREB in January 2020, further affirms China’s commitment to protect the river basin. Laggard YREB provinces will likely face aggressive action. If you don’t know where to start, check our CWR’s YREB waternomic report card from our latest Yangtze report on water risks, hotspots and growth. BTW, we have just co-authored a journal article on Yangtze waternomics with the MEE-FECO and Beijing Normal University – access this here.

Beijing’s move to protect upper watershed shows it understands waternomic development…

…future economic planning will be based on ecological boundaries & not just municipal boundaries

This basin approach is also evident in the Capital Two Zones Plan. The NDRC’s move to protect Beijing’s upper watershed, Zhangjiakou in July 2019 reinforces the view that protecting water sources is a top priority for China. Aside from sectoral and groundwater use targets, the plan moves to shut down 80% of mines by 2020 plus promote green industries. This moving of the cheese helps Zhangjiakou transition away from polluting and water intensive industries toward those that generate more GDP on less water and pollution like tourism/skiing/renewables. These are exactly the waternomic policies we have been ranting about at CWR.


China’s basin approach will also see successful YREB pilots applied to the Yellow River

Watch out for a property rights system for natural resource assets in 2020

Basically, Beijing’s understanding of waternomics = future economic planning will be based on ecological boundaries and not just municipal boundaries. Still not convinced?  China wants to set up a property rights system for natural resource assets in 2020 to provide a firm foundation for ecological compensation, environmental risk analysis, environmental rights trading, ecological redlines delineation and so on. We have covered each of these pilots before, but in 2020, the first year of the next cycle, they will be formalized into a cohesive system. The Rat will also likely see moves to apply successful YREB pilots to the Yellow River. More on these next month, so sign up!

The virus is a BIG blip; China will tai-chi to an eco-civilisation by moving the cheese…

…companies that fail to find the cheese will starve

Public snitching will become the norm due to monitoring apps & social credit scores

The vision is still a Beautiful China, this outbreak is but a BIG blip; the nation will stoically plough ahead. The cheese will slowly be moved bit by bit – pilots, polices, regulations and laws may be delayed or tweaked, but not derailed. And like Rats, these ‘beautifying’ actions will multiply and proliferate. Let there be no doubt, China is determined to tai-chi its way toward an eco-civilisation.

Abundant regulations and the rise of monitoring apps/platforms and social credit scores, will mean public snitching may become the norm in the Year of the Rat. Companies that fail to adapt to find the cheese will starve, leaving more cheese for others to prosper.

4. A New Rat Race… going circular & not in circles

It’s a circular not a linear economy, has been the mantra for a while now, but so far it’s NATO – No Action Talk Only. Hopefully, the overachieving Metal Rat will push us in a new style race – one that is going circular and not in circles. With China also moving the cheese to favour circularity, the next 12 years could bring the end of fast fashion and the rise of green clouds. Here’s why…

Fast fashion’s dirty, thirsty & wasteful ways has gone viral with Hasan Minhaj’s exposé on Netflix/YouTube


You know “The ugly truth about fast fashion”; is spilling out when that is the title of episode 3, season 5 of the award-winning Netflix show, Patriot Act by commentator/comedian Hasan Minhaj. If you haven’t watched this, you must – it’s hilariously sobering. It aired in November 2019 and has 1.8+m views at the time of writing (and that’s just on YouTube not Netflix). Awareness about fast fashion’s dirty, thirsty and wasteful ways has gone mainstream – finally! (We’ve been talking about it for years).

Mainstreaming points to a rise in consumers calling for the industry to clean-up. There is nowhere to hide anymore. This call will only get louder and stronger as the industry though acting is not doing enough. Fast fashion needs to end and end soon – with the industry accounting for more emissions than international flights & shipping combined, climate campaigners will treat it as the “new coal” – more staggering fashion industry stats here.

Fashion is going in circles & not circular…

…Blatant greenwashing & unscrupulous misleading labels pervade “eco-friendly” clothing

One way fashion can curb its environmental and climate impacts is by going circular. Many brands say they are doing this, but are they really? It seems that the industry is going in circles, appearing to be circular rather than actually being circular. Blatant greenwashing was laid bare in Patriot Act in Minhaj’s “H-M Life Conscious” Pop-Up Store exposé where ‘eco-friendly’ content, turned out to be 4% wool, which is hardly eco-friendly considering the sheep’s water and GHG footprints! A jacket was touted to be made from ‘most sustainable’ polyurethane but in reality, this only applied to the jacket’s coating. Unscrupulous misleading labels pervade the industry.

The good news is the rise of circular funds for plastics but none near this size for fashion…


Remember plastics & man-made fashion fibres share the same source material – oil

Can these circles be turned circular? Well, one way is to get enough money to the right people. The good news is that we are now seeing the rise of circular funds – Circulate Capital to tackle ocean plastic with USD106 million and Blackrock’s BGF Circular Economy Fund focused on plastic & climate change with USD20 million. But there’s nothing near this size for fashion, why not? Especially, when plastics and chemical fibres share the source material – oil; the ocean is awash with micro plastic fibres from our clothes. Speaking of plastics and oil, check out the Race for Water Foundation’s new tech solution to convert plastic waste to energy.

To build scale, demand must rise – expect to see increasing pressure from NGOs & consumers…

…you too can start shopping more wisely

New sustainable materials are obviously a big opportunity area and while we’ve seen innovations, there is nothing at a real impact scale yet. Even fibre recycling and the collection of used clothes are still challenging. To build scale, demand must rise. So expect to see increasing pressure from NGOs and consumers (see Gen Z study here) in the Rat year. Yes, you too can start shopping more wisely after a session with Hasan.


Electronic brands too are stuck in the linear rat race. Although they appear clean, they can be toxic and thirsty.  Brands are trying clean-up and become less wasteful, but they are still riddled with no-sense strategies.

Electronic brands’ business models are also in question… new mines will be needed to meet rising demand

For example Apple, who in 2019 showcased a robot called Daisy which helps recycle critical raw materials (CRMs) including rare earths in its iPhones. Daisy appears to be a new version of Liam (2016), but both robots will require whole pantheon of CRMs, metals and energy to make. Will they in turn be made of recycled materials?

Apple also said new mines will be needed to meet rising electronics demand, despite promising to stop mining minerals to make iPhones back in 2017. So although Apple is leading the circular race, the real questions here are: Is its business model of churning out various iPhone/iPad/iMac models a year sustainable? What about built-in obsolescence in its hardware and software? The rest of the industry is not faring better either – see ranking here.

Surely brands should fast track mining the mountains of e-waste they have created?

Leverage Rat’s strong urge to invent this year & come up with sensible circular strategies.

Fear not, solutions are out there. We know this from our conversations with experts at the 16th International Rare Earths Conference – from new clean separation & recycling tech to a creating a new Rare Earth Industry Association to green supply chain. Given that China’s 2019 rare earth exports were its lowest since 2015, brands may have no choice but to fast track mining the mountains of electronic waste they have created. Don’t shy away, leverage Rat’s strong urge to invent this year and come up with sensible environmental and circular strategies.

With the shocking emissions of our digital lifestyle, we must examine our own online habits

…And green Asia’s clouds & data centres

It’s easy to blame brands but the Metal Rat holds us to a higher idealistic standard. We must examine our own online habits. The carbon emissions of our digital lifestyle are shocking; there is a dark side to going viral.  Each byte of data needs water and carbon to generate – watching Netflix on HD for 4 hours in Australia is the equivalent of an entire bathtub of water used.  It’s amazing the amounts of water and energy we can save just by making a few small modifications to green our online videos.

Unfortunately, much of Asia’s data centres and clouds are not green. China’s tech giants (BAT) lag behind those in the US (FAAG) which have made 100% renewable commitments. They are currently using a mix of PPAs and carbon offsets to reach this goal. Hopefully Asia will follow and one day we will get to green clouds.


However, carbon offsets themselves are opaque – they make us feel good but are they a form of greenwashing? Do they really deliver carbon neutrality?

Carbon offsets are opaque – it only costs USD4.10 to offset a Cathay HK-London roundtrip on economy. You cannot even buy a Starbucks Grande Latte with this!

With ‘flygskam‘ (flight shaming) being all the rage, let’s take a look at Cathay Pacific’s carbon offsetting – it only costs USD4.10 (HKD32.05) to offset a roundtrip flight from Hong Kong to London on economy class. You cannot even buy a Starbucks Grande Latte with this amount! How is USD4.10 going to suck out 1.66t of CO2 of flight emissions? BTW, 1.66t CO2 is equivalent of driving a average passenger vehicle car for 6,629km.

If you are feeling outraged – good! The blinkers are off – brands across the board are running circles around us. This year, the curious nature of the Rat will prevail and the true cost of our lifestyles will surface with help from more reports from NGOs or the media. Smelling a rat, the youth climate action will spill over into consumer goods. Greenwashing brands will be ratted out and reputation risk will mutate from just lurking to hurting brands.

Greenwashing brands will be ratted out but think circular & green billionaires will be made…

…In the Rat relish in making the most out of rubbish

Eco/Entrepreneurs take note, you can ride the money making abilities of the Rat – yes, green billionaires are made by trying to stop climate change.

Like the resourceful Rat, relish in making the most out of rubbish. Think about it, an additional EUR160 billion/ year can be made just in the efficient capture and utilisation of fashion waste alone. Kerching! Nothing goes to waste!


5. Danger to Mighty Mouse… Asia finds its voice

Asia has been quiet as a mouse when it comes to climate change, but dangers that it will face from increasingly frequent and intense storms, floods and droughts are making its leaders sit up. Across Asia urgent action is required as we do not have enough water to develop. The continent’s climate strategies are also far from being aligned and many governments globally have so far planned to build resilience for 1.5°C-2°C.

End of Asian apathy = more Asian centric research by Asians for Asia

Unbearable threats lie ahead and this 12 year cycle will herald the end of Asian apathy on climate change and the start of a new dawn in realising the magnitude of challenges ahead. More Asian centric research by Asians for Asia will thus be published going forward.

Asia will have to lead the way in development-unusual – from policy setting to actions by businesses. We all risk becoming drowned rats as our infrastructure and systems are simply not ready to deal with longer droughts, more intense and frequent floods; let alone rising urbanization and lifting millions from poverty. China’s waternomic basin approach could be a way forward and we see other countries looking toward adopting and tweaking such policy pilots and/or solutions.

Water knows no borders …the sooner we invest in infrastructure & nature based solutions to avoid no/too much water scenarios, the better

However, shared basin action could still prove difficult.

But if the current outbreak has shown us anything, it is that working together is beneficial. Viruses like water, know no borders; the sooner we invest in infrastructure and nature based solutions to avoid no water/ too much water scenarios, the better.

To stay rich in a changing climate, Asia’s tycoons will have to play a pivotal role

Fortune tellers say this is a great year for founding and evolving, so we turn to a potential secret weapon yet to awaken – Tycoons. These are long term investors and should be immune to short-termism that plague climate strategies.

So why are they not acting? Because right now, they too are blind to the magnitude of the risks. Perhaps this is due to the lack of noise and research on impacts, but with more impact focused reports coming out, Asia’s tycoons can play a pivotal role in fast tracking decarbonisation and ensuring that proper resilience is built. Surely they want to find out how to stay rich in a changing climate.

With less legacy systems, Asia can adopt a blank slate approach…

We can reimagine/ build new villages, towns & cities to withstand future climates

The future can be bright. There are less legacy systems in Asia to hold us back. With millions that have yet to urbanise, we should adopt a blank slate approach – we can reimagine/ build new villages, towns and cities to withstand future climates. Should cars be symbols of wealth? Is moving to the city, the ‘in-thing’ to do? The Rat means anything is possible but as soothsayers warn, all new initiatives in the Rat Year must be carefully measured to minimize risk taking and maximize chances of success.

So we see renewed ambitions and radical strategies surfacing across the continent. Asia will rise from Danger to Mighty Mouse but while success blooms, so does jealousy and tensions will continue between the East and the West. We will also likely see many countries meet their environmental targets but this is down to the economic downturn rather than casting out old ways and bringing in the new. So do not be lulled into a false sense of security.

Maximise your inner Rat, discard Mickey Mouse bullshit

So for 2020, channel your inner Rat, use its laser concentration, quick wit and smarts to find ingenious solutions. But don’t hoard like a Pack Rat, aspire to the higher idealistic standards – be selective of what you are buying and make sure it does not pollute as our habitat needs to be kept clean to be healthy and disease-free! And don’t just focus on carbon, the Rat’s survival instincts present favourable winds for adaptation and circular projects.

There’s now 10 years left to save the world… Think Speedy Gonzales & go Cowabunga!

Think Speedy Gonzales rather than Slowpoke Rodriguez as we’re long past the time for cat and mouse games. The clock’s ticking down – there’s now 10 years left to save the world. This is not the time for more Mickey Mouse bullshit. We all have a part to play – it’s time to find out whether you are a man/woman or a mouse.

Here, we leave you with the wise words of ninja turtle Master Splinter – “I’ve always liked… Cowabunga.” So go forth and cowabunga in the Year of the Rat!

Happy lunar new year!

Further Reading


More on Latest

  • How To Make Water Issues Matter To World Leaders – Except Singapore, no other leaders of any other country have shown sustained interest in water in the last 50 years. How can this paradigm shift? Global water gurus Biswas & Tortajada explore
  • Climate Fight: Finance As Asia’s Most Effective Weapon – Green finance is set to take off as regulations promote carbon pricing and better disclosure but Dr Ma and Huang also see gaps that need closing like integrating ESG factors in risk management
  • Dirty & Thirsty – Not Just A Paper Tiger – China is the world’s largest paper producer but the industry is a Top-3 polluter. Pollution crackdowns have led to cuts across provinces and water quality has improved. With rising enforcement, is this just the beginning?
  • Race For Water – Converting Plastic Waste To Energy – With most plastic waste fragmented into tiny particles, ocean clean-up is increasingly difficult. Enter Race For Water Foundation’s circular tech to transform 5-12t of plastic waste per day to energy. Their Rollin expands
  • Green Clouds One Day – How does watching online videos exacerbate our climate crisis? Are big tech brands like BAT and FAAG doing enough to source more renewable energy? CWR’s Chan reviews the landscape – it looks like we will see “green clouds” one day
Debra Tan
Author: Debra Tan
Debra heads the CWR team and has steered the CWR brand from idea to a leader in the water risk conversation globally. Reports she has written for and with financial institutions analyzing the impact of water risks on the Power, Mining, Agricultural and Textiles industries have been considered groundbreaking and instrumental in understanding not just China’s but future global water challenges. One of these led the fashion industry to nominate CWR as a finalist for the Global Leadership Awards in Sustainable Apparel; another is helping to build consensus toward water risk valuation. Debra is a prolific speaker on water risk delivering keynotes, participating in panel discussions at water prize seminars, numerous investor & industry conferences as well as G2G and academic forums. Before venturing into “water”, she worked in finance, spending over a decade as a chartered accountant and investment banker specializing in M&A and strategic advisory. Debra left banking to pursue her interest in photography and also ran and organized philanthropic and luxury holidays for a small but global private members travel network She has lived and worked in Beijing, HK, KL, London, New York and Singapore and spends her spare time exploring glaciers in Asia.
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Dharisha Mirando
Author: Dharisha Mirando
Dharisha Mirando hails from the finance industry and joined CWR as she believes that climate and water factors are downplayed by the sector despite being significant investment risks. To tackle this, her ambition is to help build consensus, bridge the gap between finance and science, and engage with investors to incorporate these risks into their due diligence and portfolio management. This could in turn lead to innovative Green Finance instruments becoming more prevalent. She has already made strong headway as the lead author of a recently published report with Manulife Asset Management and the Asia Investor Group on Climate change, which highlights the imminent threats to Asian asset owners' portfolios from climate and water risks. Dharisha has also undertaken a number of speaking engagements on these pressing issues at investor and insurance conferences. Prior to joining CWR, Dharisha worked for a long-only public equities fund. She has also worked in the impact investment space in London and Singapore where she provided technical assistance to social enterprises, helped them raise equity investments, and managed a debt portfolio.
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Dawn McGregor
Author: Dawn McGregor
Dawn leads CWR’s work to help corporates navigate increasingly disruptive & material risks from water & climate threats, as well as transitional risks in the supply chain arising from new regulations in China. Here, Dawn engages extensively with the global fashion industry delivering on-ground workshops in China to keynotes and strategic input at European HQs. She has written at length on the end of dirty and thirsty fast fashion and her report to overcome gaps between brands and manufacturers for a clean and circular future inspired the industry to create a new wastewater tool. Dawn also works closely with the property and tourism sectors where she not only conducts strategic assessments of their exposure but builds collective action toward resilience via closed door working groups and invite-only events. Having helped build CWR, Dawn is a frequent keynote, panellist & moderator at events, including being twice selected as the lead-rapporteur at World Water Week. Her articles are cited in various industry publications including the UN’s ‘World Without Water’. Dawn previously worked in a global investment bank assessing geo-political risk, crisis management and business resiliency. She was born and bred in Hong Kong and has lived in France, England, Singapore and Beijing.
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Woody Chan
Author: Woody Chan
Woody Chan leads corporate social responsibility and sustainability initiatives at foodpanda, strengthening its commitment to grow sustainably with its ecosystem of riders, merchants, and consumers. As an advocate for environmental sustainability, Woody has also participated in various speaking engagements, from TEDx talks and university seminars to industry forums and panels.
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