The adverse impacts of climate change create multiple risks for societies. Businesses across the Asia Pacific are increasingly prioritizing this issue, calling for robust mitigation actions. As regional economies become more interlinked, responsible business and circular economy principles are gaining momentum.
Businesses that operate in many markets and industries face a variety of climate-related risks. These range from the improper disposal of operational waste to the transportation of hazardous chemicals. Broader risks include procuring goods and materials from suppliers that do not uphold ethical standards or apply ecologically sound manufacturing practices.
Governments are prioritizing investments in low-carbon infrastructure. With a focus on cutting carbon emissions within the logistics landscape, here are five factors to consider in transportation practices and supply chain management.
1. Infrastructure Gaps
Asia Pacific is a vast, geographically diverse region where distribution networks continue to expand and complexify. Enlarging middle classes are fueling the growth of the on-demand economy. Sustained urbanization is driving the need for smart infrastructure to support sustainable innovation across value chains and reduce environmental impacts.
Building connective infrastructure will advance the next wave of economic growth. Throughout the region, the construction of roads, railways, airports, and ports will enable faster and more efficient transportation of goods and people. Nevertheless, there are several areas where infrastructure requires upgrading. EV charging and servicing networks are developing from scratch in many markets. Renewable energy adoption is increasing from a low base.
2. Climate Change Risks
Managing climate change-related risks across a business facilitates the enhancement of green value chains. Risk managers are focusing on the principle of double materiality. This involves scrutinizing how the activities of a business may have adverse effects on climate change, and how climate change may affect business risks and opportunities.
3. Risk Management
Climate impact risks vary across Asia, with specific seasonal intensities. Acute heat and precipitation stress caused by severe weather events, like drought, cyclones, or wildfires, can cause critical supply-chain disruptions. These may include non-availability of essential foods or healthcare products.
The physical risks to infrastructure and people due to extreme climate events are integrated into business continuity planning. Crisis management policies must consider damage to road or rail routes caused by heavy winds or floods, power outages in cold chain facilities, and structural damage to warehouse facilities to ensure an uninterrupted supply of essential products for consumers and patients.
4. Scalable Solutions
Economies, value chains, and natural environments are highly connected. The impacts of carbon emissions transcend borders, cultures, and communities. Planning and implementing energy reduction solutions that drive positive change at scale is vital for logistics networks spanning global markets.
In line with our sustainability objective to be carbon-neutral by 2030, DKSH introduced an automated control system to improve energy efficiency at its healthcare distribution center in Malaysia. The air-handling unit reduced electricity consumption by 7% in the first year, delivering annual savings equivalent to 350 metric tons of carbon dioxide emissions.
The project could potentially be scaled across other healthcare cold chain facilities, creating cost savings, and lowering emissions throughout our global operations.
5. Renewable Energy Transition
Technology innovations are making it more operationally efficient to replace carbon-intensive fossil fuels with renewable energy sources. Clean power systems that convert natural forces, such as solar, wind, and ocean waves, into electricity can improve energy efficiency and overcome challenges such as power outages in markets where supply can fluctuate.
DKSH opened a new Healthcare and Technology distribution center in Laos featuring solar panels, and 124 solar panels were also installed at our Technology distribution center in Thailand. In addition to delivering 40% monthly savings in electricity usage, solar power ensures that concurrent testing of high-precision tools and machines, which consume a large amount of electricity, is not interrupted by power grid interruptions.
Governments and companies are increasingly prioritizing investments in green infrastructure and low-carbon technology. This shift is reflected in the growing emphasis on reducing carbon emissions throughout the supply chain. Stay updated here on the latest developments in this region and beyond.