Private sector has key roles in climate action

As published on Bangkok Post.

The UN's Race to Zero campaign sets an ambitious target -- net-zero carbon emissions by 2050 at the latest, averting the most harmful impacts of climate change and building towards a more sustainable world. The global campaign rallies businesses, cities, regions and investors from across the world for a resilient carbon-zero recovery, but that goal is still far from being met and requires unprecedented economic and social transformation.

In Thailand, the private sector accounts for nine in 10 jobs and about 90% of GDP, conferring both a responsibility and an opportunity for leadership on meaningful climate action. In recent decades, the country has experienced remarkable growth lifting tens of millions of people out of poverty, from 67% of the population in the mid-1980s to only 8.8% in 2020. However, the growth came at a cost to the environment that is simply not sustainable going forward.

This week, the Bank of Thailand opened a public consultation on repositioning Thailand's financial sector for the sustainable digital economy, including managing environmental risks. In the Covid-19 response, there is also growing awareness that recovery and stimulus measures should be founded in sustainability and climate-friendly measures. The National Economic and Social Development Plan centres the transition on the Bio-Circular-Green Economy model based on prioritising high-value industries, investments in new technologies and innovation focused on efficiency, design-thinking and sustainability.

Business organisations can no longer address environmental and social risks in a compartmentalised manner. Instead of treating sustainability risks as separate issues from the main business focus, companies must fundamentally change the way they create value. Both businesses and investors have a vested interest in leading that change. From green energy to electric vehicles, smart agriculture to healthcare, businesses operating on sustainability values will create new jobs, produce economic value and foster entrepreneurship.

Ahead of the COP26 climate change summit in November, all 10 Asean members tabled their Nationally Declared Commitments (NDCs) for mitigating and adapting to climate change, with Thailand aiming for carbon neutrality by 2050 and net-zero greenhouse gas emissions by 2065. Across the bloc, a common theme emerged -- most countries linked emissions reductions and climate action to the common imperative of maintaining and growing secure and resilient economies.

In the Global Compact Network Thailand (GCNT), a voluntary association of companies committed to sustainability principles, most of the 90 members have already pledged to reach net zero by 2050. At its annual forum in 2020, the members also promised more than US$40 billion (1.2 trillion baht) through 2030 to advance the Sustainable Development Goals (SDGs).

Just as the 17 SDGs are interconnected, meaningful actions on climate change and the transition to a green economy are sustainable only in concert with the other goals such as zero hunger, gender equality, and responsible production and consumption. The principle of "Leave No One Behind", which has added urgency in the Covid-19 recovery, fundamentally means addressing inequalities, especially barriers based on gender as well as economic and educational opportunities.

The private sector should not be expected to do it alone. Economic transformation needs an enabling ecosystem established by the government and buy-in from civil society. A major step will be the further integration of environmental and social governance factors in stock exchanges worldwide and transparency for investors. At present, 147 companies on the SET and Market for Alternative Investment are included in the Thailand Sustainability Investment list, reflecting growing demand from investors and more readiness from listed companies to demonstrate sustainability measures. New rules agreed at COP26 for carbon markets further incentivise investment and innovation by putting a price on emissions.

Businesses, particularly SMEs and those hard hit by the pandemic, will need structural support to transform their operations. SMEs are the backbone of the economy and the largest employer, touching essentially every area of the economy through supply chains, yet often referred to as the "missing middle" that are underserved by financial institutions and technical assistance. Their ability to reduce emissions and mitigate the environmental impacts of their operations will be a major determinant of Thailand's progress.

The first step should be a thorough understanding of the SME landscape and the winners and losers in a green economy, with the support of the Ministry of Industry, Federation of Thai Industries, GCNT and UN Thailand. Structural supports can include policy incentives, technical advice and technological exchange to ensure a just transition in which potential losers can maintain their livelihoods. Furthermore, as green economy jobs continue to grow, the inclusion of upskill and reskill training by all sectors will provide employment opportunities for the workforce going into the future.

As the global Race to Zero marked its first anniversary last year, the NDCs put forth at COP26 put us on track for an average 2.4-degree temperature rise, if all those commitments are fulfilled, well above the 1.5-degree target in the Paris Agreement. Expect further movement on those goals at COP27 this year in Sharm El-Sheikh, Egypt as demand for meaningful climate action, alongside the tangible impacts of climate change, moves faster than complacency allows.

This is a challenging transition for everyone, particularly in the context of pandemic recovery. It is also inevitable -- and essential -- that Thailand and the private sector stay ahead of the curve. The view of climate action, emissions reductions and sustainable investment as optional cost burdens is something we can no longer afford.

The first step is acknowledging that the ways we have been producing and consuming are no longer sustainable. That realisation is already translating into commitments to change that need support and partnerships to see through to implementation. For the private sector, this transformation is both a social responsibility and an opportunity for sustainable business.