By Chandran Nair
This opinion by Chandran Nair appeared in the South China Morning Post on Wednesday, 31 May 2006
One of the qualities that sets good business leaders apart from the rest of the pack is their ability to see opportunities and grasp them. Many see the environment as just such an opportunity. But the reality – 20 years after it was first flagged as a business concern – is that Asia’s environment has spiralled into a deplorable state.
The current public debate on green issues puts specific business activities squarely under the spotlight, even though not all environmental issues are caused by the activities of business.
Even so, how do we reconcile the stark differences between the stated enthusiasm of business for environmental opportunities and the actual condition of the environment? In addressing this question, the first step is to encourage business in its stated intention of grasping environmental opportunities. Clearly, however, there has been a breakdown between those pledges and the actual reduction in the sources and causes of environmental damage.
Why do business-led initiatives like the Clean Air Charter – launched last year to improve air quality in Hong Kong and the Pearl River Delta – suffer from weak support? At present, only some 200 companies have signed on to its voluntary pledge to adhere to six commitments on emissions, better energy efficiency and sharing expertise on improving air quality.
Is it fair to suggest that the first hurdle in such schemes lies in the word “voluntary”? Last month, only half a year into the initiative, charter signatories said they wanted the government to make it worth their while – through incentives such as tax concessions and loans – to cut pollution. That is an interesting confusion of the relative roles of business and government. It gives sceptics ammunition to say that companies are only interested in business as usual, not in backing up their grand declarations with their own money.
It is easy enough to look at every problem as an opportunity and to be positive – treating such issues as public-relations exercises. But good business does much better than that. The approaches of many business concerns gloss over the fundamental ugliness of, in this instance, air pollution. They fail to understand the fundamental issues – including what and who is contributing to the problem.
The environment suffers because few count in their business costs or purchase prices the impact they have on the air, land or water. Quantifying these is complex and contentious, and that debate achieves little. Action comes from accepting responsibility, then working to achieve tangible results.
Ultimately, we must all decide how much we are willing to pay for a better quality of life. Business can and should pass on environmental costs to consumers. Yet, many business associations lobby against raising standards that would force up companies’ costs; they complain that their competitive edge would be blunted, and cast governments as unsupportive and anti-business. But do they understand that it is not in the interest of business to constantly lobby against tighter regulations, or to use flimsy voluntary arrangements to appear to be taking a position?
Good leadership is vital in recognising and accepting responsibility. To be sure, business leaders are not going to disadvantage their own operations, nor should they. Asia has some stringent anti-pollution laws, but it is the responsibility of all business leaders to ensure legal compliance every day, every week, all year and everywhere.
Good leadership does not seek to dumb down the debate for the sake of creating an air of concern, in which tinkering is equated with political will. Good leadership sets aside petty, archaic, business-school arguments about losing competitive edge, and instead pursues the greater good.
We may well ask, then, whether there is a poverty of leadership. It is difficult to believe that good company chiefs are so few and far between, given the kinds of concerned sentiments that leading business associations have recently aired. Civil society has targeted businesses because the positions taken by their associations are meek – and they fail to follow up with robust and effective programmes.
What, then, is missing from the equation? Voluntary projects are all well and good, but they are only as strong as the commitment of their signatories.
Such charters need a mechanism that keeps them voluntary and their signatories keen and honest. This might take the form of a built-in requirement for participants to report their progress, neatly excluding companies that have no intention of following up on their pledges. But would the reality, then, be that few sign up? That would leave it to government to impose draconian regulations.
Ultimately, the equation for business involvement isn’t missing an element: it has been misunderstood. It consists of three steps that must be taken in sequence: first, business leaders must acknowledge there is a problem, and that they need to deal with it honestly by improving their business performance in specific areas.
Second, to take proper advantage of opportunities, working with – not against – regulators is paramount: good, strong regulations are often the catalysts for innovation. The third step is appropriate action.
Truly visionary leadership acknowledges that business is an integral part of society, part of the problem and – crucially – part of the solution. Only then will opportunities turn to reality.