How Asia Can Embrace the Business of Doing Better
Businesses can balance wealth generation with Environmental, Social and Governance (ESG) objectives like tackling climate change and carbon emissions, or building sustainable communities. It's doable—but only through a determined program of operational and technical renewal.
It requires effective senior leadership, along with investment, innovation, and cross-sector collaboration up and down the value chain.
The complicating variable is time. APAC is set to be the fastest-growing region in infrastructure and construction, but is still amongst the slowest when comes to digital adoption. That could be one reason why it’s not on track to meet the 2030 targets set by the UN’s Agenda for Sustainable Development.
With less than a decade to go, there’s an urgent need to change tack and find new ways to hit national commitments in areas like greenhouse gas reduction and the transition to renewables. It’s clear that on sustainability, APAC’s business and government leaders need to accelerate. The question is, ‘how?’
Finding the Fast Lane to Progress
To reach the 2030 objectives, the likely consequence is a carrot-and-stick of new incentives and regulations. But the real advances will be made by business leaders who embrace a combination of technology and re-engineered operating models. After all, investors are already monitoring ESG policies closely. When the Bangalore International Airport team leveraged digital tools to achieve sustainability goals while completing their new Terminal 2, it was a request from investors rather than policymakers.
But that doesn’t mean the logjam isn’t also breaking on the policy front. In January 2021, Indonesia announced its first-ever sustainable development plan, with hard targets for reducing greenhouse gases. Shortly after, Singapore launched its Green Plan 2030: a government-wide program of legislation and subsidy involving ministries from education to trade, transportation, and the environment.
Meanwhile at COP26, China announced a new deal with the US to tackle emissions; India promised to generate half of its electricity from renewables by 2030; and Japan pledged an extra $10 billion in overseas climate financing, on top of the $60 billion already committed to supporting the decarbonization of Asia and beyond.
More countries and companies are making new climate pledges to reduce waste and energy usage as well as cut greenhouse gas emissions. But since financing and implementing new technologies takes time, it’s in the adoption of solutions to deliver on those promises where friction is likely.
In the energy sector, McKinsey found that the average utility company could save up to a billion dollars over 20 years by rolling out readily-available digital solutions that ease the transition to renewables.
Embracing microgrids and battery storage adds resilience and adaptability to utility operating models. Yet most companies still rely on carbon-intensive energy sources, reactive management, and traditional capacity planning tools.
That’s just one example from one sector. Across APAC, business leaders should consider their approach to technology and sustainability. There are concrete steps they can take now to harness current technologies and deliver sustainable profitability.
The Capabilities Are Already Available
One of the most potent lessons from the pandemic is how quickly digital adoption can transform entire industries. The solution doesn’t even have to be new. The X factor lies in how widely it's adopted inside an organization and to what extent traditional processes are improved, automated—or replaced with something better.
Technologies with the power to deliver sustainable outcomes like Internet of Things (IoT), analytics, and machine learning are at the early adoption phase and beginning to find a place in Asia-Pacific business models.
In the AEC sector, for example, Building Information Modeling (BIM) is gaining traction in the design and project management of infrastructure and large construction projects.
The built environment is responsible for around 40% of carbon emissions worldwide, while a typical construction site discards as much as 30% of the construction material it sources. By using BIM technologies to manage project development, waste can be reduced by 15%.
And these technologies can also be used to improve operations after a facility has opened its doors. They can optimize the monitoring and management of building energy performance, helping align power consumption with actual need.
Michael Long, head of sustainability, Asia at Lendlease, wrote in June 2021 that while APAC’s construction industry is moving towards digitalization, “developers should look at utilizing digital twin technology as an intelligence interface for autonomous adaptive control.”
The future, he says, lies in buildings that use digital technologies to operate sustainably and autonomously: “they represent an evolution from static physical spaces to self-aware environments that can anticipate and adapt to human needs.”
BIM use cases and success stories aren’t difficult to find, yet just 7% of APAC construction companies say they use the technology to its full potential. That suggests a lot of room for broader adoption. Investments in early-stage innovation could lead the AEC industry toward building more high-quality residential buildings—with less negative impact on people and the planet.
Expanding the use of digital could also lead to a common industry data platform and make progress towards sustainability objectives easier to track.
“Sustainovation”
One great example of technologies’ ability to drive sustainable outcomes is Bangkok’s WHIZDOM 101 complex. It’s a sustainable smart city built inside a large metropolis, designed from the ground up to help residents lead greener, healthier, and more fulfilling lives.
The project’s ingenious use of digital unifies technology and community. Energy- and data-collecting floor tiles at the campus entrance convert kinetic energy from human footsteps into low-voltage electricity, which can be stored and used to power LED lighting, wayfinding solutions, and mobile device chargers. When visitors arrive at the site, they create renewable energy by simply strolling across the threshold.
The buildings that make up the site also use fewer components and are made with eco-friendly materials and methods. The project’s central tower, for example, is positioned to allow for better natural airflow and maximum sunlight. By drawing in natural light and wind, residents use less energy.
When the complex opens its doors, the 3D model will be handed over to property managers, who will have a ‘digital twin’ they can use to monitor and manage the site.
On the manufacturing side, Bangalore-based Greendzine is using digital design to create low-speed electric vehicles faster and more sustainably than competitors.
Cloud collaboration and design tools have enabled the startup to adopt a modular R&D approach. It means they can extend product lines using standard components that amount to 70% of the bill for parts and materials.
This saves time in testing and validating—even at low production volumes. Designers and product managers are also in a better position to work collaboratively from a single 'source of truth,' and get from prototype to production faster.
“It’s like creating in virtual clay,” says Karthikeyan Sundaram, cofounder and chief technology officer at Greendzine. “Digital helps us move to a physical prototype quickly. Because it’s been 3D rendered, we know immediately whether it fits the requirement or not. That’s how we fail fast and move forward.”
What Is the World Waiting For?
It’s worth pondering just how long science has been aware that industrialization and economic progress had a potential flip side.
French mathematician Joseph Fourier proposed the existence of an atmospheric ‘greenhouse effect’ in the 1820s. Russian geologist Vladimir Vernadsky detailed the interdependence between human life and the earth's ecological systems in his 1926 book The Biosphere.
A century or two later, we’re fully awake to how fragile those connections are. Science can reveal a lot. While technology can help provide the enabling framework for reaching sustainability goals.
Consider the example of South Korea. Its Green Growth strategy provided government support for battery storage R&D that enabled breakthroughs in stable multicycle charging and early support for integrated battery deployment. Lithium-ion battery costs declined nearly 90% from 2010 to 2020, and by 2013, South Korean battery producers had captured a leading market share.
After months when rapid climate change wreaked havoc around the world, APAC business leaders have proven they can play a leading role in addressing the urgency of the situation. Customers and stakeholders want to align themselves with businesses willing to take action. The decisions we make now can help secure a resilient and sustainable future.