By growing their enterprises in ways that support the UN Sustainable Development Goals (SDGs), the private sector could unlock US$5 trillion in business opportunities and create 230 million new jobs in Asia by 2030.
This is the headline statistic from the Better Business, Better World: Asia report that released this morning, at Singapore investment firm Temasek’s annual Ecosperity conference, a high-level conference gathering of global business leaders to debate the issues around sustainable development in Asia.
The report is an 88-page roadmap to help business leaders understand how the private sector can benefit from the SDGs, and reveals the issues that will present the biggest opportunities for their businesses over the next 13 years.
It was produced by the Business & Sustainable Development Commission (BSDC), which was convened at the World Economic Forum last year to encourage the private sector to play a leading role in sustainable development and help achieve the SDGs. The SDGs are a set of 17 goals to reduce poverty, protect the environment and improve living standards globally by 2030.
While its flagship report Better Business, Better World was unveiled at the start of 2017, today marks the public release of the Asia-focused report that was created in collaboration with the UN Foundation, strategy consultancy Systemiq, Temasek and Asia Pacific-based business strategy firm AlphaBeta.
Even as the region develops in what has been termed the “Asian century”, it faces a host of challenges such as rapid urbanisation and climate change that threaten to derail and undo progress. While metropolises like Tokyo and Beijing flourish, millions of people live without access to basic services such as water, clean sanitation and breathable air.
The report is extensively researched, clearly presented and well worth a read for those in the public, private or civic society sectors. But for the time-starved professional, Eco-Business has summed up the 10 most important things you need to know about the Business Better, Better World: Asia study.
- This is the Asian Century for sustainable development
A conservative estimate by Better Business, Better World: Asia finds that companies aligning themselves with the SDGs will find $12 trillion in new business opportunities and 380 million jobs ripe for the picking, globally. Of the total, 40 per cent of this will happen in Asia. That means capitalising on sustainable development could yield $5 trillion and 230 million jobs at the minimum.
- China accounts for almost half of the economic potential for sustainable development in Asia
The potential bounty from sustainable development vary across the region. Some $2.3 trillion in development opportunities will be found in China, while India is expected to yield $1.1 trillion and another $1.1 trillion for the developing countries of the region. Developed economies such as Australia, New Zealand, Japan and South Korea will altogether offer $700 billion.
- Cities and the energy sector offer the biggest opportunities
The global edition of the Better Business, Better World report identified a total of 60 hotspots where profits and the SDGs overlapped. In Asia, the top 20 opportunities alone make up 70 per cent of the projected $5 trillion in earnings to be made. Providing affordable housing in the developing world, especially in China, was found to be the most rewarding market opportunity, with a valuation of $505 billion. Renewable energy was found to be the second largest ($300 billion), followed by reducing food waste in the supply chain ($260 billion), and moving the automotive industry towards more circular practices ($255 billion).
- Cities: Asia-Pacific will lead the world in EV sales by 2022
This is particularly the case in China’s cities, the world’s largest EV market, where air pollution has been a persistent problem. Urban mobility solutions such as novel car sharing and ride sharing programmes will offer further opportunities in the more densely populated cities of tomorrow. Making buildings—that consume one-third of energy globally—more energy efficient through better fixtures and appliances, and temperature control systems such as district cooling systems, also holds potential.
- Energy and materials: Circular economy solutions in Asia will be worth $535 billion
Implementing circular business models in the automotive, appliance and electronics industries will offer a significant reward to companies willing to innovate with business models like leasing, and to design for disassembly and remanufacturing. Furthermore, with demand for energy in Asia set to almost double by 2030, the region is hungry for capital to invest in renewable energy projects.
- Agriculture: Food production commands 10 per cent of global GDP, but only 3.5 per cent of global venture capital funds
Asia is a major food producer, but faces challenges such as growing populations, declining yields and major underinvestment in agriculture technology. Firms committed to this area will find rewards for solutions to problems such as food wastage by developing better cold chain logistics ($260 billion), boosting yield for smallholder farmers ($55 billion), and packaging waste ($20 billion). One company that has already started on packaging waste is Unilever, which recently announced a new plastic sachet recycling technology to be piloted in Indonesia.
- Health and well-being: Total prize of $670 billion up for grabs
Ensuring that more people in Asia have insurance coverage provides a chance for companies to innovate with existing business models that could be scaled up in Asia, including risk pooling and microinsurance. There is also scope for remote patient monitoring systems and telehealth that allow patients to receive and seek healthcare without having to travel large distances. The success of India’s Apollo Telehealth services, for example, has been credited to its public-private partnership model. The Indian government fronts the capital and operating expenses for the centre, while Apollo runs the programme.
- 230 million jobs could be created by 2030
The changing structure of the economy will move demand for labour from lower to higher value sectors, and the report calls on businesses to provide “decent work” in Asia, defined as jobs that are productive, offer security, social protection, a fair wage and prospects for personal development. The industries that could create the most jobs are those that will offer the most business opportunities in 2030: cities, energy and materials, food and agriculture, and health and well-being. Meawhile digitisation and automation will reshape jobs in traditional labour-intensive industries, impact women’s participation in business, and link small-medium enterprise to global, regional and national supply chains.
- Asia needs $1.7 trillion annually to deliver on the Global Goals
To make the most of all of the SDG opportunities on offer, the region will need additional annual investment of $1.7 trillion, of which half is likely to come from the public sector. Blended finance could become another major avenue for obtaining capital, with public, philanthropic and private sector groups sharing the investment risk. Asia’s national domestic banks and sovereign wealth funds are also major sources of untapped funding potential.
- Time for a new Asian social contract
Businesses, governments and civil society will need to work together to achieve the SDGs by 2030 and in doing so, forge a new social contract in the region. The private sector must reduce its negative social impacts by creatying better jobs, being more transparent, avoiding lobbying that impedes the achievement of the SDGs, and supporting sound science.
Governments can create an environment to enable private sector growth by steering free of corruption and enforcing the rule of law. Trade unions can engage in dialogue with businesses, while civil society overall must monitor institutions to ensure they are transparent and law abiding.
Asia has its work cut out, and the report warns that there is a price for ignoring sustainable development: “Less stable and less equitable societies, an irreversibly damaged environment, and higher political risk. Increased volatility will weaken business conditions and further curtail growth. Governments will be forced to enact strong regulations to try and avert the worst effects of the compounding social and environmental burdens.”
“For these reasons, the private sector cannot afford to ignore the Global Goals. Similarly, the world cannot afford to let the private sector ignore them.”
Eco-Business is a content partner for Temasek’s Ecosperity sustainable development event, which is being held on Monday 5 June in Singapore.