Asian business set to reap 5 trillion dollars from sustainable developmentSubmitted by editor2 on Tue, 11/07/2017 - 15:01
Far from costing governments’ and companies’ money to meet the UN’s 17 Sustainable Development Goals (SDGs), a major report by the Business and Sustainable Development Commission (BSDC), an alliance of business leaders, economists, trade unionists and civil society actors, details how businesses and governments can actually benefit. Asian businesses stand to obtain five trillion dollars in business opportunities from countries meeting the new ‘Global Goals’. Yet with Thailand only ranking 100th in the 2016 Global Sustainability Competitiveness Index (GSCI), Thai companies may be unable to reap this windfall.
Asia is encountering multiple environmental and social burdens, including climate change, loss of biodiversity, and transformations in land use. For instance, over 40% of arable land in China and India is now degraded due to local pollution, climate change, or topsoil erosion. And, in the GSCI, Thailand ranks a derisory 153rd in natural capital due to water management problems, falling biodiversity and the depletion of natural resources such as forestry.
In many developing Asian countries, basic healthcare, sanitation services, and potable water remain elusive. Further, increasing inequity is reflected by over 80% of Asians now living in countries where wealth inequality has actually risen over the past two decades, depressing the middle classes.
The key to transforming a mind-set fixed on costs to one cognizant of business opportunities is for governments to buy into the SDGs by proactively shaping market activity and investment via blended public-private finance, with an estimated 1.7 trillion dollars required to unlock the five trillion in business opportunities. This is central to Asian countries wishing to escape the middle-income trap, such as Thailand, with its entrenched relatively low economic growth of 3%. Asian businesses, such as Thailand’s CP, have huge value chains involving millions of businesses, implying high levels of flexibility. Moreover, successful Asian cultures value the environment, promoting education and social justice, and reducing waste.
This dynamism leads the BSDC to estimate that placing the SDGs at the centre of corporate and governmental goal-setting will create almost 230 million new jobs by 2030, i.e., 12% of the Asian labour force. For countries up to the challenge, this could spread prosperity across both rural and urban settings and will reinvigorate local labour markets, especially in countries mired in the middle-income trap.
Figure: 60 Biggest Market Opportunities Related to Delivering the Global Goals
Adopting cutting-edge technology will unlock opportunities that align with the Global Goals. Asia has already led the way in mass producing LEDs and solar photo-voltaic cells. Asian business pioneers are developing electric bikes and will soon shape the market for electric vehicles. Thai intellectual capital scores highly in the GSCI, being ranked third in the Global South and 43rd globally, meaning its businesses are innovatory and entrepreneurial, with a dismal education sector being the main obstacle to more high-value-added businesses.
The BSDC report identifies four commercial systems in the Asia-Pacific region crucial for implementing the Global Goals.
First, demographic change means that by 2030, an additional 550 million people will move to cities, generating over 85% of GDP and bringing the urban share of the population to 44%. Reshaping urban housing via affordable housing, implementing energy efficient infrastructure, and developing electric transportation systems will unlock business opportunities worth US$1.5 trillion in 2030, with electric vehicles expected to reach 35% of overall car sales by 2040 and shared transport models flourishing.
Second, in terms of energy and materials, by 2030, shifting energy and materials systems onto sustainable pathways should generate business opportunities worth US$1.9 trillion and reduce local climate risks. Driven by China, Asia is rapidly shifting to sustainable energy, meaning peak oil demand may be reached by the late 2020s. In Southeast Asia, renewable energy could account for 22% by 2040.
Thailand’s ranking of 145th in the GCSI for resource management intensity means it is highly reliant on raw materials and energy, thus it will face higher costs and challenges to growth. Yet, Thailand is one of many Asian countries still wedded to centrally managed fossil fuel subsidies, meaning renewable, sustainable energy companies do not have the opportunity to compete fairly.
Third, regarding food and agriculture, depletion of local resources combined with rising demand for variety is creating intense societal pressure. Adopting sustainable business models in agriculture and food production, distribution and retailing could be worth US$1 trillion in 2030. Reducing the US$260 billion in waste in food supply chains is key: 37% of food is wasted in the region. Sustainable aquaculture should nearly double in the next 15 years. Developing new technologies for innovative microbial fertilisers and new soil regeneration techniques will be key to reversing soil degradation and improving productivity.
Finally, changing demographics are bringing new challenges to Asia’s healthcare systems. More than 190 million people now have Type 2 diabetes, with obesity rising even in rural areas. Additionally, the Asian Development Bank estimates Asia’s elderly population could reach 923 million by 2050. Shifting to more inclusive, affordable healthcare models and developing tailored well-being services will open up opportunities worth US$670 billion by 2030. Risk pooling to extend insurance via public–private community insurance schemes and the use of digital technologies to provide services like micro-finance will be the biggest growth areas and will make healthcare affordable and more widely available.
Thailand’s governance is ranked 69th in the world in the GSCI, meaning much of the regulatory and infrastructure framework to encourage sustainable development is in place. However, it ranks lower, at 95th, for social capital. Within this category, while Thailand ranks well for the availability and affordability of healthcare, it ranks much lower for equality within society in terms of income and assets and for political freedom and freedom from fear.
Unfortunately, the impediment to reaching this potential is the government’s inability to capitalise on a social dialogue for transformation involving businesses and civil society organizations due to the climate of fear it provokes. Consequently, society is unable to openly criticize government inefficiency and corruption, with Thailand’s position in the 2016 Transparency International’s Corruption Perception Index actually falling relative to Laos, Myanmar, Indonesia, and Vietnam. What is lacking is the vision and capacity to inspire sustainable, equitable, and profitable development. Until this is addressed, Thai companies will leave a lot of money on the table, which will likely go to competing businesses.