Capacity Development needs for

Business Sector to
Advance Green and Competitive Businesses
in the Asia-Pacific

Venkatachalam Anbumozhi
Asian Development Institute
 The Business Perspective on Running
a Successful Company
1. Increase sales growth

2. Increase operating profit More profit…

margin

3. Reduce cash tax rate

4. Reduce working capital as …out of fewer assets

% of sales

5. Reduce fixed assets as % of

sales

6. Reduce weighted average

cost of capital …at lower risk

7. Increase duration of
competitive advantage
…for as long as possible
 Policy Perspective for running a Green
Economy

Climate
Change
Sustainable
Growth
Energy
Security
Low Carbon
Green Asia
Environmental
Degradation
Private Sector
Equity & Development
Accelerated Technology & Finance
Growth Regional Cooperation
 Business is an Important Actor in Green
Economy

Other factors

Social Goals

External pressure

Business Business
Internal Pressure
Goals

gy
te
ra
St
Environmental
Goals
Energy efficiency
Waste elimination Changed
Pollution abatement Environment

Impact on
environment

Sustainable pathway
 Businesses Have to Run Through
Regulatory Mine Field

Regulatory Mine Field: emission trading, carbon tax, Global stds, >
200 MEA
 Business Case for Climate Action
•
Markets

Differentiate Products
• Gain Market Access/ Create New Markets


Competition
• Using Compliance/Beyond Compliance
• Creating entry barriers/ new substitutes


Costs
• Operate More economically
• Defend Markets

• Prevent Liability

Risk

• Protect Current Investments (C D Assets)


Intangible Value
• Enhance Corporate Reputation
• Imp. Employee Recruitment/ Retention
May 2,
6
2010
 Changing ways in viewing environment
while doing the Business

45
4 0 .3
40 38

35
2 0 0 22 0 0 6
2 9 .9
30 2 7 .5

25 2 2 .3 22

20
15
10 6 .9
4 .7
5 1 . 9 2 .8 1 . 3 1 .4
0
B u s in e e s O p Sp o rc tiau ln Cit yo n Rt r eibg u tlaiot no r y cF oa mc tpoliar ninc ep e r fI omr pmt a. nS ct er a tOetghye r s / n o .c o m m e n t

Source: MOE, Japan

Business Case for Action on Climate Change
Adaptation
• Decreased
agriculture
• Managing and/or
productivity and food • Partnering
security at national mitigating risks
• Minimising operative strategically with
and regional level
cost research community
• Increase water
• Building resilience to
stress and/or water • Creating sector
insecurity shocks on supply
chains wide initiatives
• Threats to human
• Harnessing new
health • Engaging in public
• Threats to markets
• Responding to policy and
ecosystem services
stakeholder international
• Potential conflicts
expectation advocacy
and political stability

Climate Change The Business Case Actions to improve

Adaptation for Action Business Capacity
Challenges
 The Need for a Paradigm Change

Economic System Environmental

System
+ +

Economic _
Capital
+ Social&
Residuals
Envtl.
Assets
Economic Output
+ +
+
Environmentally
Investment + Responsible
Investment
Consumption
Capacity Building Needs in the
perception of Businesses
Aspect Old Paradigm New Paradigm

1. Markets Compliance Competition

2. Values Business Holistic

3. Transparency Closed Open

4. Life cycle technology Product Function

5. Partnerships Isolation Co-operation

6. Time-frame Short-term Long-term

7. Corporate Governance Advisory Accountability

 Why there is a Gap in Business
Performance?
100 % Degree of Envi. Integerity

Absolute Gap

Strategic Gap

Tactical Gap

Current Energy
& Envi.
0%
performance

May
(Adapted from Jose) 2,
201
0
Mental Traps in Green Business Competitive
Strategy

 Seeing environment as only a part of the

game
Accepting the game as it is and/or Assuming
a linear future
Failing to think methodically about changing
the game (changing the trade-off equation)
Believing that success must come at others’
expense (no win-win options)
Being prepared for failures
 Classic mismatch between opportunities and
efforts
Mismatch between business action and policy effort

high
Potential contribution to

Policy, performance
Resource Efficiency

and reputation
opportunities

80% of overall
efforts focus on
low 20% of the total
risk
Raw material Supplier In-house End-
Distribution Usage
extraction production production of-life

Value Chain
Business Responses Need Scaling Up

Developing Low Providing Smart

Carbon Products Services

energy
food health finance
sanitation
construction textile & apparel
footwear

Production
Knowledge and
Infrastructure and
education
good governance

Create Local Wealth and Make Profit

 Types of Corporate Engagement as
evolving in the Asia-Pacific Region

 Harnessing core corporate competencies and

value chains
 Creating industry wide sector initiatives
 Innovating in public-private and hybrid
financing mechanism
 Engage in public policy advocacy and global
standard setting
 Partnering strategically with civil society and
share holders
 Action strategies for Green Economy

Low Carbon Climate Resilient Economic Growth through PPP

New Alternative Long-term
Business Models development models financially viable
business
Pro-poor Good Set up
product and service governance strategic networks
innovations
Sound
environmental and Improve
Process & Product management skills
social policies
Stewardship
Develop
Facilitate financially viable
Sustainable partnerships and business model
Marketing networks
Compile
Supply Chain Information knowledge on local
Management broker customers

Multinational Local
companies Government Entrepreneurs
 Green and Competitive Business
What could be the CBT Strategy for the
Asia Pacific Region?
 Tax incentives & grants
 Accelerated depreciation for technologies
 Industry incubators and seed zones
 Voluntary agreements tied to national targets
 Technology choices and Trade Agreements
 Education and Training for skill development
Cost of Carbon Abatement
 Finance needs in climate change

 UNFCCC (2007)
 required additional investment and finance flows in 2030
for mitigation measures needed to return global GHG
emissions to current levels in 2030 is USD 200-210 billion
 adaptation measures addressing climate change is several
tens of billions of US dollars.
 EC(2009)

developing countries are likely to face annual costs of
around 100 billion Euro to mitigate their GHG emissions
and adapt to the impact of climate change by 2020.
 World Bank (2009)
 Focusing on 450ppm target, the range of mitigation cost is
roughly USD140 billion to USD650 billion a year, and the
range of adaptation cost is from USD 30 billion to USD 90
billion.
 ADB Strategies in Developmental
Cooperation

Technical and economic cooperation in clean energy

development & energy efficiency improvement for
building a low carbon economies as well as carbon
resilient societies.
Harnessing market mechanisms to accelerate low-
carbon growth.
Capacity building for strong and effective
governments
 ADB Core Elements
for Low Carbon Asia
Financing
Initiatives
Maximizing Catalyzing Mobilizing
Market Private Concessional
Mechanisms Capital Resources

Advancing Energy Efficiency and Use of Low-Carbon Energy Sources

Mitigation
Initiatives

Enabling Sustainable Transport Policies and Applying Efficient Systems

Promoting Improved Urban Sanitation and Reduction of Fugitive Methane

Emissions

Promoting Sustainable Land Use and Forestry

Addressing Vulnerability Risks in National Development Strategies and

Actions
Adaptation
Initiatives

Increasing Climate Resilience of Vulnerable Sectors

Climate Proofing Projects

Addressing Social Dimensions

 Carbon Market Initiative (CMI)

 ADB initiative under Climate Change Program

 Financing Scheme that supports Climate Change Program,
the development of clean energy, energy efficiency and GHG
reduction projects that are eligible for CDM
 Has three components
(i) Upfront carbon financing through carbon funds (Asia
Pacific Carbon Fund and future carbon fund)
(ii) technical support to CDM project development through
technical Support Facility (TSF)
(iii) Marketing support for carbon credits generated through
Credit Marketing Facility (CMF)
 ADB- CMI attempts to maximize market potentials

Carbon
　 Funds

CMI is available to projects where ADB provides financing support

such as loans, technical assistance, equities, and guarantees
 ADBI’s contribution to Green
Economy
Capacity Building
ADBI Mission Goal:
Leading centre for the creation and sharing of knowledge on
sustainable economic development in the Asia-Pacific
Region by
 Identifying effective development strategies
 Improving the capacity for sound development of agencies
and organizations in DMCs
ADBI Strategic Themes:
 Inclusive and Sustainable Growth
 Regional Cooperation and Integration
 Governance for Policies and Institutions
 Common Capacity Building Problems
Faced
in the Region
The capacity building may be defined as the extent
to which the decision makers can

Recognize the value of new, external knowledge

to meet the needs.
Identify sources that possess it.
Gain access to the desired knowledge on best
practices and identifying effective transfer
arrangements.
Effectively utilize, assimilate, and internalize the
best practices.

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 Schematic Representation of Knowledge Transfer in

ADBI Programs
Transferor
Transferor Technology
Green Components
Components Transferee
Transferee

Technology, practice and polices

Public Machinery, peripherals,

Public and
and instrumentation, materials
private
private sector
sector Skills for operation, Knowledge on best
firms Operating capability
firms maintenance, making minor practices
Skills for operation,
improvements
R&D maintenance, making minor
R&D institutes
institutes improvements
Information for operation and
Universities
Universities maintenance
Information for operation and
NGOs maintenance
NGOs Capability to
Information for design and absorb, assimilate,
Foundations Information for design and
Foundations development and to enable and make major
development and to enable Innovative capability
independent upgrading improvements to
Specialized Independent upgrading
Specialized the regional best
international
international Knowledge to gain holistic practices
agencies Knowledge to gain holistic
agencies insights into the technology,
Insights into the technology
& policy practice

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 Interlinkages between Capacity Building & Greening the
Business
Individuals
Education Knowledge

Training Skills

Human Resource Development Coaching

Organization

Define structure & Tasks

Empowerment

Define Mission, Targets & Responsibilities

Nations

Green Biz
Policies, Funds, Procedures & Green Eco.
 Green Economy Related Capacity
Building Activities at ADBI

 Economy Wide Assessment of Emissions

 Green Growth and Climate Change Mitigation
 SME Clusters, Green Jobs and Eco-system Management
 Corporate Environmental Management & Innovation
Strategies
 Mainstreaming Climate Change Adaptation in
Developmental planning
 Reach us at:

Venkatachalam ANBUMOZHI
Asian Development Bank Institute (ADBI)
Kasumigaseki Building 8F
3-2-5 Kasumigaseki, Chiyoda ku
Tokyo 100-6008, Japan

Tel : 81-3-3593-5508 | Fax : 81-3-3593-5587

Email : vanbumozhi@adbi.org | Website : www.adbi.org

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