©2019 by Perdana Leadership Foundation.

The Business Imperative for Going Green - A Summary of Session C

Updated: Dec 12, 2019



PERDANA LEADERSHIP FOUNDATION CEO FORUM 2019

SESSION C: The Business Imperative for Going Green


Panellists:

  • Mr Poh Tyng Huei, Co-Founder & Business Director, Plus Solar Systems

  • Mr Vinesh Sinha, Director, FatHopes Energy

  • Mr Ralph Dixon, Chief Executive Officer, YTL-SV Carbon

  • Moderator: Mr Philip Rao, Advisory Partner & Asean Risk Transformation Leader, Ernst & Young Advisory Services


Summary


There is a difference between CSR, which is philanthropy-oriented, and Green Business, which is related to making business environmentally-friendly with a long-term view and sense of responsibility for the environment, the economy, and society.


Many Malaysian businesses are changing their mindsets about sustainability, though the greatest challenge remains the shift of focus from immediate returns to long-term benefits where businesses can leave a worthwhile legacy.


There are many advantages to going green. Environmentally-responsible businesses tend to attract top talent who are keen to work for organisations that make positive and lasting impact; over the longer-term, green businesses are operationally more efficient; there is more innovation in green organisations; going green often improves brand image and provides a competitive advantage. All these add up to higher shareholder value.


Investors are also emphasising sustainability and not just financial performance, as consumer awareness on environmental issues has increased. The Malaysian government can provide support via tax incentives, funds for specific sectors, and better enforcement of environmental regulations.


Slowly but surely, Malaysian businesses are becoming more environmentally aware and responsible.


Summarised Points by Panellist


MR PHILIP RAO


Mr Philip Rao
  1. We cannot go on compromising the future. We need the earth, the people, and the sustainable future for ourselves.

  2. It is always a challenge differentiating between CSR, going green, and being sustainable. There is a need to see the interaction between all these three aspects to create the environmental, economic, and social perspectives in the ways we go green and the ways we are responsible for going green.

  3. It is important to align your business strategy and practices to suit the delivery of the SDGs. We are already working very well on some of the SDGs in Malaysia; for others, we need to do better.

  4. Looking at risk management in terms of the likelihood of a risk occurring and the impact, the impact is obviously a much bigger concern. Eight out of 10 top global impact risks are sustainability related.

  5. From a survey done last year, investors are looking at your organisation very differently now: not just from a financial lens but also in terms of your sustainability performance.

  6. Harvard Business School introduced three business models concerning how to manage your business in the face of manufacturing challenges

  • Forestalling Risk: preserving the license to operate, in the manner that you manage the media and social media, to make consumers realise that you are serious about sustainability;

  • Increasing Operational Efficiency: about how organisations are incurring costs now concerning whether to go into environmentally friendly buildings, which cost more but in the long term save you energy and water, and whether organisations are recycling more to reduce the amount of waste produced;

  • Selling to the Environmental Niche: we have many different types of differentiated green products in the market today. For example, Toyota sold 230,000 units of Toyota Prius worldwide and made USD4.5 billion. Selling to the environmental niche can give you a good return and yet is positive in terms of the green aspect.

7. Consumer trends are changing in terms of employees’ and shareholders’ views of the purpose of the organisation. There is a lot of shifts in the political and regulatory regimes as well as technology that are helping us to shape the future with renewables, smart cities, and so on


8. We are seeing a lot of progress with the government support and the requirement by regulators for disclosure, which helps us as stakeholders and investors understand the company a lot more.


9. There are six advantages of the Business Imperative for Going Green::

  • We need to attract top talents. Our people today join us because of what we do and how we manifest ourselves in the manner that we are purpose-driven – whether to do well in business, to be environmentally friendly, or to be socially cooperative in the type of progress you do in the country.

  • Create a legacy for yourselves and for your organisation.

  • You have the ability to create benefit from operational efficiencies, whether by saving a certain amount of resources, improving the use of resources, or making better buying decisions.

  • You can be more responsible in the way you innovate by looking into the impact on the community and the amount of cost you incur.

  • Brand image and the competitive advantage are definitely there.

  • Make your shareholders happy. When the shareholders are happy, they will be more approving of your effort to go green.

From a survey done last year, investors are looking at your organisation very differently now: not just from a financial lens but also in terms of your sustainability performance.

MR RALPH DIXON

  1. I am a firm believer that there should be more stick and less carrot. I think both consumers and the government are going to drive the changes, so businesses should be forced by both sides to behave differently.

  2. I think businesses have a responsibility. Whether they have an obligation in terms of the stakeholder balance, the first measure is in meeting the shareholders’ financial requirements. It has to be complemented by responsible business behaviour concerning the way you develop your business strategy.

  3. Where we can behave responsibly, we should make the necessary changes. YTL has just announced that we are going for the complete elimination of single plastics use by 2025. We will find a way to achieve that because we have made the commitment.

  4. Investors punish companies for behaving irresponsibly. You do not necessarily see the impact of your irresponsible behaviour initially.

  5. For the new YTL HQ in Bukit Bintang, we spent roughly 10% more to achieve the GDI goal, but in the long run, you see the benefits. We have multiple stakeholders’ interests balanced. You do get rewarded for that behaviour ultimately.

  6. The steps taken by the new government are very positive and pro-active in terms of enforcement, setting targets on waste, and clamping down on illegal dumping.

  7. We have set up turtle hatcheries with an NGO along the Terengganu coast near our resort. We go into it more as a CSR activity, but we found that among the returning visitors, 97% returned because of this project. Suddenly the stakeholders, shareholders, directors, and employees could see that there is a tangible benefit to this project.

  8. When we interview younger or new recruits or university graduates, they ask us about our policies and commitment towards ESG. The focus is clearly on responsible business strategies.

  9. Social media has become so powerful in both positive and negative ways. Hopefully, we can reign in the negative impacts, but the positive impact is that we have much visibility now.

  10. It takes persistence and a belief in what you are looking for in terms of the solution. If we stick to searching for solutions regardless of incentives and regulatory issues, I believe we will find huge opportunities in the industry.

Investors punish companies for behaving irresponsibly. You do not necessarily see the impact of your irresponsible behaviour initially.


MR POH TYNG HUEI


  1. For us, going green means replacing conventional energy with renewable energy, which is a sustainable source. But as long as what you are doing is “friendly” and preserving the environment, that is the meaning of going green.

  2. In our business, we see different kinds of mindset between foreign and local companies. Previously, no incentive was given for foreign companies to adopt green energy, but they shared the problem through their commitment and action. The local companies’ first response is, what is in it for them and how much they would earn in return for going green.

  3. I think the hesitation comes from the 3Cs:

  • Complexity. To adopt a sustainability practice, there is complexity in reporting and complexity in terms of the accountability system, which you have to add into your business practice;

  • Additional Cost. You pay more for going green. If you are focusing on near-term profit, you would not see the long-term sustainability; and

  • Care. Some businesses simply care less for the climate, focusing on our own business, our own survival, rather than what it is going to be for the next generation.

4. We believe in what we call the energy trilogy, where we want to make full use of energy generation, energy efficiency, and energy storage to provide a sustainable energy system to everyone.


5. If we perceive ourselves as sustainable, we lead by example and do things correctly. This then strengthens our brand value as perceived by consumers.


6. About 6-7 years ago, when the renewable energy industry was very new, the government launched an incentive programme called Feed-in-Tariff (FiT). At that time, the energy cost from renewable energy was still high. You needed some incentives to promote the industry to let people know about the industry and to execute it.


7. Now, the cost of deployment of a solar project has dropped by more than 50%. It means you do not need any legal compliance or incentive to drive people to put up a solar system or go green. You just need to educate and have the commitment, probably also a more prolonged appetite on the investment return, i.e. 6–7 years.


8. In Malaysia, we are considered lucky because we have not seen the direct consequences and impacts of climate change and global warming. The weather is actually changing, and the natural disaster is happening. Malaysians need to do more than just empathise. We need to commit to combating these issues with shared responsibilities.


If we perceive ourselves as sustainable, we lead by example and do things correctly. This then strengthens our brand value as perceived by consumers.

MR VINESH SINHA


  1. The ecological system has only a certain set of resources, but we have this desire for unprecedented growth to which we measure our success. That is not an equation that makes a perfect equilibrium.

  2. Most of the time, we do not realise that everything that we do has a footprint, whether low, medium, or high. The one thing that has the biggest footprint is the Ringgit. To us, the common perception of making a profit and spending the profit in areas that save the environment just cannot work because it is not a zero-sum game.

  3. We need to look at business models and see how we can extract maximum value out of these models while being ethical and resource-responsible. It means being a resource-responsible and ethical organisation while measuring our success based on economic, social, and environmental bottom lines.

  4. I believe the climate situation that we go through today is the result of the economics of post-war 1960s where everyone felt entitled to do as they liked, and they never thought about the longer-term consequences of their actions. Nevertheless, there is hope for the planet because the new generation is not one to point fingers but is empowered to make a difference. We learn from our mistakes and we are going to solve this problem with solutions that are different from what was done in the past..

  5. At Fathopes Energy, our product is the recovery of waste oil, which we accumulate and aggregate by ensuring that it is used for industrial fuel application. We have improved food security across Asia drastically because of the unethical practice of stored waste finding its way into human or animal feed consumption. Without a bio-fuel energy sector, there wouldn’t have been a financial motive to switch from putting waste oil in food or something else.

  6. 6. In the extremely complex industry of fossil fuel, there are very few options for decarbonisation. For this industry to stay relevant, they will have to develop products that are of the same form, liquid fuels essentially, that have much lower footprints. It is about re-thinking the entire business model.

  7. Aligning the life cycle of the business towards what is happening to society is very important. That is what we do to align ourselves to sustainability. We try to identify the viable options that can be used as biofuel. I think this is a big opportunity, where many industries or manufacturing facilities can maximise the by-product and waste coming out of the manufacturing process.

  8. On the surface, the digital age disrupts sustainability because it promotes instant gratification, drives consumerism, and enables us to have options at our fingertips. However, this technology also presents us with the opportunity to check the impacts we have on the environment and to backtrack on those impacts.

  9. Using technology to track what we do and prove a chain of custody of the relevance and authenticity of our actions is very critical, and technology offers a good opportunity for us to be transparent. However, if it were used in a superficial manner, it could accelerate the climate problem we are facing.

  10. In the past, we could be reliant on crude oil a single source of energy. Moving forward, it definitely is going to be a diversified portfolio of energy streams or resources. Each geography will have a different energy mix and demand due to locally available energy sources and resources. It is about finding a balance of diversified sources of resources, which requires maturity and a high level of collaboration.

  11. It takes a lot of perseverance to achieve total adoption across the organisation. The effort to push on the vision is much more important than the vision. You need to have the buy-in and horsepower behind the vision.

  12. We need to continue to have the drive and determination to help one another as a society and to come to a friendly collaborative process so that eventually, all the organisations feed into one another where we complete one another as a whole. We are all complementing each other, so we have the lowest possible footprints and impacts on the planet.

Nevertheless, there is hope for the planet because the new generation is not one to point fingers but is empowered to make a difference. We learn from our mistakes and we are going to solve this problem with solutions that are different from what was done in the past.