Time is now ripe for green business
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Time is now ripe for green business

Can business be green and sustainable? This is the question many business leaders, as well as those from other sectors, have been pondering for some time.

Can business achieve high profitability, but at the same time make a positive impact on society and the natural environment?

As part of the 2013 Bangkok Conference: Global Dialogue on Sustainable Development, the Thailand Development Research Institute (TDRI) held a special workshop to seek out the answers to these emerging questions from the business sector.

The workshop aimed to critically assess the situation of the green business movement in Thailand, and explore opportunities and approaches for businesses, large or small, to move towards achieving a sustainable and green business model.

TDRI research fellow Kannika Thampanishvong first noted that the government has become more interested in the notion of sustainable development and green growth, as can be seen in its national social and economic development plans.

However, what Thailand needs is a "paradigm shift" to create a new level of awareness across all groups of actors _ from state to private sectors, civil society to consumers.

Green business development should start by focusing on sustainable production and consumption processes. In terms of moving towards "greener" production, Dr Kannika argued that responsible resource use, higher renewable energy usage, and exploring ways to protect ecological systems in which businesses operates are vital.

Essentially, this calls for green innovation which would enable the business model to be both green and inclusive.

To achieve this, there must be a strong policy push from the state sector to create a platform and consensus for innovative cooperation. This means supporting collaboration and cooperation among green innovators and enterprises, as well as supporting innovation clusters so that new technologies can achieve profitability through economies of scale.

Finally, the state should play a more active role in providing information about financing sources for prospective green entrepreneurs.

In terms of consumption, Dr Kannika suggested we need a change in consumer behaviour, which would require investment in time and effort in our education system so that the public understands the notion of "common property" and how their consumption behaviour can have an impact on broader society.

Additionally, a green business would need to understand their customers in terms of how "green" they are. Green customers can range from lean green, shaded green, defensive green to extreme green, which would each require different marketing tools.

Meanwhile, Chonlathorn Dumrongsak, of Siam Cement Group (SCG)'s Centre of Excellence and Sustainability Development, argued that large corporations have an active role to play in developing a business strategy that is environmentally friendly.

For SCG, going green is not merely a CSR initiative, but has increased the company's bottom line, created new revenue sources and finally given the company a licence to operate in the community.

The green strategy has helped SCG to save 5.7 billion baht per year and reduced greenhouse gas emissions by 1 million tonnes through lower fossil fuel dependency.

In addition, improving energy efficiency yields more attractive returns through more efficient production processes and better use of equipment.

Apart from the green operation, SCG also focuses on research and development to develop environmentally friendly products which target real customer needs.

Last year, the company spent 1.43 billion baht on R&D to develop high value-added (HVA) products, and the revenue from these HVA sales contributed to 34% of SCG's total product sales.

With regard to small and medium enterprises, Vichean Jedsadakan, managing director of Pig Family, an eco-friendly pig farm, said having an in-depth understanding of the ecosystem and the local community is a key factor of success in running a green business.

Similar to SCG, gaining a licence to operate in the local community means the business will not go down the wrong path which could produce consequential and unexpected losses.

However, Mr Vichean asserted that the main problem with green business in Thailand is the lack of mutual understanding between consumers and producers. Producers do not have a full understanding of what consumers want, and consumers lack a channel to communicate their needs.

Dr Decharut Sukkumnoed, an economics lecturer at Kasetsart University, argued that a green business model should focus on "value" rather than "price". By focusing on the value aspect, the business model can continue to make an impact in society, rather than narrowing its focus to the comfortable space of improving profitability.

In the case of community enterprise, it was found that people do not lack innovative capacity but need more support in terms of funding, setting-up systems and cooperation among actors.

Knowledge management, internal management structure and marketing tools are therefore essential to the success of a green community enterprise.

Green Foundation secretary-general Saranarat Kanchanavanich argued the world has used up 30% of its irreplaceable natural resources. So we need an urgent restructure in how our production system works to achieve a more sustainable process.

Under the Asean Economic Community, which will come into force at the end of 2015, businesses should question whether their deals, agreements and investment will have a negative environmental impact that would be irreversible.

Particularly with the closer economic integration that is taking place, it would be impossible for one country to ignore the calls and trends of its neighbours. If we want to live together peacefully, and achieve successful economic and social objectives, effective cooperation is needed. So the time is ripe for a stronger and better green business movement in Thailand.

Werapong Prapha is research communications manager, Thailand Development Research Institute.

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