During the coronavirus crisis, corporates face a tough decision: Amid squeezed profits, should they keep pursuing efforts to shrink their climate impacts, or put decarbonisation strategies on the back burner?
While it may be tempting to allow climate change to slip off the agenda, experts said companies should ask themselves whether they can afford to let that happen when shifting economic and political tides pose existential risks to climate-disrupting businesses in a post-pandemic world.
Speaking at the Ricoh Eco Action Day 2020 Panel titled The race to net zero on Tuesday (2 June), the experts said charting strategic decarbonisation plans now could make the difference between being future-ready once the pandemic passes and being left behind as consumer behaviour shift, climate policies change and novel low-carbon technologies emerge.
“It is unrealistic to expect companies to turn away from their core business at this point in time. You would not expect them to start prioritising things that are really innovative and really disruptive, but you would expect them to do some planning about what comes next. They need to start to think about the risks they could face in more detail,” said William Hudson, head of South East Asia at sustainability consultancy The Carbon Trust.
“We should guard against climate action being sidelined, delayed or postponed because of this pandemic. If Covid-19 is a disruption, then climate change is surely a longer-lasting and more severe disruption,” said Tan Kok Yam, deputy secretary of Singapore’s Smart Nation and Digital Government Office in the Prime Minister’s Office.
Rising to the challenge
But how can firms go about slashing their emissions? Hudson said the first step would be to understand one’s carbon footprint. Once corporates have taken stock of their emission sources, they should set science-based targets aligned with the Paris climate deal and develop a roadmap to zero emissions.
Corporates must then buckle down: They need to invest in energy-efficient technologies, switch to zero-carbon power, move towards zero-emissions transportation, and decarbonise heating and cooling. Implementing internal carbon pricing can help mitigate transition risks and improve decision making around investments, said Hudson.
The Singapore government can help drive change by using the right policy levers to achieve its ambition to phase out fossil fuel vehicles within two decades and to half peak emissions by 2050, the experts observed.
Last year, Singapore became the first Southeast Asian country to implement a carbon tax, but at a price of S$5 per tonne of carbon dioxide emissions, the tax has been criticised for being too low to move the needle. The government plans to gradually increase this amount over time to allow businesses to adjust, even as it invests in solar energy, electrifies its public buses and adjusts its strategies to incentivise the adoption of electric vehicles, said Tan.
Singapore is also pursuing efforts to foster research and development efforts, encouraging organisations to test emerging low-carbon solutions such as green hydrogen and carbon capture technologies in the city-state, he continued.
“We should aim for an economy where the public and the private sectors work together to seize green growth opportunities to both enhance our resilience and create new jobs for our people,” he added.
For lessons on how to further engage the private sector and spur corporates to clean up their act, the island-nation could also look to other countries, said Hudson. He cited a successful tax on industrial emissions that the United Kingdom introduced in 2001.
Not only did the policy offer tax relief to encourage companies to set energy efficiency targets and deploy novel technology, but it was also accompanied by extensive awareness-raising campaigns that encouraged knowledge sharing and provided sector-specific advice on the different low-carbon technologies available.
From silver linings to golden opportunities
Corporate climate action is gaining traction around the globe. For instance, more than 800 companies have set science-based decarbonisation targets, 225 firms have signed on to RE100 to show their commitment to renewable energy, and 70 firms have joined EV100, an initiative devoted to accelerating the transition to electric vehicles.
In 2017, Ricoh became the first Japanese company to join RE100 and aims to cut its greenhouse gas emissions by 63 per cent by 2030, said J.D. Kasamoto, general manager of the service and environment division at Ricoh Asia Pacific. All of the firm’s manufacturing sites in Thailand, Japan and China that assemble its printers switched to clean energy last year; so have its offices in Singapore, he told the audience.
More than transformative efforts, this calls for some corporations to take the lead. May Liew, head of sustainability and open innovation at Singapore-headquartered energy firm SP Group, said her company had launched a platform last year that enabled corporates to buy and sell international renewable energy certificates, even as it was beefing up its grid to prepare for higher solar shares.
Moreover, SP Group is working with districts to deploy energy-saving district cooling solutions and aims to support the Singapore government’s plans to install 28,000 charging points for electric vehicles across the city-state by 2030.
While the upfront cost of innovative low carbon solutions may be higher, companies should take full life-cycle costs into account, she said. Investments in more energy-efficient technologies, for instance, could save companies money in the long term.
There are also business models pandemic-stricken companies could employ to boost energy efficiency without significant upfront cost, noted Soren Kvorning, president of the Asia Pacific Region at engineering giant Danfoss. “There are investors that are happy to invest in retrofits with basically zero capital expenditure for customers and we have some of these projects out there and running,” he said.
Despite the difficult times for firms, the experts highlighted the silver lining to the crisis as well as the golden opportunity it presents. Emissions drops from lockdowns may not slow down global warming, but re-emerging wildlife and reduced pollution have offered a glimpse of an alternative world. Corporates have realised representatives need not fly to conferences that can be conducted online just as successfully, while some governments are placing climate action at the heart of stimulus packages designed to restart economies.
“The question for us in the energy industry is this: Do we go back to fossil fuels, or do we use this time as an opportunity to reset our society? The answer is clear: Healthcare, economy and climate resilience are interlinked and must be part of a holistic plan for a sustainable, healthy and green recovery,” said Liew.
“We can see this as an opportunity to test ourselves. If we can stand united to meet the challenge of Covid-19, can we all come together to also address climate change?” she added.