By Dr Leong Choon Heng
Professor, Jeffrey Sachs Center on Sustainable Development, Sunway University
The original article was published in The Edge Malaysia on 22nd May 2017
Science has gone two laps ahead and business is leading from behind. This is the situation today that makes it so difficult for scientific evidence about climate change and threats to the planet to alter the course of development and business as usual. The difficulty demands some explanation and an exploration into possibilities for change. The work of scientists and technical experts in the Intergovernmental Panel on Climate Change (IPCC) has provided concrete evidence that the planet is warming up and if it does by 2°C in this century the effects will be unbearable. At 4°C, as projected by the World Bank with business as usual, it will be catastrophic. Scientists in the Stockholm Resilience Centre have charted the planetary boundaries beyond which life as we know it cannot be sustained, yet our economic trajectory is but a race to cross these boundaries.
For the sake of the world and our future generation, businesses somehow have to incorporate this science into their decision making. Of late, and especially after the United Nations announced the 17 Sustainable Development Goals (SDGs), we see an awakening among large corporations making commitments to tackle these planetary and, by extension, our existential problems. I mention here a few from the RE100 list of The Climate Group which have committed to procuring 100% of their electricity from renewable resources, namely, IKEA, BMW, Adobe, Hewlett Packard, ING, Johnson & Johnson, Nike, Philips, Ricoh, P&G, Nestle, Tesco, Starbucks, H&M and Google.
These businesses have become frontrunners of sustainability, keeping pace with the science of climate change and abreast of the technological and engineering solutions. They are leading in front, not from behind. Another virtue is that they are going ahead with their commitment without having to wait for the greenlight from governments. A genuine commitment to humanity is done with or without fiscal and monetary incentives. Large corporations with good earnings can afford the commitment on their own. For smaller enterprises, some incentives from governments will be helpful.
Once there is widespread understanding of the planetary and existential problem, we should see many Malaysian companies joining in the direction of the global leaders. Malaysian companies can decide to be a leader or follower on this. Being a leader and first mover is hard, but there are many advantages that come with it. The problems of sustainable development and solutions are difficult, complex and multidimensional. Businesses that can develop the organisational capability to innovate and implement sustainable solutions can offer the service to others. Another thing about sustainable practices and solutions, especially for renewables, is that though it often involves much higher upfront investments and longer payback periods the cost of inputs after the payback period can be exceedingly low, giving the business a huge cost advantage. Getting into sustainability early makes a lot of business sense.
So what is holding back businesses? What does it take to nudge them into the lane of sustainability? Here, we have to think of the large number of businesses called SMEs. In Malaysia, we have 645,136 establishments which are SMEs, according to SME Corp. SMEs constitute 97.3% of total business establishments and employ 3,669,259 workers or about 65% of total employment. SMEs penetrate deep into neighbourhoods and communities. Their sustainable practices are an intrinsic part of community sustainability. The use of plastics and waste disposal come straight to mind. In agriculture, too, there are about 6,000 SME establishments.
It is important that the large number of SMEs do not bunch up to form a mountain of backmarkers. When you have backmarkers not only is the speed of progress impeded, the direction of progress is also deflected. All the fired-up rhetoric admonishing their business-as-usual practices may raise awareness but not push SMEs onto the path of sustainable practice. Most SMEs have been around since the 60s, 70s and 80s. They are matured enterprises serving in matured markets with no intention of disrupting business-as-usual. They however continue to innovate and reinvest if the cost of technology allows. A recent survey by Standard Chartered of SME entrepreneurs in the region who seek opportunities shows that they reinvest over 70% of their profits.
Two recent developments will nudge SMEs onto the track of sustainable development: The development of affordable sustainable technologies in smaller, modular sizes; and the entry of social enterprises and NGOs offering innovative, small-scale solutions as partners to the mission of saving the planet. Innovative Malaysian companies like MAEKO are offering affordable modular solutions to the problem of food waste to help meet the sustainable goal of responsible consumption and production. Such companies are on the MyHIJAU list of the Malaysian Green Technology Corporation. Equally hopeful is the growing number of social enterprises and NGOs that can partner SMEs and large corporations to achieve their sustainable mission. These include such well-known names like Eats, Shoots & Roots, biji biji, Incitement, EcoKnights, The Lost Food Project, Impact Hub and many others. Many of the solutions are not perfect and evolving through the partnerships, but changing to sustainability is not about deploying perfect solutions. It is about rapid transitioning.
Besides investing in large technological solutions, large businesses can also play a role in partnering smaller enterprises to deploy small-scale modular solutions. Businesses, large and small, need to engage in differentiated solutions. Here, we can take a look at the Sunway Group as an example. As a leader in sustainability, the Sunway Group and its enterprises are implementing sustainable projects at different scales, ranging from large-scale urban rehabilitation, green buildings, energy efficiency and renewable energy projects, water treatment systems and electric bus rapid transit to mid-sized and smaller projects like elevated pedestrian walkways, car park guiding system, sustainable landscaping, waste management, energy savings, recycling, etc. Sunway companies also work with social enterprises, NGOs, innovative firms and local communities to embrace their commitment and creativity in implementing solutions. Its close association with Sunway University and Monash University through the Jeffrey Cheah Foundation means that the Sunway Group can utilise the scientific and technological knowhow of universities to help it lead the way in finding and applying solutions to the challenges of sustainable development, and in turn assist other businesses, especially SMEs, to transition to sustainability. This is the meaning of leading and being in front.