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WHEN Prime Minister Datuk Seri Najib Tun Razak unveiled the New Economic Model several weeks ago, the thrust of it was sustainability. With shareholders screaming for growth year after year, just how green can our corporates be?
Early this year, British Gas gave out a total of 52 million energy-saving light bulbs to replace the filament variety. This means its customers are using less electricity and the company will make less money.
If every customer were to use them, enough energy would be saved to power over 150,000 homes for a year. But wait a minute, if these light bulbs help reduce electricity bills and carbon footprint, will this also not mean that the company will lose 150,000 homes a year?
How does a company balance between being green and going for profits?
Because like it or not, reducing our carbon footprint means reducing consumption and that means reducing a company’s revenue and profit.
British Gas has good reason to give those light bulbs. Other light bulb makers were trying to get customers to switch to their supplies. By giving away light bulbs, British Gas was building loyalty and it has the means and the size to do so.
Like British Gas, companies around the world are forced to come to a compromise between balancing profits and reputation. It is something inevitable as governments, non-governmental organisations (NGOs) , professional bodies, the media and the public go for green.
Going green covers many facets and perspectives. In the case of British Gas, it was only protecting its interest when it gave away light bulbs. Yes, it will have less revenue in terms of electricity usage but it was gaining loyalty and ensuring a certain amount of market share.
In the case of local information communication and technology (ICT) player HeiTech Padu Bhd, it engaged UER Energy Saving Sdn Bhd to install energy conservation devices to cut electricity cost in its data centre, making it the first locally managed data centre to adopt energy conservation practices.
HeiTech is not giving free ICT services, but it is among some of today’s Malaysian companies incorporating green elements in the group.
HeiTech Managed Services Group chief executive officer (CEO) Abdul Halim Md Lassim is confident of achieving minimal 9% energy savings in the first year, and steadily increasing to 18%-25% within four to five years.
Energy conservation is somewhere at the top of the sustainability (or green) agenda. Other issues include water efficiency, biodiversity, waste management and recycling, and land use.
Being green 20 years ago
The green movement is not new. On the local front, it started with saving trees, turtles and other lesser species some 20 years ago. Globally, over time, it has distilled into the economic realm. Nobody would have thought that greenies from the Northern Hemisphere would have a say in what and how Malaysia and other countries should conduct their trade. The issue between palm oil and soya is still ongoing. Palm oil is the world’s second most consumed edible oil after soya.
Says plantation consultant Mahbob Abdullah: “There are very few businesses which are more green than the plantation sector. If you look at palm trees, it is like a forest. It is not like soya, which is a much smaller plant. It is just that the west has very good scientists to validate all those details in their favour.”
Today, going green has gone beyond environmentalism or altruism. From the United States to China and Brazil, the business of going green is gathering steam.
But what is driving this tidal wave? Economics and in some ways, politics.
The awareness that green is good may not have engulfed Malaysian businesses just yet. With Asia recovering from the economic crisis faster than other continents, that wave will fast filter down.
Already, we are seeing certain sectors of the economy embracing the green card. Maybe it is fashionable just yet, but it will soon stop being just a fashionable byword if Malaysia wants to engage with other parts of the world, as failing which, they will be left behind.
Notwithstanding all the criticisms hurled against China and emerging markets, there are companies there which have gone into the green supply chain and Malaysian companies are buying from them.
Private equity investment company Goldis Bhd tapped into that market when it fitted out their GTower. Singapore, for example, is selling green consultancy services to our developers who want to go in this direction.
Says Energy, Green Technology and Water Minister Datuk Seri Peter Chin: “It is not a fad! This world depends on our responsible behaviour. My key peformance index depends on it!”
KPMG executive director (head of risk advisory services) Hew Lee Lam Sang says that so far only the plantation and oil and gas sectors are seeking ways to promote sustainability on a formal basis.
“Malaysia is still at an infancy stage but it is a start,” he says. Many relegate green activities to the corporate social responsibility (CSR) department.
“They are green to be seen. Or because they have to fill something in that page when they make out their annual report,” says Lee.
But thinking and living green is a way of life. To be really effective and to make a difference, it has to go down to the sinews and veins of a company and the individuals that make up that company. Just as there are shareholders in a company, each living being is a shareholder of a very big and important company called Planet Earth.
“The growth after World World II was massive and the huge population growth and demand for power, food have been exponential. But the demands of man and the increasing world’s population have also accelerated the depletion of its resources. It is this that is impacting the planet we inhabit,” says Lee.
As a country industrialises, it is only natural that more fuel is burnt and consumption increases. It is this consumption that adds to the carbon footprint.
There are several catalysts to this wave. The first is the growth momentum in India and China. As China and India move from agriculture to industry and services, this will impact on the environment.
“We cannot blame China and India, because the West have been doing it for hundreds of years. The wealth of the West was built on the wealth from the East,” says Lee.
It is a general rule that the more industrialised a country is, the richer it is. China, Japan and South Korea have constantly consumed about 80% of the primary energy in the East Asian region. Between 1990 and 2007, East Asia’s energy consumption increase 116% from a low range of 18%-29% prior to that period (Regional Political Economy of China Ascendant: Pivotal issues and critical perspectives). As China and India grow, their appetite increase.
The second catalyst is energy, as a commodity. Oil is the fulcrum of the great global conflict. This natural resource is tied up largely in countries that, at best, tolerate the West as trading partners, and at worst think of them as the Great Satan. It is this, among other things, that contributes to the volatility of oil prices.
Probably the biggest driver of awareness is carbon concerns.
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