This is the second post in a series about the Global Trader Dialogue 2019. Click here for the first post: Learn how Singapore continues striving to be a global trade hub.
Highlights from the Global Trader Dialogue 2019 Panel Discussion
Within Singapore and beyond, businesses are faced with heightened stakeholder scrutiny over how their business practices are making a positive contribution to society. To stay ahead of the competition, companies need to go green.
Against this backdrop, experts at the Global Trader Dialogue 2019 addressed how sustainability concerns are affecting their business practices, the steps they're taking to make sure that their business models are sustainable and how the industry can use financing, technology and governance to achieve sustainable value creation.
Saving the Planet, Saving Costs
In addition to being able to charge a premium for selected sustainable services or products, there are sustainable practices that businesses can implement to save costs and ensure profitability. One such practice is for businesses to increase information transparency. To do this, many organisations have embraced innovative digital solutions that allow them to trace inefficiencies that exist within their supply chain. This allows the business to reduce energy, water, waste consumption and more, hence delivering substantial financial benefits.
Bringing out an example, Daniel Wilson, Director of Strategy and Operations at TradeLens & Maersk, spoke on how TradeLens is empowering businesses to do just that by bringing all that information into one place, so that businesses and their stakeholders can make informed decisions throughout the supply chain.
According to Steven Okun, CEO of APAC Advisors and the ASEAN Representative for the Emerging Markets Private Equity Association, consumers now want to know what goes into the making of the products they purchase; right down to the raw materials. Having information transparency significantly increases their trust in the business.
Admittedly, implementing sustainability practices isn’t cost-free. However, rather than viewing sustainability practices as an obligatory business expense, Eugene Ganchev, Asia Pacific Head of Trade & Commodity Finance at ABN AMRO, urged businesses to turn these into advantageous opportunities.
He explained that banks and investors are increasingly choosing to finance companies with better sustainability practices, because they predict that these companies will be profitable in the long run. For example, companies that cut carbon from their services will likely be more profitable in the long run due to the increasing price of carbon. For companies that can transparently demonstrate sustainable impact, this added financial support brings more competitive advantages.
Furthermore, to be successful, businesses need to attract and retain the best people for the job. As Okun pointed out, businesses that are known for their sustainability practices gain a higher premium on human capital. Expanding on this, Stefan Fürnsinn, Senior Vice President of Digital Farming at Yara, said that talents who join a sustainable business want to make a tangible difference. Hence, it is important for sustainable businesses to define sustainability clearly, so that the impact can be measured.
Starting on Sustainability
The journey of going green starts with defining what it means. What does it mean specifically for each business and its stakeholders? To answer this, Okun pointed out that many commodity trading companies share the same stakeholders with similar sustainability concerns. While defining what it means, businesses can draw initial information from other companies that have published their stakeholders’ concerns.
Once these concerns have been clarified, businesses can zoom in on suitable UN Sustainable Development Goals. Fürnsinn emphasised that companies will be most effective when they target goals that they can best influence.
While sustainability is an urgent concern, Tan Chin Hwee, CEO of Asia-Pacific at Trafigura, cautioned businesses to have realistic expectations and to take the journey progressively with the banks and regulations, so that many employees would not lose their jobs unnecessarily. Rather than rushing out ill-targeted policies or strategies to meet sustainability goals, businesses must first develop metrics to track their targets. He explained that it was only after Trafigura developed appropriate sustainability metrics that they realised that 90% of their carbon emissions came from their ships. Following that, they were able to put into place relevant policies within the company.
Though challenging, businesses should not feel that they have to develop sustainability metrics on their own. Ganchev urged them to seek support from banks, government entities and other stakeholders, so that the conversation on developing suitable metrics can be broadened throughout the industry. Elaborating on that, he said that ABN AMRO would be happy to assist their clients with setting up sustainability standards, goals, policies and procedures.
Wilson added that once sustainability has been well-defined, the business can then draw out a roadmap to reach its goals and even reference the industry best practices of other companies that have already begun their sustainability journeys.
The journey of becoming a sustainable business will inevitably involve challenges. With this in mind, Fürnsinn encouraged business leaders to set a compelling vision to keep them going even on tough days. When the leadership sets a strong tone on sustainability and implements suitable performance indicators, it also better positions employees to adapt and respond positively to new digital implementations.
While the sustainability journey is a challenging one, we can all take small steps towards it. There is no need to go alone. Ultimately, it takes an entire ecosystem to achieve sustainable value creation and Enterprise Singapore has set aside technological, financial and other resources to support businesses in going green.