5 Trends For 2021: The Year of the Ox

By Debra Tan, Dharisha Mirando, Dawn McGregor 25 February, 2021

Will we embrace the strength, hardwork & diligence of the Ox for better planet or remain stubborn 'old' cows? Find out in our 5 trends

The Ox should provide much needed support for re-building after a very disaster filled Rat year. To return to order and stability, we must make better decisions - embrace the transition to a zero-carbon future + have “no-regret” adaptation strategies
But still no herd mentality on carbon neutrality; so Central banks will continue to lead the way and ensure water risks are being assessed so that we adapt for inevitable impacts
China’s prioritisation of environmental targets will continue by both reducing carbon and adapting to ensure a “Safe China”

Finally, we can all breathe a sigh of relief as we enter the Year of the Ox. Known for its strength, hardwork and diligence, the Ox should provide much needed support for re-building after a very disaster filled and disease dominant Rat year. The strong Ox also emanates stable and solid traits – rather boring sounding – but after 2020, boring, stable and solid sounds wonderful.

Pre-COVID lifestyles are a luxury of the past…


…our planet’s imminent baked-in climate impacts demand deep changes

But this doesn’t mean that life will ever be the same again. For those of you resistant to change and still hanging on to “it will get back to normal” – don’t. Pre-COVID lifestyles are a luxury of the past. Even when we get over COVID-19, our planet’s resource limitations and imminent baked-in climate impacts (most of which will manifest as/due to ‘water’ – drought/drought induced fires, floods, rain/snow/hail storms, glacier bursts, sea level rise, storm surge or wet bulb temperatures), demand deep changes.

As we said last year: “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”. For better or worse, the ever-multiplying Rat has facilitated the global spread of virus unleashing deep disruption upon us; forcing us to adapt and innovate – it didn’t ask us if we were ready, it brutally ushered in a new norm. The Ox as the next animal in the Chinese Zodiac, it simply dutifully ploughs on to stabilize/execute the scurried plans made in the Rat year.

But the downfall of the strong Ox is that it’s also stubborn; “old cows” that are resistant to change may lurk. So, can the Year of the Ox morph these stubborn old cows into raging bulls for a better planet? Or will we remain mired in bullshit, never to surface from the bog of fake news?

These paths could not be more divergent, yet both likely in 2021 due to the dual circulation/tracking that has emerged in 2020. But before we layout the roadmap to avoid the pitfalls of a load of bull to an Ox-picous 2021, let’s take a look at how we fared with our trend predictions in the Year of the Rat …

What we said last year…

To recap, we said that the Rat’s innate nature to survive meant that we’d smell a rat and take drastic action to survive water and climate threats ahead. The Rat favoured “bold decisions” and so we recommended these across the board – specifically building financial resilience as well as striving for development and business unusual.

Interestingly, with hindsight, countries that made bold lockdown decisions to shield their people from the virus fared better in 2020; China even managed a 2.3% GDP growth. Vietnam did the same with hard lockdowns driving infections down and GDP up by 2.9%. Bold moves pay off.

We did warn disruptions ahead will be deep & some C-suites will be caught off guard…

We did warn: “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.”  As the outbreak became a pandemic, hundreds of thousands of people around the world lost their jobs as some industries flailed – aviation ground to near standstill, dirty thirsty fashion went bust and oil prices even ventured into negative territory.  Meanwhile others sprouted with the rise of virtual meetings, webinars, universities, school and even gym classes.

When we cautioned “With the shocking emissions of our digital lifestyle, we must examine our own online habits” – little did we know how relevant our advice would be as we all spent more time at home and online; Netflix thrived. Incidentally, we did specifically highlight all these sectors in last year’s 5 trends as ripe for disruption; plus, we did say those that are greenwashing will be ratted out!

2020 was a seminal year for climate change with lots of physical disasters…


…such as the most widespread Yangtze River Basin floods since 1998, which caused US$35bn of economic damage

While 2020 is the year we wished never happened, it was a seminal year for climate change. Physical disasters (and there were lots) butted for headlines with COVID – the most widespread Yangtze River Basin floods since 1998 caused US$35 billion of economic damage in China’s monsoon season; Vietnam also endured several storm landfalls which resulted in more than US$1bn in collective flood and wind-related impacts; and the US$15bn in economic damage from cyclone Amphan was the costliest North Indian cyclone in modern records. 2020 was also the 2nd hottest year so far and there was a slew of grim research from the polar regions which pointed to accelerated sea level rise.

But beyond the doom and gloom, many cities across the world also saw crystal  clear blue skies during lockdowns and the “return of nature” when wild animals started to roam city streets. For the first time, we actually saw what is possible if we just all stopped all human activity – we saw the possibility of a better world.

It was an aha moment for many – we are the cause of climate change, so we can fix it. A build back better movement around a more sustainable, responsible and circular future was spawned. On the bright side, the COVID lockdowns afforded us the time to dream and re-imagine our shared future.

Asia found its voice as the continent’s three largest committed to carbon neutrality in 2020 – Cowabunga indeed!

More importantly, we said that Asia would turn from “Danger to Mighty Mouse” and “find its voice” as it had no choice but to deal with its urgent climate challenges. And rise it did … the continent’s three largest committed to carbon neutrality in 2020. China kicked it off last September, with a policy statement of net zero emissions by 2060; if this is delivered China will shave off around 0.2 to 0.3°C from our current climate path of 2.1ºC-3.9ºC. South Korea and Japan followed suit in October, both targeting net zero emissions by 2050. Cowabunga indeed!

China’s pledge came as a surprise to many, but we were not one of those – we did say “Despite the virus & slowdown, China’s resolute on an eco-civilisation and will tai-chi there”.

What did surprise us was the timing, but COVID did bring about a once in lifetime opportunity to “deploy aggressive action and bold innovations to usher out no-sense strategies”. Like we said last year – 福鼠临门 – which roughly translates to fortuitous rat arrives at your door, but how you tap its luck is down to you.

BTW, we did worry that the Rat could see Trump re-elected, but Rat’s push toward a new norm for planetary survival over-rode that. Naturally, we are pleased to see Biden eke in the US’s carbon commitments at the tail end of the Rat Year.

Finally, we said that “banks are doing a Mickey Mouse job of evaluating exposure so regulators will step in to avoid systemic shocks”. And so they did – the membership of the NGFS has ballooned to 83 today; and as we write it is still growing.

The game’s afoot – a credit evolution to ensure financial resilience is inevitable as “Black Death looms if the financial industry doesn’t clean up its act”.

Beware, sovereign ratings could see also downward pressure if they do not protect cities and economic hubs – see which sovereigns in APAC here.

With insurers expected to retreat from coastal New Zealand from as early as 2030 and Bloomberg is chiding property developers in HK for betting on low-lying areas, you know it’s time to give a rat’s arse about water risks!

Oh and those ESG winds which have started gusting, are not going to stop; they are only getting louder as the sector outperformed in 2020 – according to Fidelity, stocks with the lowest ratings lost 23 per cent in the nine months to September while those with the top ratings saw a positive return of 0.4%.

This has led to a boom in ESG funds – governments, corporations and other groups raised a record $490 billion last year selling green, social and sustainability bonds. A further $347 billion poured into ESG-focused investment funds—an all-time high. Better start prepping your vocab for ESG now!

Like COVID, water risks can happen in a flash so it’s best to be prepared.

In the Year of the Ox there’s no point crying over the spilt milk of 2020. Instead, beef up with our guide to avoid stubborn old cows and a load of bull so that you can charge steadfastly toward a bullish and Ox-picous 2021.

Here are our 5 trends for the Year of the Ox…

1. The inevitable rise of Ox-ternative cash cows

The chance to reset our lifestyles as well as the corporate and development agenda is finally here. COVID-19 changed life as we knew it and put the climate crisis back on the top of the agenda. A year on, we are still battling the pandemic, but we have also adapted; we have different ways, what and how we consume are different – we have moo-tated (sorry, we couldn’t resist).

COVID-19 gives us the chance to reset our lifestyles as well as the corporate & development agenda…

…to embrace the transition to a zero-carbon future

Since this metamorphosis was catalysed in the year of the Rat, this ‘grand change’ will apparently continue for the rest of the 12-year zodiac cycle. According to fortune tellers, the hardworking and the patient nature of the Ox will ensure a rich “harvest” and significant achievements, as long as we don’t allow ourselves to be carried away by “excessive stubbornness”.

Given this, embrace the transition to a zero-carbon future and channel the illustrious Ox to nurture prevailing moo-tations into bona fide new cash cows. Also, let’s not forget that an 8oz steak requires 17 bathtubs of water to produce. So, think BIG because that’s the scale of innovations we will need when working out solutions with ever scarce water resources.

Skimming low hanging fruits is obvious but with deep disruption, should we be reaching for the cream of high hanging fruits? The time has come to ditch the old ways of doing things – we are travelling much less, be it flying or driving – can we stick to this post-COVID? As airplanes are mothballed, expect that travel, especially business travel will not return to pre-pandemic levels.

It’s time to ditch the old ways of doing things from travel, the way we work to education…

The way we work, and offices will change, remote office/WFH could leave swathes of offices empty, but this may not be a bad thing as it could push landlords to rethink the purpose of buildings, retrofit for energy efficiency and shore up resilience against physical threats. Education is also evolving to better cater to future needs; even international students are beginning to question the carbon intensive but lucrative foreign student market.

Our intern (an international student himself) calculated that just one round-trip to London emits 2.82 tonnes of CO2e, which is equivalent to a third of the annual energy consumption of a US household. He also calculated this against online education this year (due to the pandemic) and found that 2.73 tonnes CO2e was saved – 1 academic year on Zoom produced only 0.09 tonnes CO2e.  Why are we talking about this? Or about the fact that fashion’s frolicking in oil? Synthetic fibres – a plastic derived from oil – account for 65% of fibres used by fashion and don’t forget the 85 billion plastic hangers going to landfill.

COVID also highlighted our dependence on global supply chains and since they are already uprooted, should we rethink them? Take fashion, which essentially broke during the pandemic  – 20+ household fashion companies filed for bankruptcy – from J.C. Penney, Brooks Brothers to Neiman Marcus. Now, to reduce exposure, some companies are looking to source more locally, which not only provides a more secure supply but also cuts down on emissions. We also expect to see more action on fast tracking to circular models, which are less resource intensive and wasteful.

But if we are going to spend more time at home in our PJs why not just leapfrog to virtual fashion? Will we even really need (that many) clothes if we are using avatars? You may laugh but avatars are already widely used in gaming etc. and there is a fashion model avatar, Shudu, who has her own Instagram account with 130,000+ followers.

If we go virtual it’s not just fashion that will be impacted, many other sectors will be too – shopping malls and cosmetics may eventually become obsolete.

Too far out? Remember we are charting our new future.

… Agri & food sectors are also trying to cut their resource use, GHG emissions, waste & plastic packaging; plus investing in alt-protein

Agriculture and food sectors too are going through a renaissance with efforts to cut their significant resource use, GHG emissions, waste and plastic packaging. And lest we forget, we are also feeding ourselves thirsty. Animal protein, primarily beef and pork, are the big emitters (plus water-intensive to produce) so consumers and investors are piling into alt-protein.

With Singapore approving the first lab grown chicken for public consumption last year, there’s now an Impossibly wide range of ox-ternative proteins that’s Beyond meat. Singapore’s push for 30 by 30 (30% of food sourced locally by 2030) should definitely give Asia agritech a boost – expect moo-tations galore including cowless milk plus funds to match.

So, fear not and be brave in 2021 – you have to cast out the old stubborn cows to make room for new cash cows. Sure, it’s going to be difficult as we will have to ‘unlearn things’ and accept new norms, but the Ox should give you the strength to plough through.

But we need to be careful that indeed our new habits are good for the climate & do our best with those that aren’t

But we need to be careful that indeed our new habits are good for the climate and do our best with those that aren’t – like the 1.56 billion face masks that entered the ocean in 2020. Plus don’t moo-around with those greenwashing, the conscientious nature of the Ox means that cock and bull stories will be called out.

Milking attractive cash cows ahead will require stamina and firepower to pursue – it takes a village and so we expect post-COVID entrepreneurs/dreamers to team up with large institutional funds, tech platforms, even GLCs. Also let’s not forget tycoons – as Asia pulls ahead on COVID recovery, they will actively look to throw capital and bet on ox-picious ox-ternatives to ensure wealth for generations to come.

2. Holy Cow it’s bad! Central banks will steer us back to safety in the stable Ox

When it comes to climate change, finance and corporates have traditionally focussed on assessing carbon transition risks. Actions on assessing the impacts on physical risks has so far been as mild as milk. But in the Ox year, it is time to step up because, holy cow, water risk impacts can be seismic.

US$4.3trn of GDP along 10 rivers in Asia and US$5.7trn of GDP from just 20 APAC cities at risk from chronic fresh and saltwater threats

In Asia, chronic fresh and salt water threats pervade. Mismanagement of freshwater from 10 river basins (which are already feeling climate impacts from accelerated glacier melt, less snow and changing monsoon patterns) could impact $4.3trn of GDP generated in 16 countries across Asia. Just 20 APAC cities from Auckland to Tokyo could see $5.7trn of GDP affected from coastal threats of rising seas and storm surge – for exposure by basin and by city see graphic here.

This means that there is a possibility of stranding GDP equivalent to the combined GDP of France and the UK, yet such concentrated risks have yet to be accounted for by banks.

Central banks are starting to panic over these very financially material & clustered risks…

Yes, central banks are starting to panic over these very financially material and clustered risks due to the concentration of assets in locations vulnerable to water and climate risks. Sector spreads are not going to lower risks when we could lose 20 out of 23 ports by 2100; worse still because they carry ~25% of global trade volume. At these levels, no bank will be immune, plus there are energy and food security implications.

Triggers of systemic shocks from underlying and under-unassessed (and thus under-valued) chronic water risks are aplenty. And we haven’t even talked about impacts of acute events. Here, Moody’s finds that climate-related hazard events impact firm valuations – impacts can be as large as 2.9% over the first ten weeks post-event”. Panic indeed.

…Luckily NGFS is growing & US Fed just joined the gang

Luckily, we have wandered into the Year of the Ox which penchant for stability will mean more and more central banks and financial regulators are joining NGFS (Central Banks and Supervisors Network for Greening the Financial System), to collaborate on environmental and climate risk management. Right now, NGFS has 83 members and 13 observers – but this grows every day. In December, even the US Fed joined the gang, not wanting to be left out anymore – so hopefully we’ll see more good things from the US under Biden.

There are positive omens. Previously, the space was as exciting as watching grass grow but then in 2019, NGFS sprouted three reports/guides (excluding its annual report) on how to incorporate these risks into prudential regulation or case studies on action being taken. In 2020, they churned out nine reports! This tripling of reports portends more actions from central banks.

Some of them have already started – in December 2020 the Monetary Authority of Singapore published three Guidelines on Environmental Risk Management for banks, asset managers and insurers to ensure they integrate governance, risk management and disclosure of environmental risks into their risk management frameworks. FIs have 18 months to implement this.

Stress testing FI portfolios for water risks has already started

Others such as the HKMA, Bank of England and Bank of France, have asked financial institutions (FI) to stress test their portfolios for both physical and transitional scenarios. The results aren’t going to be pretty – imagine writing down the terminal value of 22 Singapores worth of real estate which could be underwater by 2100 from just 20 APAC capitals and cities – surely this should lead to the shoring up of capital adequacy requirements as well as tail risk re-calibrations to ensure financial resilience.

With regulators channelling the “conservative bull”, all FIs will have to wake up to the reality that their full of bull or non-existent analysis on water and climate risks will no longer be tolerated. Clearly waking up sooner is better than later for getting ahead of the cattle class and already some FIs have started assessing acute physical risks (floods, typhoons etc) but barely any are looking at chronic risks (sea level rise, changes in weather patterns etc) even though these will have a huge impact on valuations.

In the Chinese horoscope, you can always depend on the Ox – its reliable and solid. So, in its year, you have to ensure your books are properly balanced; don’t get caught out … make sure you aren’t left with assets that no one wants – indeed we are seeing some off-load their coastal assets now.

Don’t take our word for it – according to Mark CarneyChanges in climate policies, new technologies and growing physical risks will prompt reassessments of the values of virtually every financial asset”.

Take the time to roll up your sleeves and get cracking on assessing water risks because we can talk about the risks until the cows come home but nothing changes until FIs act and pretty soon you won’t have a choice.

3. No time for Bullshit – prioritize ploughing through clustered water & climate risks

Water and water-related climate risks are complex, interlinked and undervalued. Unlike carbon risks, they are not fungible as water risks are specific to a location. Understanding geographical exposure is not a new fad – annual reports demand geographical split of revenue – it is enshrined in Note 1 of all financial statements.

Unlike carbon risks, water risks are geographical & clustered yet granular geo-spatial analyses of such risks has been slow

Yet despite significant clustered exposure to water and climate risks that could trigger financial collapse, granular geo-spatial analyses of such risks have not been carried out. Reasons often given are: “we are focused on carbon risks first, then impacts later”; “assessing water risks is just too much work”; “we don’t have the time/ resources”; “don’t really know how to value the risks” and “anyway, how do we know these risks will hit for sure.”

They sound valid but ultimately all bullshit reasons when it comes down to managing risks, which lest we forget is the reason why FI’s, PM’s and so on get paid big bucks. Their laziness and mis-cowculations could put us all out to pasture, yes, all of us as they manage our pensions and savings too.

We will likely reach 1.5ºC by 2030 so we are way-off our carbon targets. With impacts already being felt surely we should also be prioritizing impact assessments?…

Too harsh? Let’s start with “we are focused on carbon risks first then impacts later”. Valuing carbon transition risks are important and reducing carbon will alleviate impacts so this is sensible right? While this made sense before, we will now likely reach 1.5ºC by 2030. We are way-off our carbon targets: by 70 years to be exact; given this, surely we should be urgently prioritizing impact assessments?


‘Adapt to survive’ is a well-known mantra yet we stubbornly cling to carbon-first-water-later; the time for that has past – we must cast this stubbornness aside if we are to survive. Water risks are not magically going to disappear; they are only rising.

Worse still ignoring large chunks of chronic risks of water scarcity and sea level rise have resulted in a negative finance feedback loop (see diagram).

We are still driving capital to flow to already water stressed river basins/vulnerable coastal regions, which only adds to already concentrated financial risk exposure.

Meanwhile, investments also continue in carbon-intensive industries which only serve to amplify and accelerate impacts in vulnerable areas.

This strategy is clearly “udderly” stupid – it’s time to properly account for all risks – not just carbon, which brings us to the next set of ‘full of bull’ excuses – “assessing water risks is just too much work”; “we don’t have the time/ resources”; and “don’t really know how to value the risks”…

There is so much at stake – in The Year of the Ox, those that work hard will get rewarded…

…Good news is you don’t have to start from scratch…

Just because it’s not easy should never be an excuse when there is so much at stake. In the Year of the Ox, those that work hard will get rewarded so if anything, this is the year to put in considerable effort on this front. Besides, you do not have to start from scratch – all sorts of tools currently exist on assessing water risks already. You can use WRI’s Aqueduct tool for water risks, CDP’s company and city scores, and Four Twenty Seven’s physical risk maps – not all are free but there are plenty of choices.

And now for the bad news… while many tools assess certain types of water risks none of them will provide you with a comprehensive assessment. We wish we could tell you that you could press a button on the Bloomberg terminal and your water risk scores will magically appear; well it doesn’t exist; at least not yet. Indeed, a recent report just out by UNEP FI says existing tools and methodologies do not properly capture the knock-on effects of climate risk.

…however, you will need to carry out an asset-by-asset analysis for different types of water risks

We have been lulled into a one-size-fits all fungible carbon assessment solution; this will not work for water risks. So don’t hold out for it.

You will need to carry out an asset-by-asset analysis for different types of water risks – more on this here. As DWS says, we need a “transformational framework” for water risk, their Francesco Curto, Michael Lewis and Murray Birt share more on this framework and key findings from their latest report.

Chronic risks are also being assessed: We developed the CWR APACTT 20 Index to benchmark coastal threats across APAC to inform regional capital allocation

There’s a lot to do but please don’t be cowed. The good news is that efforts have been made in recent years to assess the chronic aspect of water risks, not just by us but also by BlackRock, DNB, Fitch, and Moody’s. On our side, we have benchmarked coastal threats across APAC to inform regional capital allocation as well as to catalyse government decarbonization/adaptation actions with the CWR APACCT 20 Index; replete with to-do lists/questions. We have also unpacked basin risks as well as built consensus on methodologies for sectoral water risk. If it’s all too much, contact us and we can see what we can do to help.

And for the doubters who say “how do we know these risks will hit for sure?” – this is precisely why it’s called “scenario” stress tests, duh…

…& some central banks & regulators are already demanding it

And for the doubters who say “how do we know these risks will hit for sure?” – on the surface, this sounds like a fair winge because who wants to put in all that painstaking work when climate events may or may not hit? But we have major beef with this because it misses the blindingly obvious point – that this is precisely why it’s called “scenario” stress tests, duh.

Anyway, whether or not you perform physical/transition water risk scenario analysis and stress testing may not be down to you anymore as some central banks and regulators are already demanding it. Physical risks have also been included in the TCFD framework but no one has done a good job of it so far.

But this may start to change soon as smart FIs try to get ahead of the winds of change. Already the EBRD, Standard Chartered, Rabobank, Rockefeller Capital Management, and YES Bank have said they will issue climate-related physical risk disclosures by the end of 2021. Plus ABN Amro, AXA XL, Danske Bank, ING, and LINK REIT have promised to do this by 2023. All good omens and we are eagerly waiting for the outcome with bated breath. Given the levels of red, we hope they’re not vague but comprehensive.

It ain’t safe until downside scenarios are tested, tail risks recalibrated & systems made safe

In short, we can moo about risks until the cows come home, but it ain’t safe until downside scenarios are tested, tail risks recalibrated and systems made safe. All this hardwork in the Ox Year will be worth it because not only will your portfolio/assets/operations be protected against water risks, but the opportunities also become much clearer, carbon intensive industries less lucrative and previously un-bankable adaptation projects more attractive.

Chewing the cud over water risks in favour of carbon transition risks are over…

…properly pricing chronic risks will lead to the revaluation of assets

The days of chewing the cud over water risks in favour of carbon transition risks are over. Properly pricing in chronic risks will lead to the revaluation of huge chunks of assets. Like we said before, when the lack of water/ rising seas strand your assets, the terminal value (which is at least half the asset value) comes into question. And once the terminal value is questioned, it is very hard to maintain current asset values. It doesn’t matter that the event is decades away by 2100, an asset with a 70 year life never holds the same value as a freehold asset. This is finance 101.

The reality is that in ensuring a stable financial system that can withstand shocks, financial regulators will have to push FIs to properly price assets so regulations will likely wipe out asset value ahead of the physical event itself.

In light of this, don’t be a cow; be accowntable – this is not just about doing the right thing for the planet or being ethical, but actually doing the right thing to protect the bottom line.

The stakes are high – do not become roast beef, knuckle down to water risk assessments and hoof it for the triple win. Still not convinced? See our 8 reasons why you should channel the hardworking ox rather than a lazy cow.

4. China reset – no longer a bull in a China shop but raging bull on all things beautiful

When it comes to China, many are seeing red; but on restoring its environment, it is definitely still leaping forward to blue skies, green pastures and clear waters. China’s greening has reached a new level – where the economy is now planned around regional ecological carrying capacities; it is on its way to building an ecological civilisation.

The ‘New China’ has deprioritized GDP in favour of environmental targets

While many are stuck on an older version of China, this ‘New China’ is no longer charging around like a bull in a China shop, pursuing growth at all costs, but has deprioritized GDP in favour of environmental targets – it is carefully and methodically planning (like the Ox) a “beautiful” future. Despite setbacks from COVID and Trump, we said last year that they will tai-chi there with multiple pilots and in this Ox year, they will build on past plans made and stoically plod on.

This ecological civilisation path (enshrined in China’s constitution), is not new. The steering toward this path started in the 2011 with the 7 new ‘Strategic Emerging Industries’ in the 12FYP.

Game changing policies were set way back when. The 14FYP brings China to the ‘next phase’. The 14FYP is a milestone between China’s two 100-year targets; it’s not only for the next 5 years, but 15 years till 2035. Now that ecological boundaries are set, expect all targets to be set through an ecological viewpoint.

And let’s face it, when China sets targets, it pretty much always hits the bullseye. Hear what our advisors Professor Asit K Biswas and Dr. Cecilia Tortajada have to say on hitting environment targets

It is important to understand that ecological civilisation is not greenwashing campaign. China is doing this because it has no choice; it understands its resource constraints.

Indeed, structural changes have been made to government ministries to facilitate this and multiple pilots implemented to innovate new ways forward.

On water alone, China spent CNY3.58 trillion in the 13FYP – up 57% from the 12FYP…

Trillions of yuan have also been spent – in water alone, China spent CNY3.58 trillion in the 13FYP 2016-2020 on water infrastructure and conservancy; up 57% from the 12FYP; and the 14FYP points to more.


…waternomics also saw a boost with China continuing with the green development of the YREB & efforts to protect Beijing’s upper watershed

Waternomics (the setting of economic policies based on watersheds and water management) also saw a boost with China continuing with the green development of the YREB and the efforts to protect Beijing’s upper watershed. At the risk of sounding repetitive, its plans for the Yellow River in the 14FYP re-affirms China’s commitment to shift beyond traditional water management towards a waternomics approach where economic planning is based on the ecological carrying capacity as well as the boundary of the watershed.

This waternomics approach to economic planning and watershed management is here to stay and has even garnered fans from India which also suffers from limited water for development. This holistic resource allocation based on environmental capacity should also receive a boost from the introduction of property trading rights across all natural resources in China.

Make no mistake; this new China is not the same as old China. The new China has fully embraced climate change with its commitment to carbon neutrality; building new ecological cities like Xiong’an and shoring up coastal protection in key coastal hubs such as the lucrative Yangtze River Delta and Greater Bay Areas – Guangzhou, Shenzhen, Shanghai and Suzhou have made sizeable efforts compared to other APAC cities. BTW, seawalls are included in FYPs and even development plans have chapters on ecological targets/aspirations.

The grand vision here is building a “Safe China” – expect more on flood control, climate adaptation, hydraulic infrastructures & disaster insurance

The grand vision here is building a “Safe China” – so expect more on flood control, climate change adaptation, key hydraulic infrastructures as well as disaster insurance in the Ox Year. All these should bode well as they reflect the conservative and solid nature of the Ox. Also, as buffaloes love to wallow in water, more action on ocean protection and ocean economy protection is also on the cards in the 14FYP.

There is a Chinese saying 九牛二虎之力 … which roughly translates to ‘the force of 9 cows & 2 tigers’ implying great strength and all-out great efforts. Indeed, we expect the new China to apply ‘the force of 9 cows & 2 tigers’ to deliver the 2060 net zero target and protect China from climate impacts.

The Party Central Committee & State Council publicly reprimanded the all-powerful NEA of sabotaging top enviro agenda…

For the doubters that don’t believe environment is at the top of the agenda, the Party Central Committee and State Council publicly reprimanded the all-powerful NEA in January 2021. It issued a scathing report on the energy regulator’s sabotage of the top environmental agenda; old China would have never done that. Phew! China’s still going green.

To give you an idea of what’s in the report, chinadialogue translated the inspectors’ words as “The NEA’s misguided thinking that ensuring energy supply is more important than protecting the environment and that other departments and local governments are responsible for imbalances in energy planning is the main reason behind the unbridled development of China’s energy sector in the past years”.

Some of the ‘multiple failings’ to reflect the top leadership’s environmental priorities in its policy-making include massive development of coal power capacity in key regions for air-pollution control and watered-down environmental requirements in the drafting of energy-related laws and regulations. The NEA has 30 working days to come up with a correction plan on problems identified by inspectors – so expect more aggressive coal cuts and accelerated green energy transition from China in the Ox Year.

…sending out a powerful signal – everything is up for change if it blocks ecological civilisation

With this, China is sending out a powerful signal – there are no scared cows – everything is up for change; especially if it blocks the path of ecological civilisation. But with little or no coverage of this in the international media, it is hard for others to see where China is really heading.

Here’s what you need to know in the Year of the Metal Ox when weighing economy vs environmental trade-offs … in China, the environment is the “golden cow” and to continue milking it, the cow needs to be healthy. So it will do whatever it takes (9 cows & 2 tigers) to not kill it.

New behaviour may make China unpredictable, but as we said before, pilots and policies may be tweaked and stubbornness to cling on to old ways may persist, but the overall direction is clear – it will keep ploughing forward to build a Beautiful China. We will ruminate over China’s 14FYP in next month’s newsletter so sign up!

With COVID in check, the Metal Ox should provide China with golden opportunities in the green economy. So while some countries will continue to lock horns, others will realise that waving a red flag in front of a bull will just result in a lot of running around. Instead try working with it … sure it’ll be hard work but you could plough yourself a plentiful harvest.

5. No herd mentality on carbon neutrality means we must kow-tow to no-regret adaptation strategies

Let’s face it, the Cow is NOT going to jump over the moon. We are just going to have to face some hard truths – as we pondered last April, “this pandemic has made it glaringly clear that we are really crap at managing something which is generally certain but specifically ambiguous. COVID-19 and climate change both fall into this category – we know it WILL happen but exactly WHEN and precisely the magnitude of the impact is ambiguous.”

The fact that we still haven’t managed to get COVID under control a year on when we knew it WILL happen is mind-boggling – we knew a pandemic was coming yet had no global plans in place. We fear that this will be the same for climate change, except losses to human lives and the economy will be exponentially worse than COVID. Nevertheless, we would happily cast it off into the abyss of someday faraway, hoping that if we ignore it, it will not happen; that’s just udderly irresponsible.

Like COVID, climate change needs collective action to resolve it…

Another hard truth is that like COVID, climate change needs collective action to resolve. All you need is irresponsible behaviour from governments or the public and you could risk another spike in infections. But the good news is that we know we can flatten the curve to near zero infections – we did this four times in HK in the last year.

…carbon neutrality pledges are a good start but now the hard work begins

Now more than ever, we need herd mentality on carbon emissions. The carbon neutrality pledges are a good start but now the hard work begins. We need to harness droves of ecopreneurs, patient and impatient capital, R&D spending, climate tech and so on to drive carbonomics. To them we say enough with the huffing and puffing at the starting line, we need a stampede to the finish line to deliver net zero on time.

But if our cow-terproductive response to the pandemic is anything to go by, we must also hedge our bets to ensure a stable future even if we don’t manage to rein in emissions on time. The conservative nature of the Ox demands we kow-tow to sense and sensibility – we must adapt to the risks ahead; and we must start now.

Adaptation cannot be an afterthought as climate risks cannot be reduced to zero.

Governments must integrate adaptation actions into policy thinking to catalyse robust economic development, say the World Bank’s Drs. Hallegatte, Rentschler & Rozenberg as they share with us six adaptation principles to follow for a resilient future. Adaptation cannot be an afterthought as climate risks cannot be reduced to zero.

The UN Adaptation Gap Report released in January 2021 says we are behind in adaptation: “such action is lagging far behind where it should be” and that “while nations have advanced in planning and implementation, huge gaps remain, particularly in finance for developing countries and bringing adaptation projects to the stage where they bring real reductions in climate risks.”

It urges “public and private finance for adaptation must be stepped up urgently, while faster implementation is required on adaptation projects.” We could not agree more, especially when there is so much at risk. Asia needs to charge ahead here as it is most vulnerable; and finance can be one of its secret weapons.

There is money to be made in adaptation: investng $1.8trn globally = $7.1trn in total net benefits!

Balancing lives and livelihoods is not easy as COVID has shown but there is also money to be made in adaptation – investing $1.8 trillion globally in five areas (early warning systems, new infrastructure, agriculture, mangroves & water) from 2020 to 2030 could generate $7.1 trillion in total net benefits. Now that’s not a bad return!

Singapore, too small to make a dent in carbon emissions is ensuring that it can survive.

Not only has it laid out no-regret adaptation plans to protect critical infrastructure against 5m of sea level rise, it has also embarked on a series of strategies to ensure a bullish future. See how Singapore is making business unusual the norm.

But it’s also about survival… Singapore is protecting critical infra against 5m of sea level rise

Indeed, kow-towing to common sense and leaning into the crisis can not only protect assets but also create new cash cows. Prudence therefore dictates that in the dual tracking/circulation world of today, where piecemeal efforts to rein in emissions prevail, it is best to prepare for a hard landing by building a safe harbour.

According to fortune tellers, this is the year when we will fully feel the weight of our responsibilities, a year when it is necessary to double our efforts to accomplish anything at all. Given that the clock is ticking down fast, there is no time to be afraid – grab the bull by the horns and start making no-regret adaptation plans today.

While some are charging ahead like Singapore, others are plodding; as long as the herd is heading in the same direction, it’s all good.

Out with stubborn & mad cows, channel think-out-of-the-ox!

While the Rat has left us in disarray; the Ox will help us set the house straight. To return to order and stability, we must stay away from making udderly ridiculous and irresponsible decisions. Also, do not succumb to ‘lazy cow’ and the bovine madness of fake news (and there is a lot on climate change); instead, take time to diligently plough through the latest research yourself so you know which downside scenario to stress test.

We want certainty but we are all walking into an unknown – we know broadly, but not exactly how and when our planet is going to react to rising temperatures. In times like these, it is best to err on the side of caution and deploy no-regret strategies.

This is no time to be a cowboy, instead round up the herd and charge into protecting people and livelihoods from future crises. Resilience is not built in a day, and actions across sectors and stakeholders need to be coordinated as well as holistic, so use the methodical nature of the Ox to come up with sensible and solid plans.

But just because it is solid and sensible does not mean it can’t be exciting. COVID has presented us with a once-in-a-lifetime unicorn opportunity to morph toward business unusual, a new normal. The transition to a low carbon economy has started but can we turn it this into a raging bull market? Only time will tell.

We’ll likely reach 1.5ºC in 2030 – rushing headlong into a new frontier…

Regardless, life will not be the same again, especially since we’ll likely reach 1.5ºC in 2030, which is seventy years in advance of our intended target of 2100. We are rushing headlong into a new frontier whether we like it or not; we have to brace ourselves for impact – so don’t be stubborn, be ready.

…this will break but also create – so grab the bull by the horns and make business unusual the new norm!

New frontiers will bring new fortunes and since the horns of the Ox resembles the hat of 財神 Chinese God of Fortune, in this Ox year, grab the bull by the horns and make business unusual the new norm. There’s no room for cow-ards and old cows in this brave new world … to milk it, fortunes favour those who think-out-of-the-Ox!

Now armed with this mantra, go be Oxpicious!

Happy lunar new year!

Further Reading


More on Latest

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.
Read more from Debra Tan →
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.
Read more from Dharisha Mirando →
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.
Read more from Dawn McGregor →