Good for the planet, good for business

THIS WEEK'S TOPIC: What challenges - and opportunities - are there for businesses as they decarbonise their operations?

Lawrence Loh Director, Centre for Governance and Sustainability NUS Business School

It is all too fashionable now for businesses to declare a net-zero carbon emissions target and put it in for a long time: say 30 years later in 2050. Yet, there are key challenges to be faced - the 4 Cs: cost, customer, change and commitment. First, it is about cost escalation - decarbonisation may lead to higher costs including production or carbon taxes or credits purchases. Second, customer acceptance must be considered - do the customers really care? Third, carbon neutrality is change management - it has to be mainstreamed across the entire organisation, including the policies and processes. Fourth, it is the commitment journey - the company must have clear and definitive decarbonisation milestones to be achieved and verified.

Sebastian Mueller COO and Co-founder Ming Labs

Organisations that are serious about their future will have no choice but to embark on their sustainability transformation. And they need to start as early as possible to reap the potential rewards. In that sense, sustainability is the new digital. It has become the paradigm that will drive behaviour over the coming decades and will determine how well (or not) organisations will do.

Businesses that get ahead of the coming ''burning platform'' situation that forces transformation will have more leeway in creating their future. Cleantech, greentech, and the whole sustainability transformation will create trillions of dollars in business potential for those who are courageous enough to take the jump and seize it.

Patrick Lee Cluster CEO, Singapore and Asean Markets Standard Chartered Bank

The decarbonisation imperative is upon us. This presents both an opportunity in itself and one that pushes us to overcome challenges of addressing financial and technical gaps. By supporting the efficient movement of capital and technology to reduce carbon emissions as fast as possible, without slowing development, we can stand against climate change where it matters most. While we must act now, recognising that decarbonisation is not a sprint but a marathon, is key. And what we cannot decarbonise, we need to effectively compensate. For that, leveraging nature-based solutions in biodiversity-rich Asean, as well as participating in robust and transparent voluntary carbon markets, will be the need of the hour.

Victor Mills Chief Executive Singapore International Chamber of Commerce

The first challenge is not to be overwhelmed by the extent of what faces our species and planet. Not to delude ourselves that it is somebody else's responsibility to act, but realising that action starts with each of us, and each business. Accepting it will be a transition from fossil fuels to alternative sources of energy, and not ruling out nuclear energy to meet business and societal needs. The opportunities for problem-solving are legion. These will best be realised by academia, business, governments and countries collaborating to innovate. For that to happen, we need responsible leaders who know we are all the same species, and that we only have 1 home.

Anders Liss Country Manager Scania Singapore

The main challenges are time and investment. It is a complex process, and we know that decarbonisation will not happen overnight. But there can be a clear pathway ahead if a business commits strongly to the Science Based Targets initiative (SBTi)'s science-based targets, to take urgent action to reduce greenhouse gas emissions in line with the latest climate science.

For radical change to happen, we need to invest in innovation to accelerate the development of viable solutions to reinvent how a business operates, including how it designs, manufactures and distributes its products. The first movers in eco-innovation will stand out competitively in their sectors. It is a business opportunity, but it is also imperative for businesses to decarbonise and drive real change for future generations.

Hans-Christoph Hirt Head of EOS Federated Hermes

We have seen a discrepancy between the growing numbers of companies setting climate targets, with very few of them being science-based. According to the SBTi, science-based targets have cut corporate emissions by about 25 per cent over the past 5 years, hence their importance;a target with a credible pathway and interim targets is far more ideal for investors. From an asset management perspective, companies with SBTi approved targets are a leading indicator of credible decarbonisation, which is tough to predict. Hence, we recognise positively those companies that have SBTi-approved science-based targets, particularly in our low-carbon strategies.

Hrishi Olickel Co-founder and CTO Greywing

Decarbonising operations require companies to address 2 key challenges. First, on the technical front, the biggest issue is monitoring. Carbon costs involved in operations can change with each decision, making predictions and tracking difficult. That is why most reporting is done after-the-fact, and only on a quarterly or annual basis. Second, it is important to balance decarbonisation initiatives with potential business costs. It can be hard to identify where large improvements in carbon can be achieved with minimal impact on the bottom line or operational speed. Implementing the right digital solution could solve these issues and help decision-makers turn otherwise stagnant data into actionable intelligence within days or minutes.

Wong Kee Joo Chief Executive Officer HSBC Singapore

South-east Asian companies are developing environmental, social and governance (ESG) strategies due to a gamut of climate change challenges including operational impacts from extreme weather disruptions, increasing compliance costs to meet government policy, as well as consumer and employee pressure. However, companies can also turn these risks into a competitive advantage. To be truly sustainable, a firm will need to undertake a holistic review of their operations, culture, processes and controls, in order to fully understand the risks and vulnerabilities within their business. While this risk management is at the heart of building business resilience, this process can also lead to productivity improvements, prompt carbon-efficient product and service innovation, and drive competitor differentiation.

Chris Humphrey Executive Director EU-Asean Business Council

Decarbonising operations and greening supply chains is not an option. It is a must-do. But it is not something that companies can do by themselves, though they can take unilateral steps on energy efficiency as an initial step. Decarbonisation requires government intervention and support on areas such as energy transition away from high carbon-emitting fossil fuels for electricity generation to, eventually, renewable energy sources. It is an area where much of Asean is sadly slow at making changes: acceleration of the process to ensure continued attractiveness for foreign direct investment and further economic development is essential.

Josephine Ong MD, Asia-Pacific South Dassault Systemes

To decarbonise operations, businesses must make different choices, from reconsidering sourcing strategies, redesigning or retrofitting existing sites, to reimagining product design and production processes. Businesses will also need to invent new business models and adopt new technologies for a lower carbon future.

Businesses that are willing to invest in technology will be able to better calculate their carbon footprint. Virtual twin technology is key to helping industry design new sustainable products and solutions for the transition to a green economy. Virtual twins allow for simulations that remove the need for physical prototypes, improve product life cycle management and reduce waste and carbon emissions.

Leon Perera Chief Executive Officer Spire Research and Consulting

The immediate challenge, particularly for small and medium-sized enterprises (SMEs), is to develop systems to track companies' carbon footprint, reduce it and report it. Success will always elude you if you do not know what it looks like. But beyond that, companies ought to move faster to move their fleets and machinery to renewable energy. There are 2 underrated opportunities for the private sector in the decarbonisation journey. One is to find business opportunities in reducing methane emissions. Methane is a far more harmful greenhouse gas than carbon dioxide. One exciting frontier here is plant-based proteins. The second is to find business opportunities in biodiversity and natural habitat protection. We are surely very far away from fully understanding the complexity and richness of all existing plant and animal species, let alone extracting useful insights and innovations from the same.

Jeffery Tan Group General Counsel and Chief Sustainability Officer Jardine Cycle & Carriage

An important first step is for businesses to embrace the reality and cost impact of carbon to their operations. Hitherto, this has been insignificant and largely having no price tag attached to it.

In the blink of an eye, governments around the world will swiftly increase carbon prices and taxes as they focus on the global agenda of decarbonisation and climate change, fanned by the flames of desire to replenish governmental coffers that have been impacted by the pandemic. Businesses with large carbon footprints will experience the fiscal pain most intensely.

Those businesses that quickly recognise the opportunity (and consequential rewards) in changing their behaviour to rapidly decarbonise their operations will be the ones that remain competitive, improve profitability, be well placed to get ahead of this carbon challenge and enjoy the added bonus of meeting stakeholders' expectations.

Malavika Bambawale MD, Sustainability Solutions, Apac Engie Impact

Climate change is fundamentally disrupting lives and industries as we know it, and businesses that fail to grasp the magnitude of this change will fall behind. On the surface, the disruption by the shift towards ''green'' may seem like a huge burden, but there are opportunities for first movers to capitalise on green growth by transforming their value chains and business models. In the end, many opportunities that are good for the climate will also be good for business. As climate change continues to pose both a moral and financial risk, businesses must move from intent to action by developing a strategic and implementable road map to net zero, to be the true forces of change.

Seah Kian Peng Group CEO FairPrice Group

Reducing environmental impact must be a business imperative to address the mounting global sustainability concerns. This also requires a multifaceted approach, which includes operations assessment, financial investment, impact measurement, governance, as well as collaboration with strategic partners and consumers, among other prerogatives. At FairPrice we remain committed to reducing our environmental footprint and promoting sustainable production and consumption, while sourcing for products responsibly. We have put in place a sustainability framework that articulates our ambitions and priorities complementing the United Nations (UN)'s Sustainable Development Goals. We have also established a collective target to reduce our carbon footprint by 50 per cent by 2030.

Dennis Tan Chief Executive Officer Prudential Singapore

Businesses have an opportunity to shape our future through climate-positive strategies to secure global net-zero emissions by 2050. Life insurers, such as Prudential in particular, can make a huge difference because of the long-term assets that we hold. To this end, we are decarbonising our investment portfolio and integrating ESG considerations into our investment decisions. Recognising that countries are at different stages of development, we place importance on an inclusive transition, so we can achieve our net-zero commitments without adversely impacting the health of these economies. In ensuring that our investments are responsible, we can make the future safer and communities more resilient.

Ronnie Lee General Manager Lenovo Singapore

As businesses embark on a net-zero journey, there are many considerations which may appear challenging, be it from costing, scale-of-initiative, availability of technology, leadership or buy-in from employees. The need for businesses to embrace best ESG practices has grown significantly from internal and external stakeholders; it is vital then that there is strong commitment from the leadership team to align the objectives and communicate clear goals with a science-based approach to measure outcomes. Businesses can tap on the expertise that technology companies can bring to improve productivity while decarbonising, building a scalable foundation to cater to the dynamic situation. The road towards net zero will not be easy, but with clear goals, the right mindset, agility and strategic partners, true changes can happen.

Mark Smith Managing Director, Apac Digital Realty

The rapid shift to all things digital over the past year has underscored the importance of data centres as the backbone of our digital economy. Against this accelerated growth, building sustainable and energy-efficient data centres has become more urgent than ever.

In South-east Asia, the tropical climate can pose a challenge in meeting this requirement due to high cooling needs. However, operators can still capture sustainability gains, whether through energy-efficient data centre design, renewable energy sources, or carbon credits. This will continue to be imperative for them to balance digital growth with sustainability initiatives, to safeguard digital progress made thus far.

Terence Zou Founder and CEO Ryde

While it is good to encourage green investments and promote the use of clean energy, one unique struggle for smaller startups and SMEs, especially in the local context, is the lack of in-house expertise and understanding of carbon emissions - how to calculate and how to curtail it.

Sans this technical knowledge, a business cannot efficiently plan its decarbonisation strategy, nor pen its efforts into numbers that are easy for the public, employees, and stakeholders to comprehend.

The gap among environmental experts, business owners and everyday consumers is one that needs to be bridged. Of course, where there is a gap, there is an opportunity. This means that businesses - particularly tech startups perhaps - can create the technology to operationalise this in-house and signal the need for more freelance tech and eco consultants. Ultimately, this is to ensure that even smaller players can be part of the decarbonisation movement.

Andrea Debbane Chief Sustainability Officer Kuehne+Nagel

Visibility and reduction capability are major challenges to decarbonisation in the logistics industry. Many organisations do not have the data or tools to measure their carbon footprint, and acquiring new technologies and low-carbon and clean fuels is often a costly endeavour.

To overcome these challenges, Kuehne+Nagel is working closely with our customers, suppliers, and the ecosystem to provide businesses with greater transparency, and optimise our routings and services with lower carbon emission and clean fuel options. Through research and collaboration, we are fast-tracking innovation and providing customers with insights and alternatives to lower carbon emissions.

In doing so, we are unlocking carbon neutrality for our stakeholders, so that they can embrace new opportunities, maintain accountability and achieve a more sustainable future.

Victor Tan Chief Executive Officer Top International Holding

Decarbonisation of operations can be challenging for businesses. It is not just about the cost of transition while they redesign the current system, but also about how they are going to adapt to this change in their industry. For one, the capex in the technology and/or equipment is high. As the majority of businesses are not equipped for the decarbonisation of operations, they would lack the skills, knowledge, and technical know-how to make this happen.

The opportunities, however, are immense. There are environmental benefits to decarbonisation which can improve a company's reputation. The reduction of wastage and energy output, as well as increase in productivity, can result in positive impacts on the bottom line. When processes are optimised, the manpower can be upskilled and deployed to take on higher-value work.

Tang Kok Thye President Singapore Green Building Council (SGBC)

Decarbonisation has its own challenges. Due to lack of internal alignment, concrete data and a standardised accounting framework, businesses are having a hard time gaining headway and making breakthroughs in pushing the low-carbon agenda forward. With proper direction and setting more specific goals, decarbonisation creates and offers many viable and efficient business opportunities. It will also offer an avenue to attract and retain valuable talent, especially professionals with sustainability and carbon-centric skill sets.

Jimmy Yam Vice-President, East Asia Eaton

While decarbonisation is increasingly regarded as key to sustainable growth, the absence of strong economic incentives has discouraged businesses from incorporating alternative energy sources. Traditional electrical power infrastructures need to be upgraded, and the complexity of managing intermittent renewables can add to operational costs.

The good news is that advancements in power management technology, such as automation and energy storage, is making the energy transition a viable reality for more organisations. Businesses that invest in these technologies today stand to come out ahead in the low-carbon future - one where power is not only generated centrally but in a distributed power grid. Facilities known to be power guzzlers, such as data centres and commercial buildings, could generate and store their own power to optimise energy costs, lower emissions, improve resilience and reduce reliance on the grid.

Jessie Xia Managing Director, South-east Asia Thoughtworks

Sustainability has transformed from a concern that is good to have for companies, into a business imperative today. With tech increasingly becoming a core pillar of society and with the rapid shift towards cloud-driven business models, organisations must maintain oversight of how digital transformation and the move to cloud can impact the carbon footprint.

This requires boardrooms to have a deeper understanding of how to balance seamless, productive transformation with optimising cleaner, efficient resource and energy consumption throughout the digitalisation process - what has been coined the ''green cloud'' mindset.

Companies that adopt such environmentally conscious thinking can stand to gain bottom line savings, brand enhancement, and most importantly, create real-world positive impact.

Willson Deng Chairman, Singapore Manufacturing Consortium (Simco) CEO, Arcstone

While businesses are setting goals to reduce their carbon emission, many cannot meet their targets without support or strategic planning. For manufacturers, one way to achieve sustainability is through innovative tool sets that calculate the sustainability impact of each product produced. This way, full transparency on every level of the supply chain can be achieved, on top of solving traditional pain points by designing new products with suppliers that leverage real-time sustainability data from across the value chain. This would in turn increase responsible manufacturing, allowing businesses to raise energy efficiency levels, reduce costs and consume fewer resources. It is hard to improve what you cannot measure, but through supply chain manufacturing transparency, we can leverage data to make things better and greener.

Joe Ong V-P and GM, Asean Hitachi Vantara

To help achieve a decarbonised society is part of Hitachi's environmental vision. As the IT subsidiary, Hitachi Vantara promotes digital solutions, develops smart data centres, offers energy-saving storage and smart city solutions. Technology plays a key role in reducing the carbon footprint, but it can also be perceived as a challenge at the same time. Combining our IT and consulting expertise, Hitachi Vantara is able to help customers adopt the right technologies (from artificial intelligence, machine learning, data analytics, cloud, 5G to Internet of things) to achieve their sustainability goals. This year, Hitachi is proud to be a principal partner of the UN Climate Conference (COP26), where we are going to demonstrate how technology and data can fight climate change.

Anthony Couse Chief Executive Officer, Apac JLL

For businesses to embark meaningfully on their decarbonisation journey, enlisting the buy-in and support of their workforce is critical to that success. A recent employee-focused sustainability report by JLL found that more than 6 in 10 workers were not aware of their companies' carbon reduction goals, and said that their companies did not involve them in green initiatives. Given that employees are the lifeblood of every organisation, this disparity needs to be addressed urgently, especially since 50 per cent of the workforce have expressed a desire to help meet future carbon reduction targets. The pay-offs from bridging this divide are clear - an engaged workforce aligned with corporate sustainability goals not only helps to make change happen faster, but in the longer term, will also pay dividends in talent retention and attraction as the workforce gravitates towards responsible businesses.

Yoon Young Kim Cluster President, Singapore, Malaysia and Brunei Schneider Electric

Amid the pandemic, funding investments and changes to drive more sustainable operations continue to be a critical challenge for business everywhere, including in Singapore. Our latest research showed that only 27 per cent of Singapore organisations are fully utilising new technologies to operate more sustainably, representing significant, untapped opportunities to optimise performance.

Electrification, digitisation, and modernisation are required to improve energy efficiency and realise our shared goal of decarbonisation. To build energy resilience, businesses must make adequate investments in resourcing, processes and systems. Organisations that commit to sustainable transformation by setting bold targets and clear road maps, while leveraging technology as a core focus of their sustainability strategy, will unlock market advantages, create opportunities for collaboration, and future-proof their business.

Luigi La Tona Chief Operating Officer StorHub Storage Space

We believe that business and community can (and should) work hand in hand. The community has given a lot back to us and it would be short-sighted not to reciprocate. Singapore's Green Plan 2030 fulfils a goal to make our environment better for the whole, not the few. If business has the opportunity to give back in this way, why not? For those incentivised by money-saving, there is also this, taking, for example, electricity cost spikes. Our organisation has implemented a garden-to-sky approach consisting of electric vehicle charging stations, smart air-conditioning, a lush roof garden, and full solar panels. Helping business, community, Mother Nature and Singapore thrive is our idea of the perfect relationship.

Jolin Nguyen Managing Director AYP Group

As organisations work to manage the efficient use of energy, this provides opportunities for professional employer organisation (PEO) firms to bring their unique use of technology to the fray. PEO companies have an exclusive understanding of game-changing human resources technologies which would help corporations reduce their reliance on staff and precious natural resources such as paper. This makes for better use of resources, ensuring a more sustainable and energy-efficient future. A big challenge that decarbonisation presents, however, would be regulation and the costs of substitutions. As such, this is a good time for technology and regulations to find a balance without distorting any market forces.

Lim Soon Hock Managing Director PLAN-B ICAG

As they say, there is always a silver lining in dark clouds. Businesses should always look for it, and not be constrained by new challenges. A 42-year-old SME, TruMarine Pte Ltd, which I am involved in, is doing just that.

The green movement for the marine industry has accelerated in pace. One major challenge is reducing the carbon footprint onboard vessels. This means improving fuel efficiency and extending the lifespan of assets onboard vessels, through optimal maintenance programmes while looking at harnessing alternative fuels. The company, jointly with the Advanced Remanufacturing and Technology Centre, has developed a predictive maintenance app using sensorisation technologies, machine learning, and data analysis to help vessel owners better manage the assets, such as turbochargers on board.

In transiting from a one-to-many to many-to-many business model, requiring the company now to also collaborate with competitors, it hopes to be the Alibaba of the marine industry to connect service providers to vessel owners globally, for the repair and refurbishment of turbochargers. TruMarine has seized a game-changing opportunity for the company to scale, opened up by the world's transition to a low-carbon future.

This is Part 1 of the responses.

Part 2 will be published on Nov 8.

READ MORE: Capital markets still not fully pricing in climate risks, even as COP26 kicks off