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| Leaders in green businesses like Shinta Widjaja Kamdani of Kadin, left, and Felia Salim of Bank BNI, second from right, attend the Sustainable Business Awards ceremony last week. (JG Photo) |
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Many
corporate leaders believe that going green is an expensive business. They think
they have to make money before they start spending money on the environment.
But what these leaders don’t realize is that sustainable business is just good
business.
The
inaugural Indonesian Sustainable Business Awards, supported by the Jakarta
Globe, were presented in South Jakarta on Wednesday to recognize the progress
businesses here have made in developing sustainable initiatives.
The first
of its kind in Indonesia, the awards program was established by international
consultancy firms Climate Business and Global Initiatives, and was also
supported by Indonesia’s Chamber of Commerce and Industry (Kadin).
The
winners, from small-medium enterprises to big businesses, showed that for them,
making money does not have to cost the Earth. In fact, since implementing
sustainability initiatives, many of these companies found that their businesses
improved.
United
Tractors, the heavy equipment unit of Astra International, emerged as the
overall winner for its focus on the environment, corporate social
responsibility and management of human resources.
“Our
concept of sustainability begins with the company philosophy that United
Tractors is here for Indonesia,” said sustainability director Edhie Sarwono.
For United
Tractors, a well-managed sustainability division, along with outreach programs
that communicate the company’s vision for a green future to its employees and
host communities, has paid for itself in improving productivity.
So why is
it that so many companies are reluctant to think long-term about the impact of
their business on the Earth?
Green Sense
and Cents
Speaking at
the awards ceremony, Bank BNI Vice President Director Felia Salim said that for
her company, going green just made sense.
“We are in
the business of supporting sustainable businesses,” Felia said. “So for us,
sustainability makes good business sense.”
As an
intermediary for businesses, Bank BNI found that by implementing sustainable
initiatives, it has been able to attract clients with similar goals. In this
way, aiming toward sustainability has not cost the company, but brought it more
business.
New clients
may only be a short-term benefit, but in the long-term, all businesses will
need to start thinking about sustainability sooner or later.
“Companies
cannot afford to not look at sustainability,” said Shinta Widjaja Kamdani,
Kadin’s chairwoman for the environment and climate change.
Shinta said
that realistically it’s time for Indonesia to catch up with the rest of the
world when it comes to sustainable business practice.
Since 1992,
big businesses from around the world have shown their commitment to
environmentally friendly practices through their membership of the World
Business Council for Sustainable Development.
Speaking at
the event, Tony Boatman from sustainability consultancy firm The Indela said
that it is in every company’s interest to share their experience with green
initiatives.
“We’re on
the same planet, so it’s actually not a competitive thing. Business will need
to transform,” he said.
Just last
year, Kadin established the Indonesian Business Council for Sustainable
Development, a body for Indonesian companies to share the best practices green
initiatives.
“I think in
Indonesia the idea of how to become a sustainable business is still in an early
stage,” Shinta said. “There has to be a breakthrough if we want this happening
faster.”
What Does
Green Mean?
Going green
basically means trying to reduce a business’ impact on the natural environment.
The idea is to develop a sustainable business that makes the most of the
resources at hand, without depleting those resources completely.
But it’s
not just about the environment. A sustainable business thinks about its impact
on employees and the community as well.
In
business, this is referred to meeting the “triple bottom line,” comprised of
planet, people and profits. The aim is to develop all three, without
compromising one for another.
“You can be
as green as you like, but if the workforce isn’t happy then business is going
nowhere,” said Alex MacGillivray, executive director of Climate Business.
Planet,
people and profits may sound like a lot for a company to focus on, but
MacGillivray said that in fact, the three cannot be separated.
“You can’t
sort of pull out the green stuff and say, ‘Well that’s something different,’
it’s very integrated into the way the company’s run,” he said. “Sustainable
business is very much part of being a well-run company.”
Green It
Like You Mean It
The first
thing to know about going green in business is that you have to be sincerely
committed to it.
Studies
have shown that while most consumers are willing to pay a little extra for
products that they know are environmentally friendly, they are not prepared to
fork out if they don’t believe the hype.
When
businesses treat sustainability initiatives as something to tack onto their
portfolio, rather than a whole-hearted effort to clean up their act, consumers
are unlikely to buy it.
“Sustainable
businesses, if they do it well, will have an advantage,” MacGillivray said.
“But if a company has a sustainability program because they think they should
do, or because the CEO or the CEO’s wife, thinks it’s a good idea or because
they’re following the latest trend, actually they could lose money.”
The key, he
said, is good marketing to make sure that the consumer understands the
company’s intentions in switching to a green product or business model.
Another
important factor is to make sure that the cost of that change is not passed on
to the consumer in the form of a green premium.
Consumers
may say in surveys that they are willing to pay more, but when it comes to the
crunch, many will still choose the cheaper option.
“If you
really believe in this stuff then you have to find a way of making it affordable
so that it’s not a dilemma for a customer,” MacGillivray said. “It has to be a
no-brainer for the consumer so that they can do what they’d prefer to do, but
they don’t have to decide on price.”
The real
challenge for Indonesia is not just to produce green products, but to make them
affordable for the country’s majority low-income population.
The growing
middle class may be developing an awareness about making ecological sustainable
choices, but for the rest of the country, price is always the clincher.
Businesses that are serious about making an impact here will put low-income
earners first by developing products and services that provide a future for
this market.
“Markets
move faster than the government can introduce regulations,” said Felia from BNI.
“Markets and consumers also have to push.”
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