Blue boats transport tourists going to Phong Nha, Vietnam. The wharf was funded by the Asian Development Bank’s Greater Mekong Subregion Sustainable Tourism Development Project, giving local people more work opportunities. (Photo courtesy Asian Development Bank)
By Sunny Lewis
MANILA, Philippines, February 21, 2019 (Maximpact.com News) – Advancing green business across Asia and the Pacific is “…a win–win for all stakeholders, but requires mobilizing vast resources of private capital and innovative management approaches,” the Asian Development Bank (ADB) concludes in a new working paper on “The Business of Greening: Policy Measures for Green Business Development in Asia.”
“The challenge for the public sector is to bring the private sector to the forefront of the green-growth transition,” finds the paper’s author, Daniele Ponzi, chief of the ADB’s Environment Thematic Group in the Sustainable Development and Climate Change Department.
“Inherent in this challenge is the need to engage firms in innovative ways to go beyond increasing wealth for their shareholders to achieving the goals of social development and environmental quality,” Ponzi writes.
There is no universally accepted definition for “green business,” Ponzi acknowledges. To him, the term means “any profit-oriented activity that supports environmentally sustainable growth.”
Strong economic growth in the last 50 years has eased poverty for hundreds of millions of people in Asia and the Pacific. The region is now home to a healthier, longer-living, and better-educated population. But as per capita incomes and consumption have risen, pollution levels, too, have risen, and natural resources have been depleted.
By stripping their lands of natural capital, Asian nations are compromising vital ecosystem services such as food and water to climate regulation and natural flood defenses provided by mangroves.
“These trends are threatening past economic and social gains on a vast scale,” writes Ponzi.
The fast-paced growth and booming of the manufacturing and service sectors have taken a toll on the environment and natural resources in a region that is highly vulnerable to environmental threats. On the other, some 908 million workers live on less than a US$2 a day, according to the International Labour Organization .
Policy makers in Asia and the Pacific are increasingly recognizing that economic growth, decent living standards, and environmental sustainability are interconnected.
In many countries, new legislation and initiatives are being put in place as part of a global push to make economic growth greener.
Framework Agreements Make Greening Imperative
The “green growth” model of development seeks robust economic growth while also ensuring that natural assets continue to provide the resources and environmental services on which long-term well-being depends.
The international community is moving towards greener economic growth inspired by a series of sweeping agreements reached in 2015.
There is increased global momentum for green growth embodied in the 2030 Agenda for Sustainable Development with its 17 Sustainable Development Goals, the Paris Agreement on Climate, the Sendai Framework for Disaster Risk Reduction, and the Addis Ababa Action Agenda, a global framework for alignment of financing flows and policies with economic, social, and environmental priorities.
Ponzi notes that high-income countries, both in the Asia-Pacific region and around the world, are leading the way in pursuing green-growth initiatives, while a number of middle-income and low-income countries are challenging the “grow now, clean up later” approach.
Recognizing the many urgent challenges and limited resources developing countries must deal with, Ponzi explains that while their commitments exist on paper and overall policies are in place, supporting mechanisms and agreements for implementation are often slow-moving, missing, or ineffective.
The path to green growth depends on political will and public sector capacity, and, Ponzi notes, political will is often driven by “environmental pressure points,” such as air quality in China, deforestation across Southeast Asia, and rising sea levels inundating Pacific Island countries.
Governments can set policy frameworks for green economic growth, but only a small part of the investment needed to make those policies a reality can come from domestic public sector funds and official development assistance from other countries.
Ponzi argues that there is a need for a much greater flow of investments from the private sector, both foreign and domestic, in environmentally sound practices and technologies to implement clean energy, sustainable transport, green cities, waste management, natural resources management, ecosystem services, biodiversity, and pollution prevention and control.
The Tatay Hydropower Station, opened in 2015, is a Chinese Sinomach project on the Tatay River 300 km (200 miles) west of Phnom Penh, Cambodia’s capital city. (Photo courtesy Sinomach) Posted for media use.
China Finances Greener Development
In China, billions in renewable energy investments have made the country a leader in promoting clean energy and green finance, creating business opportunities, experts said in New York in November 2018, during a panel discussion on China’s green economy.
As the world’s largest investor in renewable energy, “what China has done is identifying these areas as strategic industries and [China has] poured a tremendous amount of money, mostly for subsidies [into them],” said Barbara Finamore, founder of the China Program at the Natural Resources Defense Council, a New York-based, nonprofit international environmental advocacy group.
With 25 years of experience in environmental law and energy policy in China, Finamore said that China has invested an estimated US$46 billion, mostly in subsidies, in research and development for the solar industry over the past decade. In the electric vehicle market, the figure reached around US$58 billion.
Another panelist, renewable energy expert Damien Ma, associate director of the Chicago think tank Paulson Institute, pointed out that much of the clean energy financing has come from the private sector – private equities, venture capital and private businesses.
China is now the second largest green bond market in the world after just two years of development, as the intention behind such bonds was “to mobilize private finance in that direction,” Finamore said.
“China’s green sector is attracting growing investment from enterprises as the country strives to balance economic development and environmental protection,” the state news agency Xinhua reported in January.
Data from the National Bureau of Statistics showed investment in the environmental sector surged 42 percent year on year in the first 11 months of 2018.
China National Machinery Industry Corporation Ltd. (Sinomach), a state-owned machinery conglomerate, is targeting green areas such as the production of equipment related with environmental protection and core components of new energy vehicles, according to Sinomach general manager Zhang Xiaolun.
“I believe green manufacturing will accelerate the transformation and upgrading of China’s manufacturing industry, improve its core competency and facilitate it’s sustainable development,” he told a recent forum.
China’s recycling industry is booming, too, with more enterprises investing in transforming waste, including steel, nonferrous metals and plastics, into renewable resources by using new technologies.
Russia Helps Southeast Asia Grow Green
The Association of Southeast Asian Nations, ASEAN, consists of 10 countries: Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
Jerry Bernas, program director with the ASEAN Corporate Social Responsibility Network says, “The mega trend for ASEAN countries is that even though countries like Indonesia, the Philippines and Vietnam have experienced high growth, people are slowly realizing that it has not yet translated to a better life for most of the people in these countries. The growth is being captured by top corporations and is not in line with ASEAN government commitment to inclusive and sustainable growth.”
More funding is about to flow into the 10 ASEAN countries from Russia. Today ASEAN made a deal with Russia to access its ASEAN-Russia Dialogue Partnership Financial Fund to facilitate cooperative projects in the fields of: science and technology, energy, e-commerce, minerals, tourism, transport, food, agriculture and forestry, connectivity, information and communication technology, education, health, trade, investment and financial services.
Last year, ASEAN and Russia signed an agreement that elevates their relationship to a “strategic partnership,” and the agreement contains many references to sustainability.
The agreement is “…based on the principles of equality and shared responsibility to promote peace, stability, prosperity, sustainable development and social progress in the Asia-Pacific region;”
The agreement promotes cooperation in environmental activities, including: biodiversity conservation, coastal marine environmental protection, climate change adaptation and mitigation, sustainable agriculture and resource management, improving water resources management and promoting regional food security.
It also covers capacity building in space technology and its applications.
Asia-Pacific residents have been increasingly purchasing new high-tech environmental goods and services. These goods and services are found in many sectors, each of which represents markets in the tens of billions of dollars.
Recent annual estimates of the global size of green industries range from US$1.1 trillion to US$4.4 trillion, and Asia-Pacific growth is driving a growing share of this market, Ponzi notes.
A growing number of Asia-Pacific firms are supplying green goods and services, and many more companies are greening their businesses. Some are using greener inputs or selling more environmentally sustainable products and services, while others are transforming production and consumption patterns across entire value chains.
Pacific Islands Go Greener
In October 2018, Natasha Woods, founded Eco Conscious (Fiji) an online business that aims to help people reduce their plastic waste by providing better alternatives to some of the everyday plastic and single-use plastic that we use. “It was a huge move for me,” said Woods, “but I felt that I needed to do something that kept me happy and content at the same time.”
Eco Conscious (Fiji) started by selling metal straws to help reduce the impact of plastic straws. The company now has bamboo toothbrushes with 100% biodegradable handles, cotton mesh bags, organic produce bags and bees wax food wraps to replace plastic cling wraps. “Our first batch sold out very quickly,” said Woods.
Yet despite progress, some governments around the region are elected by voters who do not place high importance on conserving natural resources. “Local financing is scarce, accountability measures are lacking, and inadequate governance is still a frequent barrier,” Ponzi writes.
One of the most glaring weaknesses is that greening is still not practiced by the majority of small and medium enterprises (SMEs) although SMEs account for much of the industrial pollution and waste generation in this region.
Ponzi asserts, “Although the volume of pollution generated by each firm may be limited, SMEs as a whole can do worse damage to the environment than larger multinationals.”
To make the most of green business opportunities, Ponzi says governments should seek a mix of policy instruments that achieve short-term wins and long-term transformation.
Governments can consider four possible policy levers, he says: regulations, market-based instruments, enabling investments, and business-oriented practices.
Business-oriented measures and green finance are closely related, Ponzi observes. For instance, he writes, GreenTech Malaysia, a government agency, awards green certificates to projects that adopt green technology. These certificates complement the country’s Green Technology Financing Scheme by making it easier both for banks to evaluate the feasibility of such projects and for manufacturers and users of green technology to access this finance.
In his New Year’s message, Syed Ahmad Bin Syed Mustafa, acting CEO with GreenTech Malaysia, said, “Together, we can make the world see Malaysia as a household name not only as the catalyst for green technology deployment but also as the centre for climate change – a country that builds its economic success based on sustainability, inclusivity and innovation through the greentech industry.”
Featured Image: Natural and manufactured elements combine in this beautiful Beijing park scene, June 26, 2013 (Photo by Lex Kravetski) Creative Commons license via Flickr