Lack of sustainability practices to become increasingly costly for businesses
Mindy Tan
HAVING sustainable practices in place will be increasingly important as the deadline for the European Union’s Carbon Border Adjustment Mechanism (CBAM) draws nearer, with one in five Asean exports to the EU expected to be impacted.
The CBAM, which aims to harmonise the EU’s domestic carbon pricing policy with that of imports, will see the bloc impose extra taxes on imports that fail to meet its climate standards. It will be introduced in 2023 and become operational in 2026.
In his opening speech, Wee Ee Cheong, deputy chairman and CEO of UOB, noted that this move “will have a big impact on Asean’s manufacturing economies, which export to the EU”.
“Businesses in the region will have to grapple with these changing demands,” he said.
Wee was speaking at the Gateway to Asean conference, which was held at Marina Bay Sands Expo and Convention Centre on Thursday (Oct 13). The conference featured discussions on cross-border connectivity in the region, and how companies need to adopt digitalisation and sustainable practices in their financial supply chain management.
Andrew Varona, supply chain director at Unilever, noted that it is increasingly embracing sustainability as a way to mitigate risks and manage costs.
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Speaking on a panel, Varona noted that the consumer goods company had even found ways to reduce costs when switching from conventional packaging to more sustainable packaging.
Meanwhile, fellow panellist Christopher Ong, managing director at DHL Express Singapore, quipped that when DHL Group announced in 2017 that it intended to reduce its greenhouse gas emissions to net-zero by 2050, all he could think of was that they had the world’s largest fleet of cargo planes.
But DHL has since inked deals for sustainable aviation fuel and in Singapore, they have a total of 90 electric vans, making them the first logistics provider in Singapore to transition to a commercial EV fleet of this scale through its partnership with ComfortDelGro.
“A lot of people think sustainability is a cost,” said Ong. “(But) there are a lot of opportunities. Once you start looking at the numbers – you can’t manage what you can’t measure – once people get a good handle on their carbon footprint ... you’d be surprised at where you can find opportunities to not only save costs, but also burnish your reputation as a sustainable company.”
Separately, UOB launched its UOB Sustainability Compass, which provides a step-by-step guide for small and medium-sized enterprises to kickstart their sustainability journeys. The tool provides businesses with customised reports based on their sectors and sustainability readiness. It also educates businesses on regulations, standards and certifications that impact their sectors. They will also be advised on recommended sustainable financing solutions to kickstart their sustainability initiatives.
The tool will be available to businesses in Malaysia, Thailand and Indonesia from 2023 onwards.
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