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Eye On Asia | Southeast Asia’s businesses can embrace social responsibility now – or learn the hard way
- European laws such as carbon taxes and on supply chain due diligence are set to disrupt how business is conducted in Asia
- Importantly, research shows customers, investors and capital markets reward companies that materially improve the world
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The case is clear – we must fix the pressing issues of pollution and social inequality that threaten our world. But who’s best positioned to make a positive and lasting social impact?
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Traditionally, the role of implementing change has fallen to governments and charities. But these issues are far too complex and multifaceted for just those two stakeholder groups to address. There is a third player that can, and must, fill in the gap.
The business world must play a bigger role in addressing environmental and social causes. This is particularly urgent in Southeast Asia, which faces some of the worst consequences of issues such as global warming – and because of coming regulations.
The EU, for a start, has introduced a cross-border carbon tax. Under an agreement reached last December, the European Union will impose a pollution tax, starting with imports of iron and steel, cement, aluminium, fertilisers, electricity and hydrogen.
With taxes such as these, companies producing in Asia may suddenly find themselves unable to sell into Europe, one of the world’s biggest markets.
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Germany has also introduced a supply chain due diligence act, which in effect will require companies to ensure their suppliers are free of human rights violations, such as child, forced or slave labour. Such legislation is likely to continue spreading across Europe and is set to disrupt how business is conducted in Asia. The bottom line is that buyers in Europe will no longer find it economically viable to buy from sweatshops.
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