A Guide on Business Sustainability

Sustainability is fast becoming mission critical for businesses in Asia. Here’s why.

Why is sustainability important for businesses in Asia?

Melting glaciers and rising sea levels are not just bad news for the inhabitants of Greenland or Tuvalu. They have direct and indirect global implications, particularly in today’s interconnected world.

Southeast Asia, for instance, is increasingly exposed to climate change. The Asian Development Bank forecasts that if left unaddressed, climate change could reduce the region’s GDP by 11 per cent by the end of the century.¹ Meanwhile, a recent United Nations report points to rapidly rising sea levels in Southeast Asia, driven by manmade greenhouse gas emissions, climate change and warming waters.²

With governments and multilateral organisations making long-term plans to combat global emissions and pollution, it is in companies’ own interests to step up efforts to help fight our planet’s climate emergency. However, many companies in Asia still find it hard to recognise the magnitude and urgency of the problem, let alone act on it.

One survey found just 24 per cent of Asian respondents have an environmental, social and governance (ESG) strategy compared to 48 per cent of corporates globally, and 87 per cent of European and UK companies.³ Yet a growing number of businesses are recognising that the opportunity to do good isn’t reserved for green companies. What’s more, non-action comes with risks, which is why many are increasingly looking to shore up their resilience.

Here’s why firms of all sizes should make sustainability a key part of their plans.

The rise in popularity of everything from vegan foods and ocean-friendly sunscreens to electric vehicles shows that consumers increasingly care about the environmental and social credentials of what they buy.⁵

Today’s consumers – especially millennials – don’t base buying decisions solely on product selection or price. Increasingly, they’re assessing what a brand says, what it does and what it stands for. They’re supporting companies whose brand purpose aligns with their beliefs.

Businesses that clearly stand for something bigger than what they sell and take decisive action on ESG issues are more likely to be able to strengthen customer relationships and better connect with consumers. In short, moving sustainability up the corporate agenda can help businesses access new customers and unlock new green market opportunities.

More investors are seeking to boost sustainable companies

Meanwhile, analysts at pension funds and asset managers are calculating the long-term risks to industries that fail to move away from high-carbon, high-polluting activities – anticipating that changing laws and attitudes may make it expensive to raise capital or access new markets, if not put them out of business altogether.

A recent HSBC report⁶ substantiates this view. It found that not having a strong ESG approach is simultaneously impacting firms’ financing opportunities and presenting supply chain risks.

• Think short term and long term. Decisions made today impact the future. Climate change impacts are systemic, all-encompassing and here to stay.
• Be holistic. Review everything from electricity usage and property portfolios, to where you source materials and how you package and ship products, to operational preparedness. This means engaging with all layers of your organisation and embedding green and social issues into your business and investment decision making.
• Stay up to date. Technological changes and green innovations could put more low-carbon alternatives within your reach. Stay abreast of the regulatory environment, sustainable financing options and evolving investor and customer expectations. You may find that climate-friendly action will lift – not drag down – your profits and reputation.