Paving the way for greener recovery in trade and business relations

Climate change, one of the most pressing and threatening issues nowadays, may be addressed with a sense of commitment and readiness for change, especially when the matter is perceived as relevant and strongly linked to the everyday aspects of people’s lives. According to a scientific study by Swim et al. in 2011, there is correlation between human behaviour and the rate of consumption known to lead to the emission of carbon dioxide and methane gases. That is why change here refers to our continuous endeavour to shift towards new methods and approaches in our fundamental activities, including trade and business activities.

Like a boomerang, what we throw will eventually come back to haunt us 

The catastrophe posed by climate change has not slowed down, but is intensifying. As stated in the headline of a report released in August by 2021 by the  Intergovernmental Panel for Climate Change (IPCC), “the scale of recent changes across the climate system as a whole and the present state of many aspects of the climate system are unprecedented over many centuries to many thousands of years”.

Among countries of the Asia-Pacific region, five countries that were largely affected by climate change are Vietnam, Thailand, Philippines, India and Australia. While specifically across the Association of Southeast Asian Nations (ASEAN), data released by the International Monetary Fund in 2018 stated that  the average temperature in Southeast Asia has risen every decade since 1960, with Myanmar, Philippines, Thailand, and Vietnam amongst the 10 countries in the world most affected by climate change in the past 20 years.

However, aside from the numerous fearsome natural risks, global economic loss due to climate change in 2050 may reach a spectacular amount of $23 billion. Secondary problems such as increasing air temperature, water levels, and risk of hydrometeorology disasters such as floods, hurricanes, droughts and forest fires will worsen if climate change is not seriously managed and anticipated. Furthermore, those physical impacts of climate change will hit certain sectors which are sensitive to climate destruction such as agriculture, forestry, supply chains and food security, causing more complex and widespread problems.

Preliminary efforts in order to encourage green development agenda within trade and business

During the COVID-19 pandemic, we often hear the phrase “no one is safe until everyone is safe”. This motto shows that we need to empower and work with each other in order to survive through troubling times. In the future, this motto will still be relevant because we will likely be facing various challenges which could possibly be even more complex and interrelated. That is why, under the regional umbrella especially as for the trade between ASEAN-Australia, now is the time to prioritise environmental and sustainability transition objectives into trade policy and development initiatives. Nonetheless, noting that trading is classified as one of the downstream sectors, hence we need to raise awareness and provide enabling conditions that highlight three main points such as policy coordination, research and development, and access to knowledge. 

First, we must align policy coordination with each other’s priorities and focus on a greener vision of the future. There are several potential areas of collaboration to diminish carbon emissions such as carbon border adjustment, certification of carbon footprint and implementation of the circular economy concept. Moreover, we may implement an emissions trading system which works based on the market to create incentives in lessening carbon emissions. The regulation of emission limits and its license are procured by the government. 

There are other sectors outside of trade that are equally important to control climate change, such as  implementing  carbon tax and adding incentives and funding to lessen carbon emissions. Alper stated that increasing the tax of carbon by 1 per cent may decrease carbon emission by 0.9 per cent. As a matter of fact, not every country has implemented carbon pricing. Every country is on a different level in implementing this initiative. According to the World Bank, there are 40 countries that have implemented the carbon pricing mechanism and its rise has been predicted in the future. Increasing participation in carbon pricing showed that the intervention in climate change is progressing.

Second, we must conduct joint research and development activities. Collaboration in research and development regarding sustainable energy is important to hasten our gears in facing climate change. It may help to facilitate change and make innovation accessible to the countries of Southeast Asia and Australia. This collaboration is not specific to governments alone, but also includes companies, educational institutions and investors to support the implementation of environmentally friendly technology and renewable energy.

Third, we must create platforms that provide access to education and information to improve public (especially businesses) comprehension and offer information regarding climate impacts, opportunities and best practices of greener business models. The referred platform should include information on how private sectors may participate and be responsible in mitigating climate change. The goal to achieve a net-zero economy is done in collaboration. Other than that, we should  provide a capacity building programme to increase company awareness about climate change. This program consists of several criteria, step by step information, and standards or requirements for companies such as manufacturing industry, agriculture, or even Small and Medium Enterprises (SMEs) to include emission reduction targets in their business activities that are within their capacity.

The aftermath of the COVID-19 pandemic is indeed a momentum to strategise collective action. We should start considering how to improve green agenda support, which can be done through aligning the interests and ambitions in moving toward trade-environment operation models. Prior to these goals, those three elements should be considered to achieve better preparation. It is not an unattainable utopian vision, as long as we start in unity and give prominent efforts to this endeavour.