Did You Know: For BIMP-EAGA, Green (Manufacturing) Is Golden

Date Published
April 16, 2020

Businesses can go green by developing environment-friendly products and services, choosing eco-friendly suppliers and recyclable packaging, and conserving energy. Photo credit: iStock/Chaay_Tee.

BIMP-EAGA is developing a green manufacturing sector that is competitive and capable of higher levels of processing and value-added production. The biodiversity-rich subregion has chosen a sustainable development path to protect the environment and promote livable cities and communities.

What is green manufacturing?

It’s a way of producing goods that uses resources, including energy, efficiently and sustainably and reduces wastes.

The United Nations (UN) calls it sustainable production, and it is part of the Sustainable Development Goals (SDGs). Goal No. 12 is to ensure responsible consumption and production or “to do more and better with less.”

A 2019 study published by the Asian Development Bank (ADB) says “greening” businesses entails companies taking active measures to change their products or processes to be more environmentally sustainable. These could include sustainable sourcing of raw materials, conserving energy and shifting to renewables, and developing eco-friendly products and services. “These measures can be taken at various points in the life cycle of a product, and can extend throughout the entire supply chain of a good or service,” the study says.

Why does it matter?

The UN warns that if the global population reaches 9.6 billion by 2050, the equivalent of almost three planets will be required to sustain current lifestyles.

The BIMP-EAGA subregion has not been spared from environmental degradation. Forest resources are being depleted at an increasingly alarming pace, while threats to the sustainability of marine resources continue to increase despite more regulations and stricter enforcement. More than 80% of marine pollution is said to come from land-based sources that include deforestation, poor waste management, rising population, and growing coastal development.

What are the benefits of green manufacturing?

  • It’s good for the environment and is key to easing pressure on BIMP-EAGA’s natural resources.
  • More efficient use of resources and energy can result in cost savings and even lift bottomlines. The ADB study says companies can see cost savings in greening their operations as it can make them more productive and profitable. It can also lead to higher-quality, lower-cost products as production becomes more efficient, less waste is generated, and waste disposal costs decrease.
  • It can be good for brand image and therefore sales. As more consumers become more environmentally conscious and selective, they are likely to buy more from green companies.

How is BIMP-EAGA making the switch to green manufacturing?

BIMP-EAGA is mainstreaming sustainable management approaches in all sectors. It is adopting sustainable ecotourism, sustainable and climate-resilient farming and fishing practices, and clean and green production technology.

In their meeting in June 2019, BIMP-EAGA leaders called for “multi-sector cooperation to promote a green economy in our subregion.”

An example is the ADB-supported Green Cities Initiative, which will build smart, green, and livable cities in the subregion. Across the globe, cities consume almost 75% of Earth’s natural resources and are responsible for more than 75% of global green-house gas emissions.

Launched in 2016, the program helps enhance the capacity of city managers in integrated planning and management of urban infrastructure. In addition, it encourages all sectors, including industries, to use water and energy more efficiently and reduce wastes.

BIMP-EAGA has completed Green City Action Plans for two pilot cities—Kendari in Indonesia and Kota Kinabalu in Malaysia.

What are the challenges?

The ADB study says most small and medium enterprises (SMEs) in Southeast Asia face no external pressure to go green. “From an environmental perspective, this lack of supply chain pressure is significant, as SMEs account for a sizable amount of industrial pollution and waste generation. Although each individual firm may be polluting only slightly, in aggregate, SMEs can do worse damage to the environment than larger multinationals. Without external pressures, the SME transition to more sustainable path-ways is a difficult challenge.”

Another study cites other challenges:

  • Many SMEs lack knowledge and skills related to greener practices at every level of the value chain.
  • Even if an SME is aware of possible measures, turning green can be expensive, giv-en the SMEs’ lower margins.
  • Many SMEs simply do not believe that becoming greener is worth the effort.
  • SMEs in Asia face particularly high barriers to credit. Credit screening is stricter be-cause SMEs’ finances may not be up to par.

What are the solutions?

The ADB study recommends adopting a mix of policy instruments to encourage businesses to go green. These range from policies mobilizing private investment, as well as those enabling structural and behavioral change among producers and consumers. Governments can also adopt market-based instruments, promote green innovations, and push for business-oriented practices. It is also important to understand the types of companies the policies should be targeted at. In particular, policy makers should help SMEs while they “green” their business models.