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Sick Mother Earth can hurt business

Protecting the ecosystem and its biodiversity will mitigate risks in the supply chain and provide opportunities for companies

The economic future of the Association of South-east Asian Nations (Asean) region looks bright.

In recent years, the grouping has been growing by around 5 per cent a year and the Asian Development Bank estimates that by 2030, nearly half a billion of Asean's population will be considered middle class.

New International Monetary Fund projections put the region on track to becoming the fourth largest economy in the world by 2050.

It would be difficult to find a business today that doesn't keep track of these projections in economic health and isn't excited about the region's prospects.

From New York and Frankfurt to London and Singapore, the rise and fall of each trend is closely scrutinised to capitalise on opportunities and mitigate risks.

Yet, few businesses take note of another critical trend that can affect their operations and profits just as much, if not more - the failing health of the planet.

We cannot have a prosperous society in a degraded planet; all signs are pointing to human activity driving the planet to the edge, as business and people consume more natural resources than Earth can regenerate.

We cut more trees than can regrow, we catch more fish than can reproduce, we emit more greenhouse gasses than natural systems can absorb.

We create materials like plastic that last forever and throw it away after a single use.

The UN Office for Disaster Risk Reduction estimates that in the last 10 years, climate-related disasters have caused US$1.4 trillion (S$1.9 trillion) in damage worldwide, with the Philippines, Indonesia and Vietnam among those countries most frequently affected.

Floods alone could cost South-east Asia as much as US$215 billion each year by 2030, said the World Resources Institute.

Asean today already faces a multitude of trans-boundary environmental issues such as extreme-weather events, haze, freshwater scarcity and over-fishing, along with dwindling forest cover and loss of biodiversity.

As intangible as it may seem, loss of biodiversity is one of the major threats to the health of crucial ecosystems such as oceans and forests, on whose services our economy, social stability and individual well-being depend.

SUSTAINABILITY ISSUES

As the effects of climate change worsen and our planet's resources and natural systems come under increasing strain, sustainability issues will increasingly hit companies' bottom lines.

Businesses that depend on water and commodities are particularly vulnerable.

For instance, when asked about supply-chain snags with sugarcane, sugar beets and citrus for its fruit juices, Coca-Cola admits that increased droughts, more unpredictable variability and 100-year floods every two years are major threats.

It's clear that companies not only have a responsibility to ensure that the natural resources and ecosystems that underpin their business are used sustainably, but also must do so for their own bottom lines and long-term viability.

Protecting land, oceans, rivers, forests as well as their biodiversity and communities will mitigate risks in the supply chain and provide enormous opportunities for businesses willing to invest in the future.

This is particularly true in Asean. Favourable economic outlooks are a great opportunity for businesses in the region to lead the way towards a long-term approach, rather than obsessing over short-term profits.

Increasingly, employees, customers and investors are demanding that businesses promote environmental, social and governance practices - for the bottom line and the "greater good".

Yet, despite the benefits of sustainability, companies are still dragging their feet and taking a short-sighted, short-term approach.

A new WWF report published with the National University of Singapore (NUS) found that banks in Asean are failing to redirect financial flows away from environmentally and socially destructive business practices.

Importantly, they have not begun to tap into the growth opportunities needed to finance the transition to a sustainable economy.

A huge opportunity lies in tackling the worsening global water crisis; key will be redirecting financial flows towards more sustainable water projects.

We work with financial institutions on innovative approaches such as blue bonds and water stewardship funds to bridge the gap between the world's water needs and funds waiting to be invested in sustainable and bankable water projects.

The key to a bright future for businesses, and of course the planet, lies in establishing resilient markets that produce more sustainably, consume more wisely and safeguard our natural wealth.

Healthy economies depend on a healthy environment - that is the bottom line.

The writer is director-general of WWF International. 
This article was published in 
The Business Times on Nov 2.

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