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Sustainability Priorities In The New Decade For Businesses In Asia
Agriculture rebuilds soil health by restoring its carbon content, positively impacting plant health, nutrition, and farm productivity. Healthy soil absorbs more CO2 than it emits, mitigating climate change.
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We are about to start a new decade arising from the ashes of the unprecedented Covid-19 socio-economic disruptions. It is a crucial decade considering every business decision will determine how far we progress on achieving the United Nation's Sustainable Development Goals (SDGs) by 2030. The present decade will also witness the acceleration of stakeholder capitalism's concept, reducing Milton Friedman's idea of shareholder primacy. As the businesses start giving shape to their sustainability strategies, it is necessary to reflect on the top sustainability priorities for the Asian continent. Solidaridad has decades of sustainability experience working with hundreds of businesses on one end and millions of farmers and workers at the grassroots. Based on those learning, I have tried to list ten areas businesses need to prioritise to reduce social and economic inequalities in Asia and address mounting climate challenges.
1. Address growing inequality through boosting shared prosperity; The world is rapidly becoming inequal, and inequality accelerated in the last decade after the financial crisis of 2008-09. Most economists now widely accept that capitalism's present form is benefitting only the rich. Forty-two individuals now possess the same cumulative wealth as the bottom 3.6 billion people on the planet. In the new decade, businesses are expected to play a critical role in solving this growing inequality. Doing so won't be a charity, but a sensible business decision. Creating rural prosperity is necessary to augment saturated urban middle-class markets to drive growth. For example, large corporations could support workers and farmers' owned companies in three ways- through preferential sourcing, fair and transparent price, and through credit and investments. It will create community wealth using locally rooted ownership, ideally held broadly, to develop resilient and shared prosperity.
2. Increase investment in women: McKinsey has reported that women contribute only 17 per cent of India's GDP, and estimates that India could add $700 billion to its GDP in 2025 by closing this gap. Current estimates place India's female participation rate in the formal economy at only 24 per cent — among the lowest in developing nations. In Asia, rural women increasingly run successful enterprises. Yet their socio-economic contributions and entrepreneurial potential remain mostly unrecognised and untapped. Disruptive public-private-community (PPC) partnerships would be crucial to stimulate and upgrade women entrepreneurs to join the formal economy.
3. From "Feeding the Future" to "Preserving the Future": In the last decade, the popular concept was to double food production by any means to feed the world's future 9 billion population. Organic farming and regenerative farming were debunked as an unscientific and unrealistic concept that would lead to more forest land requirements to grow food. Unfortunately, crop intensification did not spare land for nature or significantly increased farmers' income. Instead, as per the United Nations, the intensive agricultural practices have desertified around 1-billion acres of farmland. The good news is that this can be turned around through ecosystem restoration and regenerative agriculture. Regenerative agriculture rebuilds soil health by restoring its carbon content, positively impacting plant health, nutrition, and farm productivity. Healthy soil absorbs more CO2 than it emits, mitigating climate change. The innovative food businesses should join forces with the NGOs to create the business case and consumer demand for certified regenerative products across the value chain.
4. Pollution: air, water and solid waste will create new business challenges and opportunities: Pollution currently poses one of the most significant public health and human rights challenges, disproportionately affecting the poor and the vulnerable. Exposure to air, soil, and water pollution is responsible for about 40 per cent of deaths worldwide. The businesses will increasingly require to measure the pollution impact in their supply chain through regular audits. Programmes to reduce and eventually eradicate pollution in the supply chain should follow up such audits. Further, the cost of waste disposal will rise substantially over the next few years. Therefore, it would be pertinent for businesses to reduce the waste volume to the landfill on one end and convert 'waste' into productive outputs on the other. It will provide operational savings and generate new jobs opportunities through the recycled products value chains.
5. Shift from bio-fuel to solar-powered batteries for clean energy: This decade would be decisive for clean energy. In that process, solar-powered batteries would likely be the winner over bio-fuels. A 1MW biogas power station uses circa 12,000 tonnes of biomass per year produced on 300 hectares of land. By contrast, a solar panel may take on 6 hectares to make as much energy as that biogas power station, and it would do so at half the cost! The automotive industry plays a pivotal role in this transition by switching from fossil fuel vehicles to vehicles that are powered by electric vehicle batteries (EVBs). The electric cars' exploding market requires the supply of vast volumes of EVBs. However, the businesses will need to collaborate with NGO partnerships to address massive human rights and environmental challenges around sourcing battery materials like cobalt and Lithium. Businesses will also need to address the recycling challenges of these batteries.
6. Cheap labour won't be of a business advantage anymore: Automation will make outsourcing manufacturing to distant places to benefit from cheap workers increasingly irrelevant. Robots and self-service machines will replace many of the tasks currently performed by human employees at lesser costs and higher efficiency. Maruti Suzuki India Ltd already has one robot for almost every four workers at its Manesar and Gurgaon plants. Today, robots can stitch T-shirts at 22 pieces per second, costing 0.33 Cents per T-Shirt which is way cheaper and faster than $2.10 produced by workers in Bangladesh. At the same time, technology creates new high skilled jobs as well. It is an area where businesses could join hands with the NGOs and Government to train workers with new skills and get them employed in more high-tech jobs.
7. Fair Trade in Data: The Covid-19 lockdown has intensified our dependency on the Internet and Communication Technology (ICT). Mobile apps and social media is changing how we live, work, and communicate. The value of information assets has never been greater. According to the European Commission, by 2020, the value of personalised data – just one class of data – will be one trillion euros, almost 8% of the EU's GDP. Many consider Data is more interesting and valuable than even currency like the dollar. The massive penetration of data in all spheres of human life, it's increased financial value, and its potential misuse would create a grassroots level movement for Fair Trade in data. The businesses would require to follow an ethical charter for data procurement and data trade while fairly compensating individual data suppliers for value generated out of data.
8. From sustainability certification seals to digital transparency: Voluntary sustainability standards reached its pick in the last decade. The Ecolabel Index, the largest global directory of ecolabels, currently lists over 460 labels in 80 different sectors operating in 180 countries. But it is now well acknowledged that voluntary standards have failed to deliver impacts at scale. The Covid-19 has accelerated the demand for radical transparency beyond certification claims-particularly in the food and clothing industry. In India already, Happy Banana, the fruit brand from Desai Fruits Venture Pvt Ltd (DFV), has started deploying the QR code solution FarmTrace on the fruit to help consumers track the journey of the fruit from farm to fork. Similarly, China's Guangzhou municipal market uses the block-chain-based traceability system providing information on the farm, details of the farmer, and harvesting time of the produce. The fifth generation of cellular network technology (5G) expansion in the present decade will eliminate the square-root based human audits and take the digital transparency initiatives to the next level.
9. From value chain sustainability to regional frameworks on sustainability: The value chain approaches to sustainability created islands of success but could not achieve scale to transform different sectors. In this decade, we will witness an increase in the regional approach to sustainability. It is already visible in the European Union's Green Deal for sustainable food system across the EU by 2023. The Africa Palm Oil Initiative (APOI) from 10 palm-oil producing countries of Africa has developed sustainable palm oil development principles for the region. Similarly, in Asia, the tea-producing countries have developed a Tea Asia Alliance to set a common sustainability framework in tea. The Asian Sustainable Palm Oil Network (ASPN) mutually recognises national sustainability frameworks for palm oil in India, China, Indonesia and Malaysia. The businesses would benefit from engaging with such regional sustainability frameworks. It would create a level playing field, reduce sustainability costs and increase trade in sustainable products towards sector transformation.
10. Nutrition at the base of the pyramid: In a recent survey, India came out to be the third worse hit country by the obesity epidemic, after China and the United States. Obesity rates and other health problems are on the rise among the poor who are being pushed toward unhealthy diets by pricing. It is a fact of life when you visit any grocery store: healthier food is more expensive, and junk-food is way cheaper. Yet, half of the world population living on less than $5.50 a day represents a vibrant consumer market. During the last decade, FMCG businesses created for-profit models of selling affordable but aspirational shampoos and beauty creams to the poor. In the present decade, the food companies have the chance of disrupting the junk-food markets by providing affordable but aspirational healthy and nutritious food to the aspirational poor. The prospective rewards include growth, profits, and invaluable contributions to humankind.
The 2020s is poised to become a decade of disruption in the field of sustainability. In the post-Covid pandemic period, many analysis suggests Asia would play a defining role in the world's economic recovery. Already, 43 per cent of the world's largest companies (by revenue) have their headquarters in Asia. The citizens of Asia would demand increased commitment from these companies to committed to the community, consumer and the planet. The businesses may do well to look beyond the traditional sustainability from the lenses of managing reputation, risk, cost-saving, and brand positioning. The next decade may be about a shared vision to create a new, more resilient, healthy, equal society that lives in equilibrium with nature.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.