Is Corporate Asia ready for the Green Economy?

GLOBE-Net –  A new report by ACCA (the Association of Chartered Certified Accountants) explores the concept of a ‘green economy’, and its relevance in Asia. It brings together the views of companies, investors, NGOs and accountants from across Asia and demonstrates the need for a multi-stakeholder approach to sustainability.

Gordon Hewitt, sustainability advisor at ACCA, said: ‘The transition to a green economy cannot be achieved by any one group alone, and requires the collaborative efforts of a range of stakeholders.

Governments need to set policies and regulations that promote green growth; investors need to incorporate environmental, social and governance (ESG) into their decision making and capital allocation decisions; companies need to develop goods and services that minimise environmental and social impacts; and civil society needs to engage on the topic and demand accountability from governments and corporations.’

The United Nations Environment Programme (UNEP) has come up with the following definition of a green economy. ‘An economy that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. In its simplest expression, a green economy can be thought of as one which is low carbon, resource efficient and socially inclusive’. (UNEP 2010)

The report follows a series of events that took place earlier in 2012 in four cities across Asia – Singapore, Jakarta, Hong Kong and Beijing.

These events drew together representatives from a range of leading NGOs, business organisations, corporations and the accountancy firms and were held in partnership with the international NGO, WWF.

It makes a case for green economic governance, and demonstrates how governments need to develop new metrics that go beyond GDP if they want to create the necessary incentives for investors and companies to adopt more sustainable practices.

Such arguments echo the conclusions of the United Nations Conference on Sustainable Development, or Rio+20, which took place in June 2012.

The Business case for a Green Economy 

The report also highlights that the business case for sustainability is gaining momentum in Asia and leading companies are integrating sustainability into their corporate culture and decision-making processes.

The scale of the challenges facing companies is enormous, but this operating landscape does present much opportunity for growth.

A recent study by the Harvard Business School has shown that a sample of companies that had adopted environmental and social policies by 1993 had, by 2011, outperformed a similar sample of companies that had not adopted such policies.

This suggests that incorporating sustainability into corporate culture and decisions presents businesses with a number of benefits, which ultimately create new opportunities for growth.

“Governments need to set policies and regulations that promote green growth; investors need to incorporate environmental, social and governance (ESG) into their decision making and capital allocation decisions; companies need to develop goods and services that minimise environmental and social impacts; and civil society needs to engage on the topic and demand accountability from governments and corporations” Gordon Hewitt, sustainability advisor at ACCA

UNEP has identified a number of green economic benefits to business, which include (UNEP 2011): * more resilient supply chains *new investment opportunities *sales growth, through increased consumer demand for sustainable goods and services, and*reduced dependency on natural resources.

The benefits of doing so include more resilient supply chains; a lower dependence on natural resources leading to lower input costs; and increased sales, as customers within Asia and from around the world are now considering sustainability in their purchase decisions. Accountants, as key members of the business and finance community, are well placed to help companies realise these benefits.

Gordon Hewitt concludes: ‘ACCA believes that accountants have an important role to play in assisting companies to adopt green economic practices. The core skills and experience of accountants will be valuable to companies seeking to measure and report on their environmental and social impact.’

The full study is available here

See also GLOBE-Net article “Is corporate Canada ready for the green economy?”

01/24/2013 – 16:15