In today’s economy, as we begin to experience the birth pangs of a global green transition, pursuing ethical business practices is truly a case where conscience and prosperity cross paths.
Ethics is about doing what is right. Living a set of values. And working for the greater good.
The core of ethical business essentially means respecting and securing the interests of all stakeholders. This should hopefully come as no surprise. However, the distinctive factor today surrounds the questions of what constitutes a stakeholder.
In the energy sector for instance, stakeholders have traditionally been the investors, the employees and the consumers. Yet today, decision makers in this sector are beginning to acknowledge that the nature of their work renders local community members too as vital stakeholders.
Furthermore, the surrounding environment, negative externalities, and the future generations whose lives will be vastly affected by them, are also legitimate stakeholders who must be considered in decision making.
Every company of course already has legal fiduciary responsibilities to its investors, and law-bound commitments to the welfare of its employees. Yet as business leaders in ASEAN, we believe it’s now time that regulation and legislation around the world catch up, taking into account the aforementioned unseen stakeholders, and a company’s ethical obligation to them.
Corporate responsibility, in its truest sense, leads businesses to be more valuable. Unethical business practices on the flipside are inextricably linked with scandal and costly public relations disasters. Indeed investors, customers and competent employees want nothing to do with such a business.
In recent years, energy companies in particular have seen this dynamic play out with many investors placing a particular emphasis on Environmental, Social and Governance (ESG) practices. Customers and employees too, are expecting companies to play a role in delivering benefits to the communities they serve.
Indonesia, my country, is also on the cutting edge of the green energy transformation. Our archipelago nation is blessed with the array of natural resources the next century requires; from abundant geothermal, solar and hydroelectricity to massive reserves of nickel, a vital component in the lithium batteries required for the electric vehicle (EV) revolution.
However, despite our commitment to green energy infrastructure, we face significant challenges in accessing affordable financing for these projects. The interest rate differentials between developed and developing nations pose a major obstacle, limiting our ability to secure favourable financing terms for renewable energy initiatives. This disparity hampers the pace of our transition and creates an uneven playing field.
It is imperative that we address this issue and advocate for more equitable interest rates across the globe. Developing countries, like Indonesia, should not be burdened with higher costs and limited access to affordable capital, especially when striving to meet ambitious climate goals. A fair and balanced approach to interest rates is crucial to ensure a just and inclusive transition.
In line with these goals, the current government, working hand in hand with the private sector is pushing for a brave and ambitious transition to a modern, resilient, and renewable green infrastructure which represents a generational economic opportunity for Indonesia.
A transition to a low-carbon economy won’t just help our shared environment. It will create millions of good-paying, high skilled jobs for Indonesian workers. It is a commitment to an ethical future for our future economy, for the workers of Indonesia, and the right thing to do.
Indeed, energy companies – including our own – across our traditionally coal consuming nation have set ambitious goals of achieving carbon neutrality within mere decades. Furthermore, multi-billion dollar initiatives such as the Just Energy Transition Partnership have been launched to facilitate the reduction of emissions and keep global warming within the desired limit of 1.5 degrees Celsius. Most importantly, the green energy transition must be designed to be affordable, scalable, secure and accessible for our customers. The lights must stay on.
So while all companies have a responsibility to recalibrate their moral compasses, the ‘arc of the morale universe’ is particularly long for energy companies. Indeed, companies in the traditional businesses of fossil fuels have been challenged to chart a truly new path. We must all now look forward, diversifying business portfolios which suit a green, clean, sustainable and ethical future economy.
As we look towards our future economy, a company’s profitability will not be in spite of its commitment to corporate responsibility and environmental stewardship. It will be because of it.
Arsjad Rasjid chairs the Indonesian Chamber of Commerce and Industry (KADIN Indonesia) and the ASEAN Business Advisory Council (ASEAN-BAC), and is President Director of Indika Energy.
