Did you know that informal sectors in APAC, employing over 60% of the workforce and generating 30-50% of emissions in key economies like India and Indonesia, remain invisible to formal ESG frameworks, blocking scalable net-zero progress? From street vendors and waste pickers to untracked SMEs and informal trucking, this “missing half” of the climate economy emits billions of tons of CO2 annually with zero policy leverage. Addressing it unlocks $200B+ in green jobs and resilient supply chains by 2030.
How are informal sectors driving APAC’s hidden emissions?
- SMEs and micro-enterprises: Over 70 million informal SMEs in APAC rely on diesel generators, coal stoves, and inefficient processes, contributing 20-40% of urban emissions. Without formal audits, they evade Scope 3 tracking, yet represent 50%+ of food, retail, and manufacturing value chains.
- Informal logistics networks: Motorcycle taxis, bicycle deliveries, and unregulated trucks handle 60-80% of last-mile transport in cities like Bangkok and Manila, burning cheap fossil fuels with zero electrification. Congested routes amplify fuel waste by 25-50%.
- Waste pickers and recycling chains: 10-20 million informal workers recover 20% of global recyclables but burn plastics openly or use polluting sorting methods, releasing methane and toxins equivalent to 5-10% of regional waste emissions.
Why do formal ESG strategies ignore this reality?
Formal ESG focuses on tier-1 suppliers and certified giants, overlooking 80% of APAC’s economy where data gaps and weak enforcement hide emissions. Policies like carbon taxes bypass informal actors lacking IDs or bank accounts, while tech platforms exclude non-digital players. Result: 90% of decarbonization investments target the visible 20%, leaving systemic risks unaddressed and greenwashing unchecked.
How can we build scalable transition pathways for informal decarbonization?
- Map and incentivize via inclusive baselines: Partner with NGOs and apps like India’s Garjana to GPS-track informal hotspots, prioritizing high-impact areas like waste (30% of emissions) with simplified GHG tools adapted for low-literacy users.
- Deploy micro-tech and peer networks: Distribute solar kits, electric bike swaps, and biogas stoves through cooperatives; platforms like Gojek’s informal driver programs cut emissions 40% via EV incentives and route AI.
- Finance and certify bottom-up: Launch micro-green bonds and carbon credits for verified transitions (e.g., Plastic Bank’s waste picker model), tied to emerging standards like APAC’s informal SBTi equivalents for market access.
- Policy bridges with governments: Advocate blended mandates, subsidies for clean fuel switches, digital IDs for ESG inclusion, and public procurement favoring green informal suppliers to scale nationally.
Strategy&Ops supports APAC organisations decarbonizing informality through inclusive audits, SME tech pilots, and policy roadmaps. Our expertise bridges formal-informal divides, delivering measurable emissions cuts and equitable growth.
The era of elite ESG is over. Is your APAC climate strategy ready for the informal majority? Reach out to our team at info@strategyandops.net.
#DecarbonizingInformality #APACClimateEconomy #InformalESG #GreenSMEs #WastePickerTransition
References
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Frontiers in Environmental Science (2025) [Article on environmental science]. Available at: https://www.frontiersin.org/journals/environmental-science/articles/10.3389/fenvs.2025.1645194/full
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