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Navigating the net zero horizon (I/II): ASEAN companies' evolution and benefits in sustainable business practices

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By Alex Hong

· 12 min read


This is part one of a two-part series on sustainable business practices in ASEAN. You can find part two here.

In an era of enormous environmental problems, the ASEAN region is positioned to reshape its commercial landscape and lead the charge toward a more sustainable future. The pressing need to combat climate change and embrace sustainability has spurred ASEAN businesses on a transformative path that necessitates a paradigm shift towards net-zero solutions. This perspective serves as a lighthouse, illuminating the route towards a resilient, environmentally conscious company environment. It digs into the important role of net-zero principles in not only transforming corporate operations, but also in becoming the backbone of economic resilience and growth, examining the multiple benefits, obstacles, and imperative reforms required for ASEAN organisations. As ASEAN nations embark on this journey towards sustainability, the incorporation of net-zero initiatives emerges not just as an ethical obligation, but also as the cornerstone of a dynamic, forward-thinking business culture set to form a sustainable legacy for future generations.

Introduction

Overview of the ASEAN region's commitment to net-zero strategies

The ASEAN area, which consists of ten varied nations, is at the vanguard of a revolutionary path towards sustainable and net-zero initiatives. Several member states have made strong commitments to attain net-zero emissions, attempting to restructure their economies and industries to dramatically cut greenhouse gas emissions. Notably, Singapore has announced intentions to attain net-zero emissions by 2050, including extensive roadmaps and policy frameworks to guide this transition. Similarly, Vietnam has declared its intention to achieve net-zero emissions by 2050, demonstrating a collective will to address climate change.

Purpose of the commentary: understanding the multifaceted benefits and challenges of net-zero pivots for ASEAN companies

The purpose of this commentary is to shed light on the diverse landscape of net-zero plans in the ASEAN corporate arena. The article aims to provide insights into the possible benefits and obstacles faced by enterprises in the ASEAN region when embracing net-zero efforts by delving into the complexities of this critical move towards sustainability.

Sustainability has developed from an ethical priority to a strategic need for organisations on the world stage. This transition can be seen throughout ASEAN, where businesses are increasingly recognising the need for sustainable practises in retaining market relevance and resilience. According to statistics from sustainable investment reports, there has been a significant increase in environmentally conscious investments in ASEAN countries, with a 40% increase in sustainable investment portfolios over the last year.

Furthermore, according to a recent poll performed across ASEAN nations, around 78% of customers now prioritise sustainability when making purchase decisions. This growing consumer awareness gives a once-in-a-lifetime opportunity for businesses eager to integrate sustainability into their operations and product offerings.

Numerous real-world examples from the ASEAN region demonstrate the benefits of adopting net-zero strategies. Thai Beverage PCL, a large beverage firm in Thailand, for example, has made tremendous progress in lowering its carbon footprint over the last three years. Since 2020, the company has reduced its carbon emissions by 20% thanks to a thorough sustainability plan that focuses on energy efficiency, renewable energy adoption, and waste reduction. These efforts have not only helped to safeguard the environment but have also improved Thai Beverage PCL's reputation and brand value, indicating that sustainability is a strategic advantage for businesses.

Similarly, Telekom Malaysia Berhad (TM), a leading Malaysian telecommunications corporation, has dramatically decreased its carbon footprint over the last three years by implementing a comprehensive sustainability plan that focuses on energy efficiency, renewable energy adoption, and waste reduction. The company has reduced its carbon footprint by 20%, raised renewable energy use to 15% of overall energy consumption, and diverted 95% of garbage from landfills. These efforts have helped to protect the environment and strengthen TM's position as a sustainability leader, demonstrating that adopting sustainability is not just an ethical obligation but also a strategic advantage for businesses.

These real-life examples demonstrate the potential gains in innovation, operational efficiency, and market competitiveness that ASEAN enterprises may accomplish by shifting to net-zero and sustainable business models.

This essay will explore deeper into evolving consumer behaviour trends, the widespread influence of climate change on businesses, and the vital symbiotic relationship between economies and nature in the next sections. Furthermore, it will highlight how optimisation towards net-zero practises can strengthen value chains, open new revenue streams, and strengthen brand identity, as well as why embedding net-zero principles into the fundamental ethos of ASEAN's business landscape is critical for long-term success and sustainable growth.

Changing consumer behaviour

Shifts in consumer preferences towards sustainable products and services

The consumer preferences landscape within ASEAN markets is undergoing a dramatic transition, with a visible shift towards sustainability. Consumers are increasingly valuing products and services that adhere to environmental and ethical principles. The increased knowledge of climate change, environmental damage, and social responsibility is driving this trend. According to recent market research (Retail Asia, August 2023), more than 80% of ASEAN customers exhibit an increasing preference for purchasing goods from companies committed to sustainable practises.

As a result, ASEAN enterprises have seen a significant increase in demand for eco-friendly alternatives across a variety of industries. This need extends beyond industries such as food and beverages, fashion, electronics, and others. The adoption of sustainable practises and the manufacture of eco-friendly items has become critical for businesses seeking to remain competitive and relevant in today's changing market.

Influence of eco-consciousness on purchasing decisions in ASEAN markets

Environmental consciousness has emerged as a critical issue affecting consumer behaviour in ASEAN economies. Consumers are increasingly concerned about the environmental impact of their purchases, forcing a reconsideration of brand selection based on sustainability credentials. According to research (Bain & Company), approximately 70% of ASEAN customers are willing to pay a premium for products that demonstrate sustainability, indicating a considerable readiness to support environmentally responsible firms.

This increased awareness has not only influenced purchasing decisions but has also triggered a paradigm shift in brand loyalty. Customers' trust and loyalty are increasing in companies that actively engage in sustainable practises. Brands that openly announce their commitment to sustainability efforts and net-zero targets enjoy a competitive advantage, grabbing the attention and allegiance of environmentally conscientious customers.

Impact of consumer behaviour on the adoption of net-zero strategies by companies

The developing consumer landscape, characterised by a growing demand for sustainability, has had a significant impact on the strategic decisions of ASEAN-based enterprises. The growing demand for environmentally conscious products and services has prompted businesses to implement net-zero plans. Businesses are re-evaluating their supply chains, manufacturing processes, and overall business models to fit with sustainability goals in response to customer expectations.

Unilever Indonesia, a large Indonesian consumer products corporation, has actively promoted sustainable practises and has seen a favourable influence on its adoption of net-zero methods. The company's initiatives have not only resonated with customers but have also fuelled internal innovation and efficiency.

Unilever Indonesia has reached out to customers through education and awareness initiatives that emphasise the environmental and social benefits of adopting sustainable practises. These initiatives have increased consumer awareness and pushed them to make more environmentally friendly decisions. The company has also made environmentally friendly items such as biodegradable detergents, reusable packaging, and plant-based alternatives more accessible and inexpensive. These products have been highly received, lowering the environmental effect of Unilever Indonesia.

The combination of shifting customer behaviour and increased demand for sustainability has pushed businesses across ASEAN industries to adopt net-zero strategies. The need to meet consumer expectations while also addressing severe environmental issues highlights the critical role of consumer behaviour in driving the adoption and success of net-zero initiatives inside ASEAN firms.

This article will investigate the concrete impact of climate change on ASEAN businesses in the following sections, emphasising the need for sustainable practises and the crucial dependency of economies on nature. Furthermore, it will explain how optimising towards net-zero practises may strengthen value chains, provide new revenue streams, and improve brand identification, as well as why infusing net-zero concepts into ASEAN's business mindset is critical for long-term growth and success.

Climate change's business impact

Exposition of climate change's tangible effects on ASEAN businesses

Climate change provides significant challenges to enterprises throughout the ASEAN area, manifesting in a variety of tangible ways. The region's vulnerability to extreme weather events, rising sea levels, and changing precipitation patterns has a considerable influence on natural resource-dependent economies. Agriculture, for example, a major sector in many ASEAN countries, is threatened by lower crop yields as a result of irregular weather patterns, creating hazards to food security and supply chains.

Furthermore, companies that rely on stable environmental conditions, such as tourism and fishing, face interruptions caused by environmental deterioration and biodiversity loss. Coastal regions, which are frequently tourist hubs, are vulnerable to coastal erosion and damage from extreme weather events, which have a negative impact on the local economy and livelihoods.

Analysis of vulnerabilities in various industries due to climate-related disruptions

Climate-related disruptions expose ASEAN's various industries to risk. For example, extreme weather events interrupt supply chains in the manufacturing industry, affecting the flow of raw materials and delaying production schedules. Furthermore, the energy sector confronts issues due to the variability of renewable energy sources caused by climate oscillations, which affects energy reliability and stability.

Natural resource-intensive industries, such as forestry, confront hazards of resource depletion and biodiversity loss, threatening long-term sustainability and profitability. Furthermore, infrastructure, such as transport and utilities, is prone to damage and operational disruptions induced by extreme weather, resulting in higher maintenance costs and economic losses.

Financial implications and risks of climate change for companies in the ASEAN region

Climate change's financial ramifications pose substantial dangers to ASEAN enterprises. Climate-related disasters are becoming more frequent and intense, which raises operational expenses, insurance premiums, and infrastructure investments for adaptation and resilience. Climate change-related damages in ASEAN countries are estimated to be in the billions of dollars per year.

Companies that do not adjust to climate hazards may encounter difficulties accessing finance, recruiting investors, and obtaining insurance coverage, resulting in lower market competitiveness. Furthermore, legislative reforms aimed at mitigating climate change have an impact on firms by increasing compliance costs and potentially penalising noncompliance with environmental standards.

Charoen Pokphand Group (CP Group), a Thai conglomerate with a diverse portfolio of operations, is one of the ASEAN enterprises facing substantial financial consequences and risks as a result of climate change. The agriculture and food processing businesses of CP Group are particularly sensitive to supply chain disruptions induced by extreme weather events. Furthermore, the company's operations in numerous ASEAN regions subject it to infrastructure damage from natural catastrophes. Furthermore, CP Group's companies are subject to environmental rules aimed at reducing the effects of climate change, which may impose additional costs on the company.

Climate change poses significant threats to CP Group's varied business portfolio. Due to rising temperatures, shifting rainfall patterns, and increased pest infestations, its agriculture and food processing businesses are facing lower crop yields and higher production costs. Changes in weather patterns and concerns about food security are causing disruptions in consumer behaviour at CP Group's retail companies. Furthermore, the company's telecommunications industry is vulnerable to infrastructure damage caused by extreme weather occurrences, which could impair its capacity to deliver services and generate income.

These examples highlight the financial risks and opportunities linked with climate change for ASEAN firms. In the next sections, this analysis will look at ASEAN's vital reliance on nature, emphasising the necessity for sustainable practises and the inherent link between net-zero policies and economic resilience. It will also explain how shifting to net-zero practises may strengthen value chains, provide new revenue streams, and improve brand identification, as well as why incorporating net-zero concepts into ASEAN's business culture is critical for long-term growth and prosperity.

Economies' dependence on nature

Understanding the interdependency between economic activities and natural resources

The ASEAN region's economies are inextricably linked to natural resources, relying significantly on different ecosystems for subsistence and growth. Agriculture, fishing, tourism, and manufacturing are all directly dependent on natural resource supply and stability. Agriculture, for example, is a substantial contributor to many ASEAN economies, and its productivity is dependent on healthy soils, appropriate water resources, and stable climatic conditions.

Furthermore, natural resources provide raw materials to sectors such as forestry, mining, and energy production. Natural resource extraction and utilisation provide regional economic growth, employment, and trade.

Highlighting the significance of biodiversity and ecosystem services for ASEAN economies

Biodiversity and environmental services are critical to the ASEAN economies. Pollination, clean water, air purification, and climate regulation are all provided by the region's diverse biodiversity and ecosystems. Various economic activities, such as agriculture, pharmaceuticals, and ecotourism, rely on these services.

To attract visitors, the tourism business in ASEAN countries, for example, mainly relies on the preservation of unique ecosystems, beautiful landscapes, and animals. The destruction of these natural assets as a result of climate change or unsustainable practises directly threatens the viability and economic benefits of the tourism industry.

The imperative need for sustainable practices to ensure long-term economic resilience

Natural resource conservation and sustainable use are critical for ASEAN nations' long-term economic stability. Unsustainable practises like deforestation, overfishing, and habitat loss not only endanger biodiversity but also threaten the stability of economies that rely on these resources.

Maybank and Thai Beverage, two significant Malaysian and Thai corporations, have emerged as leaders in integrating sustainability into their business operations, recognising the vital role of environmental and social aspects in ensuring long-term economic resilience.

Responsible banking, inclusive banking, and green finance are central to Maybank's sustainability strategy. To mitigate environmental and social risks, the company has adopted comprehensive risk management frameworks, adheres to high corporate governance standards, and promotes financial inclusion through microfinance and small business development programmes. Maybank also spearheads green financing activities, providing financial solutions for environmentally friendly enterprises.

Thai Beverage PCL, on the other hand, prioritises water stewardship, waste management, energy efficiency, environmentally friendly packaging, and social responsibility. The company has reduced its water use and waste creation significantly, implemented energy-efficient technologies, switched to sustainable packaging materials, and actively supports a variety of social programmes.

Maybank and Thai Beverage have both received recognition for their commitments to sustainability, including awards from organisations such as the Dow Jones Sustainability Index and the CDP Climate Change and CDP Water Security Leadership Awards. Their environmental efforts have not only contributed to their financial success but have also established a standard for responsible business practises in ASEAN.

The need for sustainable practises goes beyond environmental concerns; it is also a strategic requirement for economic resilience. Companies that adopt sustainable practises fit with future market trends, legislative shifts, and customer preferences, ensuring their position in a shifting economic context.

In the following sections, this analysis will look into the revolutionary potential of optimising value chains through net-zero strategies within ASEAN enterprises. It will explain how these techniques lead to additional revenue streams, increased operational efficiency, and stronger brand identities. Furthermore, it will highlight the importance of incorporating net-zero concepts into the fundamental vision and culture of ASEAN enterprises in order to support a sustainable and prosperous future.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the author

Alex Hong is the Executive Director of Digipulse Data and strategic advisor. He is the Chief Sustainability Coordinator of the Youth Networking Business Committee (YNBC). Alex is LinkedIn’s Top Voices (Green) in Singapore 2022 and represents the Global Blockchain Business Council (GBBC) as the Ambassador of Southeast Asia.

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