Thai businesses seek a more sustainable path
Social and environmental concerns move up local business agendas
PETA BASSETT, Contributing writer
BANGKOK -- The concept of sustainability -- balancing economic development with social and environmental issues -- seems a far cry from the reality of modern Thailand.
It is hard not to be skeptical when the country's track record includes the European Union's 2015 "yellow card" warning over illegal, unreported and unregulated fishing. It was ranked the world's third-most unequal country after Russia and India in terms of income disparity in a 2016 Credit Suisse Global Wealth Report. Look no further than the capital's polluted waterways on any given day for an environmental spot-check.
Sustainability principles are, however, gaining traction in Thailand's private sector. While relevant index rankings and awards are increasingly touted as badges of honor in corporate communications, they are also a public record that can spur improvement efforts. This is one of several factors giving cause for hope amongst sustainability experts and industry insiders.
One key driver stems from the United Nation's Sustainability Development Goals (SDGs). They have captured unprecedented global attention since their 2015 launch and have been a powerful catalyst for governments and businesses to put sustainable development on their agendas.
Nat Vanitchyangkul, Asian growth initiative leader for sustainability consultancy ERM, credits the 17 SDGs with making it easier for companies to identify issues to focus on. "It can also help them to clearly articulate what they are already doing in terms of sustainability," he said.
Regulatory conditions are also forcing a reappraisal of the traditional profit-driven model in Thailand. In line with a growing number of stock exchanges around Asia, listed Thai companies are encouraged to publish sustainability reports supported by guidelines from bodies such as Global Reporting Initiative (GRI), an independent sustainability reporting and standards organization. Disclosures can cover environmental, social and governance issues, and give benchmarks for future improvement.
Alyson Slater, chief network engagement officer for GRI, said such requirements are being put in place to give foreign investors confidence that progress is being made on sustainability challenges. "They [the regulators] mainly say this is a way to try and reassure the global investor market that despite serious social and environmental challenges in the country their top companies are performing well in this area," she said.
The increased demand for supply chain accountability from global brands is also helping push sustainability onto business agendas in Thailand, Slater said. Companies are being forced to investigate their own supply chains due to foreign regulations as well as consumer sentiment. This applies to subsidiaries and suppliers in Thailand.
For the tourism sector, global interconnectivity translates into close scrutiny by major travel agencies from abroad seeking to ensure compliance. "We see a lot of demand from European agents only wanting to send their customers to sustainable hotels," said Chompan Kulnides, vice president of investment at Minor Holdings (Thai) and sustainability project leader for the Minor Group. The group has a portfolio of over 150 owned and managed hotels and resorts, along with over 2,000 food outlets across 32 markets.
The scrutiny that Minor and other large companies then need to apply to their own supply chains, particularly with regards to food sourcing, creates a ripple effect. "Traceability is a key concern," said Kulnides.
Cost savings can also drive businesses to implement sustainability projects. Planned government deregulation is set to lift restrictions on households and companies selling solar power generated from their rooftops to state utilities. This will reduce electricity bills and initial capital outlays will be recouped sooner. Effective waste management is another area that presents ready and measurable savings.
Another external driver for corporate Thailand is society at large, which is increasingly aware of sustainability issues. "It's socially unacceptable not to be [sustainable]. Now you have to do it. It's a no-brainer," said Bangkok-based Jeffery Smith, director of sustainability for Six Senses Hotels Resorts Spas, a luxury "wellness" brand. "Our guests come with an expectation," he said.
Smith sees the need for a shift from thinking that guests merely want the highest quality, to understanding that they want to support brands with the highest sustainability standards. This fuels positive peer pressure, with brands concerned about market sentiment and not wanting to be left behind. Industry coalitions, such as Hotel Owners for Tomorrow, of which Six Senses is a member, help by sharing best practices for the benefit of all and, ultimately, customers.
Consumer awareness of sustainability issues is on the rise and many industry experts attribute this to the power of social media. "Instant karma" is how Rosalind Yunibandhu, formerly with professional services firm PwC, describes the potential for rapid and widespread online judgments. She co-founded the firm's Thailand sustainability and climate change practice in 2009, and recently launched a food consultancy. "Social media has created greater transparency," she said of the need for companies to be increasingly cognisant of their actions and to plan for potential reactions.
Internal sustainability departments in corporate Thailand are also challenging the status quo. Prae Piromya moved in-house from consultancy ERM to join Pace Development in 2017. Now vice president of sustainability management for the luxury developer, she describes her initial role as educating and building consensus within the company. "It's about gaining people's confidence, and showing industry gold standards to incentivize them," she said.
Soft skills to engage all stakeholders are key, whether operating internally or as a consultancy. "From the cleaner to the CEO, it's a coaching process," said former PwC consultant Yunibandhu. "You need to understand lots of different people and empower them to make changes and see the impact."
Framing sustainability issues in the business parlance of risks and opportunities is one way to promote action. Smith of Six Senses said his organization viewed natural assets beyond resort borders as business assets. The group protects offshore reefs for their long-term tourism value and, where relevant, applies strict purchasing policies for local fisherman to eliminate by-catch, the accidental fishing of untargeted species.
This broader approach is applicable to all sectors. "We know our footprint is larger than the furniture we sell," said Lars Svensson, sustainability and communications director for Ikano Retail Asia (IKEA Southeast Asia) and group sustainability manager for Ikano Group. "We reach more people than just our consumers." This includes shopping center security guards employed by sub-contractors. The group advocates fair working conditions for them as well.
One IKEA program profiles three Thai families for three years, looking at the lifestyle changes they make with the company's products. Measurable outcomes include saving money for education through more effective waste management. "Little changes have big wins," said Svensson, describing how this initiative can inspire many consumers to incorporate sustainable practices into their own lives.
Large Thai businesses have the scale and agility to truly make a difference, in the eyes of some critics. Convenience store operator CP All has over 10,000 7-Eleven convenience stores throughout Thailand. As some environmental campaigners have suggested, the company could make a big impact in the push to reduce plastic waste, a key sustainability concern, simply by requiring store workers to first ask customers if they need a plastic bag or straws, instead of automatically handing them out.
Grassroots organizations can also prompt businesses to do more by raising awareness of issues or facilitating change. Since launching in March 2016, ThaiSOS, which can be described as a food rescue startup, has redistributed over 320 tonnes of food donated by Tesco Lotus and hotels including the Hilton Millenium, Anantara Riverside and Centara properties in Bangkok. "It's so much easier now. We are taking on two new hotels a month," said Abigail Smith, Thailand operations director for ThaiSOS. Corporate donors are increasingly eager to participate.
"No one wants to be left behind in something that is becoming a movement," Smith said of the increased private sector cooperation her organization is seeing. Her remarks suggest that the fear of missing out could well be the ultimate driver for Thai business to consider the triple bottom line of profit, people and the planet.