28 May 2024
Changing Perspective: Regulation as an Innovative Tool to Help Elevate Corporate Sustainability Performance
by Weenarin Lulitanonda “PM 2.5 smog choking Thailand’s economy, says World Bank” – this was the eye-popping headliner, published in December 2023, in one of Thailand’s English-language newspaper, that would have given its readers much reason to pause. The article detailed the analysis undertaken by the World Bank, which showed that Thailand’s economic costs from premature deaths and medical costs due to air pollution is estimated to be around US$32,841 million, or equivalent to a staggering 6% GDP loss.1 At the individual level, the Energy Policy Institute at the University of Chicago (or EPIC) computes annually an air pollution index – called the Air Quality Life Index (or AQLI) – which translates particulate air pollution and its impact on life expectancy. Based on 2020 data2, air pollution in Thailand is shortening the average Thai life expectancy by 1.8 years, relative to what it would be if the WHO guideline was permanently met. But there are regional variations, and in the Northern Thailand, where air pollution is the most hazardous, this has led to residents there having their lives cut short, on average, by around 2 to 3 years. To contextualize this, at the height of what became known globally as the “airpocalypse” in China, toxic air quality there during the 1990s, had caused average life expectancy of Chinese residents in the more polluted Northern China to be cut short by around 5 years.3 Therefore, by this comparison metrics, the impact on human lives in Thailand is certainly a rallying cry for urgent action. Air pollution, is a manifestation of structural issues, steeped in a long entrenched and unsustainable growth model that prioritizes economic prosperity over environmental protection. However, it does not have to be this way. Sustainable solutions exist and have been successfully implemented in many countries, demonstrating that economic growth is not stifled by addressing air pollution. A necessary precondition to successfully manage toxic air quality is the passage of well-crafted clean air legislation – one that addresses the root causes of this public health crisis. China has been a shining testament to this, having experienced remarkable progress since declaring a “war against pollution” in 2014. China’s PM 2.5 pollution levels had declined by roughly 40 percent, from its 2013 peak levels, and their pollution reduction policies have led to a gain in average Chinese life expectancy by about 2 years, whilst the country’s economic growth had remained undeterred during this period. It is along the vein of seeking win-win solutions which underpins the drafting of the citizen-led Thai Clean Air Bill. This innovative draft legislation, includes amongst others, economic incentives that will help to shape behavioral change towards a common clean air future. In short, there are more provisions of carrots than sticks. This will be supported through the provision of a Thai Clean Air Fund for Health that will be financed, through the application of polluter-pays-principle, from taxes, penalties and fees on all sources of air pollution. In turn, the money collected through this fund, will be appropriately re-allocated towards many uses including, amongst others, the provision of support for eligible private sector businesses to support their clean air transition. At this juncture, these concepts may possibly invoke a kind of knee-jerk reaction of unease amongst the more conventional business leaders. This is because the mere use of the term “regulation” often conjures up concerns over potential increase costs of doing business and more bureaucratic red-tape. However, this is an invitation to set aside such preconceived notions, to first fully understand why this may not be as business-unfriendly as initially feared. This will be addressed through providing more specific, concrete examples from the vantage point of three business sector groups as follow: The Car Industry: Today, electric vehicles (or EVs) are still not within the affordable reach of the general public in Thailand. The Clean Air for Health Fund is envisaged to possibly be used, for example, to help provisionally subside the purchase of EVs for consumers, so that the pricing of EVs would be at a more attainable consumer price point. It is expected to also support programs, such as cars for clunkers, that are used to incentive consumers to trade in their currently polluting vehicles to purchase more environmentally-friendly EVs, or else to support more use of public transportation. In parallel, it is envisaged that there would be a hiking of car taxes, which needs to be increased with the age of the vehicle as reflective of their relatively heavier emissions. This will make the value proposition for car ownership of older, more polluting cars be significantly less economically attractive, than it currently is. The Agro-Industry: It is undeniable that the Thai agro-industry has been facing mounting public criticism for the agriculture burning activities within their supply chain and the lack of viable solutions to address this problem sustainably. Measures incorporated in this citizen-led clean air bill may well help to improve the public standing of this industry. Specifically, the Clean Air for Health Fund is envisaged to be used to help provide conditional subsidy support for the existing high costs of machineries and/or the adoption of other technology. This is so that it will become more economical for farmers to mechanize their harvesting and/or pre- and post-harvesting operations in lieu of burning their fields. There is, however, one additional stick applied in this draft legislation, which is in the area of transboundary haze. This is because there are no provisions in any other existing Thai laws to address this issue. Specifically, it will apply to any entity, regardless of national affiliation, that undertake operation abroad resulting in emissions blowing into Thailand causing public health impact. In such cases, the burden will fall upon the accused entity to prove that they are not the point source of the emission in question. As supply traceability systems should be well set up in most established companies – to already meet stringent EU and US trade environmental requirements – so this should not be a cause of concern. For agro-industry players on the cusp of developing such a system, this will expedite their adoption process, which they would, nonetheless, be required to have in place in order to continue to sell into their own higher-value export markets. The proposed penalties in this clean air bill are aligned with levels set in the Singapore Transboundary Haze Act. This is so as to raise the bar to deter polluting entities from engaging in any economic activity that would cause air pollution into Thailand. As for penalties for farmers involved in agricultural burning, they will remain as they are, in accordance with existing Thai legislation. This draft citizen-led clean air legislation does not cover this aspect, except in very specific circumstances, such as when agricultural burning remains undeterred in the face of declared states of national emergency. The Industrial Sector: The Clean Air for Health Fund is expected to also be used to help companies within the industrial sector transition to use cleaner, more environmentally-friendly operations through conditional provision of subsidies towards the costs of these more expensive, greener technology. For companies not open to adapt their operations, they would simply not benefit from the various incentives availed through this Clean Air for Health Fund. In closing, no matter who we are, we all need to breathe the same air to remain alive and well. As such the fight for clean air should not be a polarizing issue but should be an issue that must rise above all political and business interest. For ultimately, the fight for clean air is the fight for a livable future of our children and grandchildren, and that is the true, lasting legacy that we will all collectively leave behind. |
About the Author Weenarin Lulitanonda is one of the co-founders of the Thailand Clean Air Network (or Thailand CAN), a citizen-driven nonprofit that includes professionals from multi-disciplinary fields to support policy solutions to the air pollution crisis in Thailand. Thailand CAN has developed the first citizen-driven Clean Air Bill which has been submitted to the Thai Parliament and is one of the draft legislations currently being considered as passage into law. Weenarin holds a Masters in Applied Economics from the University of Michigan in Ann Arbor and an Undergraduate Degree in Economics and Finance from the Victoria University of Wellington, New Zealand. |
Sasin Collaborative Thought Leadership: Transforming Our Critical Systems Complex multi-actor systems have developed around satisfying critical human needs, such as nutrition, mobility, energy, or housing. These systems, as well as enabling sub-systems such as education, finance, etcetera, represent most of our economic activity, but there is also enormous inefficiency embedded in the complexity and dynamics through which these systems have evolved, making them responsible for most of humanity’s environmental and social impact. Current efforts to reduce our negative impact can hardly be considered successful, because too much focus is still on marginal improvement of our traditional models. Only 18% of the 169 targets set for the 2030 SDGs are on track to be reached (most targets show virtually no progress and 15% are in fact reversing). This is why increasingly, scholars and practitioners are trying to understand the nature of systemic change, the radical reinvention of our critical systems. Cambridge University Press recently published ‘Transforming our Critical Systems – How Can We Achieve the Systemic Change the World Needs’ by Sasin professor GJ van der Zanden and researcher Rozanne Henzen. Sasin has invited thought leaders and practitioners from around the world to share their visions and insights on the reinvention of the systems that they are part of. These pieces provide a rich variety of perspectives from business, policy makers, civil society, academia and think tanks, as well as enablers such as finance, technology and start-ups. In systems change, incorporating perspectives from multiple stakeholders is essential to come to a shared understanding of the system dynamics and challenges, develop a shared vision of the future and explore possible interventions and collaborations.
1https://www.worldbank.org/en/country/thailand/publication/temdec2023#:~:text=5%20particles%20led%20to%2032%2C211,6%20percent%20of%20its%20GDP 2https://aqli.epic.uchicago.edu/wp-content/uploads/2022/03/Thailand-FS.pdf 3https://www.nber.org/system/files/working_papers/w28467/w28467.pdf, https://www.theguardian.com/environment/2013/jul/08/northern-china-air-pollution-life-expectancy