When discussing climate change from a business perspective, we can’t avoid asking the question: “Is it time to invest in addressing climate change?” “Is our business part of the group that should act now?” “If so, how much budget should we allocate and what should we invest in?” “When should we invest in digital tools to help with this?”
Climate change is no longer just about weather-related issues such as rising temperatures, more frequent and severe natural disasters, or simply a “negative impact on the environment.” It has become a major factor that is increasingly affecting businesses across all industries. This is due to the growing enforcement of regulations both in Thailand and in key partner countries worldwide to drive environmental responsibility. There is also rising consumer demand for sustainable products. Additionally, the risks of natural disasters affecting business operations are pushing industries to seriously plan and prepare to address these challenges.
Why Should Businesses Start Investing in Climate Change?
The challenges brought on by climate change are increasingly impacting businesses in terms of economics, legal regulations, and social expectations. Businesses that neglect this issue may face risks such as higher costs from future carbon taxes, changes in environmental laws, or even loss of business opportunities as consumers shift their support to more sustainable brands.
- Pressure from Regulations and Carbon Taxes
Many countries are implementing carbon taxes and regulations that require businesses to disclose their greenhouse gas emissions from their products (Carbon Footprint of Products – CFP) and the emissions from their operations (Carbon Footprint of Organization – CFO). Therefore, businesses that export products to countries with these regulations will inevitably have to report their emissions accurately. While Thailand is still in the process of considering relevant laws, now is the time for companies to begin adjusting their internal processes to reduce emissions before these laws are enforced. This will help avoid future carbon tax penalties and higher costs when businesses compete for resources and technologies to reduce carbon emissions.
- Consumer Expectations
Consumers are increasingly interested in supporting brands that prioritize sustainability and the environment. In Thailand, we are used to checking nutritional labels for calorie or sugar content for health reasons. However, in countries with regulations supporting climate change mitigation, the carbon label of products is highly emphasized. A 2022 survey found that 76% of consumers in the European Union check the carbon label before purchasing a product. This pressure is strong enough to make businesses in the EU reassess their emissions. If a company cannot demonstrate responsibility in this area, it risks losing customers to competitors that are more environmentally conscious.
- Reducing Carbon and Increasing Operational Efficiency Are the Same Issues
It is often thought that reducing greenhouse gas emissions requires new investments, such as installing solar panels, purchasing new machines, switching company vehicles to electric cars, or replacing all light bulbs with energy-efficient ones. However, if considered carefully, the first step in reducing carbon emissions in business is reducing unnecessary activities and improving operational efficiency to avoid waste—whether in terms of time, human resources, or natural resources. This approach will lead to cost reductions or increased revenue, and reducing carbon emissions becomes a secondary benefit. For example, if you’re a manufacturer of consumer goods, designing smaller packaging with fewer materials can reduce transportation rounds and increase product space per round. This not only improves logistics efficiency but also reduces carbon emissions from using fewer materials and less fuel. Similarly, in industrial factories that adopt IoT, AI, machine learning, and robotics in production lines, the principle of Lean Manufacturing aims to reduce production time, minimize unnecessary materials, and reduce waste. This not only improves production efficiency but also significantly cuts energy costs and carbon emissions related to energy use.
Does Your Business Need to Invest Now?
To be straightforward, not every business will immediately feel the impact of government regulations or legal changes. However, understanding the risks of climate change will help assess whether your business needs to start investing in climate change adaptation.
- Industries with High Greenhouse Gas Emissions
Industries such as manufacturing, energy, and transportation should begin evaluating and investing in emissions reductions first. These are the industries with the highest emissions, and nearly every regulation related to climate change will target them first. This will affect the entire supply chain of these industries, which will face increasing pressure to reduce carbon emissions. Companies in the supply chain play an important role in the production and supply of goods or services for these industries, such as raw material suppliers, manufacturers, transporters, and distributors. Every activity in the supply chain contributes to the overall carbon footprint, which will be reported by the main industry. Therefore, it is highly recommended that the supply chains of manufacturing, energy, and transportation industries begin adapting together.
- Businesses within Multinational Corporations
Businesses that are part of multinational corporations with parent companies in countries with enforced climate change laws, or subsidiaries operating in those countries, will inevitably need to report their greenhouse gas emissions and continually find ways to reduce them. This will help minimize the impact of carbon taxes and penalties.
- Businesses Needing to Maintain Competitiveness
Transparency in sustainability is a key factor in decision-making for investors and customers today. Businesses that fail to adapt risk losing their competitive edge, especially those with customers in countries where climate change laws are already in place, such as the European Union. Investors and customers alike will prioritize working with businesses that demonstrate sustainability, as these companies need to report their data as part of their own corporate sustainability efforts.
What Should You Invest In, and When Should You Use Digital Technology?
A key question many businesses ask is, “What should we invest in?” Of course, we should not rush into things like planting forests or purchasing carbon capture technologies before addressing internal business processes.
Investing in emissions reductions and operational sustainability can be broken down into two main parts:
- Improving Processes and Infrastructure
Businesses can start by improving production processes, workflows, energy usage, and resource management to become more efficient and reduce emissions.
- Using Digital Technology to Enhance Efficiency
Digital technology should be used to address climate change when businesses need more accuracy and efficiency in managing sustainability and carbon reductions. Here are some signs to consider digital investment:
- When your business needs to report greenhouse gas emissions to government agencies, shareholders, or customers, and must comply with various standards, both domestic and international.
- When there is a need to reduce operational resources to lower long-term costs, which may result from human error, high employee turnover, or time spent on manual tasks.
- When businesses need to demonstrate transparency in sustainability to consumers and investors. Digital reporting technologies can ensure transparency, traceability, and accurate calculations according to principles.
Digital technologies recommended to help address climate change include tools for data management to calculate carbon emissions (such as MFEC Data Discovery), carbon management platforms, and data analytics and AI tools to identify areas for improvement and forecast the potential impacts. These technologies enable businesses to effectively formulate climate change policies.
This is the right time for businesses to invest seriously in tackling climate change—whether through improving production processes, using energy more efficiently, or adopting digital technologies to manage data and calculate carbon emissions. Investing in Green Tech and efficient solutions not only helps businesses survive this challenge but also promotes growth and ensures long-term competitiveness.
If your business is ready, don’t wait—start planning and investing in technologies that will set you on the path to sustainability today.
