The Business Dialogue Group 20 (B20) of the Trade and Investment Task Force in collaboration with the Indonesia Commodity and Derivatives Exchange (ICDX) held an online Side Event Webinar with the theme "Technology and Market Innovation For Decarbonization" on Friday (26/8/2022). The purpose of holding this webinar activity is to provide an overview of how the industrial world responds to the global issue of climate change, by carrying out technology-based innovations and digitalization.
There are three start-up companies presented in this webinar. Each explains how the business model that is being implemented supports the decarbonization process that is able to have an impact on climate change. The three companies are Xurya Daya Indonesia which is engaged in renewable energy; Carbon Ethics that conducts business based on nature based solutions; and Octopus Indonesia, which runs a business in the field of waste management.
In his opening remarks, Martin Santoso as Associate Partner of leading sustainability work in Indonesia, McKinsey & Company explained that currently innovation plays a key role in economic development, so that it can be combined with global issues of climate change and sustainability. It is the duty of business people to adapt and innovate in technology and make changes to business models. One of them is by making the decarbonization transition, namely the process of reducing or eliminating all carbon emissions, with the aim of achieving the lowest emission point.
The problem is that emission reductions in many business models rely heavily on technology which not all market participants are ready to implement. But with digitalization, it has the potential to support decarbonization in all lines of the economy, from transportation, agriculture, manufacturing to waste management. Businesses that are able to adapt and adapt quickly will be able to take advantage of this growth opportunity as increasing efforts in Indonesia's low carbon technology and market are core components of decarbonization.
According to Martin, his party is actively helping clients to decarbonize in more than 50 countries. There are 5 main business strategies that McKinsey recommends to clients to implement decarbonization. The first is the Net Zero and Environmental, Social and Governance (ESG) Strategy, namely the development of net zero emissions and a strategy to see the decarbonization potential of companies and prepare a roadmap for implementation. Second, Green Business Building, namely the preparation of a new business ecosystem that is able to provide opportunities based on support for the environment.
Third, Decarbonization Transformation, which is a strategy to reduce emissions, both from the main business and its derivatives (upstream and downstream) and see the potential risks of the company by making an ESG strategy and seeing concrete initiatives to improve the company's communication with the capital market. Fourth, Sustainability in Financial Institutions is to see the potential for product and service innovation from financial institutions, such as the issuance of green bonds. Fifth, Sustainability Investing, namely how to carry out the execution of green bonds or in terms of equity from a sustainable business.
In practice, this decarbonization-based business model is not only beneficial for the environment but also able to provide economic benefits for the company. This was conveyed by Eka Himawan as CEO & Founder of Xurya Daya Indonesia, who actively distributes and markets rooftop solar panels as an alternative energy source.
According to him, there is a very significant growth from the use of rooftop solar panels, namely 372 users in 2018, until 2022 reaching 1061 customers. "There is an increase in usage of 1360 percent during 2018 to 2022," he said. Eka explained that there are many great benefits for the environment, including: Production of environmentally friendly energy of more than 42 million kwh; reduced carbon emissions by nearly 40 kg; job creation for 726 job seekers; equivalent to planting nearly 515 trees and capable of providing electricity to nearly 30 thousand homes.
In line with Eka's explanation, Jessica Novia Co-Founder & Chief Marketing Officer (CMO) Carbon Ethics also conveyed. The company he founded focuses on education and community empowerment to reduce carbon emissions in order to maintain the amount of blue carbon, namely the amount of carbon absorbed by ecosystems in the sea. This is important because Indonesia is the largest archipelagic country in the world, so it has the most blue carbon stocks globally from mangroves and sea grass. But on the other hand, Indonesia also has the fastest deforestation rate in the world. "Therefore, it is very important for us to maintain the level of blue carbon that we have so that it is sustainable, by educating stakeholders, both companies, the government and the community," said Jessica.
According to Jessica, there are four strategies carried out by the company in maintaining the presence of blue carbon in Indonesian waters. First, Education and Carbon Calculation, where at this stage the company provides education, trips to conservation areas, calculates carbon footprints and reports to companies. Second, Carbon Offset, which invites companies to participate in community-based activities that can have a positive impact on the environment, social and economy of the community. Third, Sustainable Gifting, namely giving appreciation or gifts to parties who are able to contribute to reducing carbon emissions. The goal is to create a sustainable culture in society. Fourth, Tech Enablement, namely the preparation of a carbon calculator widget as a means to calculate the amount of carbon offset.
To date, many organizations and companies have joined in Carbon Ethics activities in various forms. Jessica gave examples of Garnier-L'Oreal marketing campaign activities, employee outing activities with Allianz and carbon calculation and offsetting activities with the Youth20 Dialog Forum. By collaborating with various institutions, Jessica continued, her party believes it will be able to help mangrove farmers who live in poverty. "With the conservation of business institutions in carbon offsets and carbon footprints, it can raise the standard of living of local communities," he said again.
Providing benefits to the community is also one of the goals of Octopus Indonesia, which is engaged in waste management. According to Rizki Mardian, Octopus Indonesia's Chief of Data & Research, his party is a digital platform for the business of selling waste or waste. "There is an economic mission that is carried out based on existing business potential, there is also a social mission to improve the lives of scavengers," he said.
Scavengers, who are termed in this business as conservationists, are a major aspect of the business being run. Through the digital application, users will ask conservationists to pick up, collect and bring waste in their environment to the check point area provided by the company. For the collected waste, the company performs metadata and makes algorithms regarding the type and brand. Then the metadata is collected to be given to the company so that a recycling process can be made for the product. "From users to conservationists and can return to the recycling industry, so that they can contribute to reducing carbon emissions," said Rizki.
During running the business since 2018, it said it had succeeded in reducing the rejection rate for recycling from 48% to 1% and creating a speed of waste collection up to 200%. Economically, this activity is also able to increase the income of each stakeholder in the supply chain between 30% to 60%. “We also have a brand with data, analytics and realtime visibility for recycling. With this action, we can have an impact on the community, especially scavengers and housewives," he explained.
In conclusion, Carmelita Hartoto as Coordinator of Deputy General Chair (WKU) IV for Human Quality Improvement, Research and Technology and Innovation KADIN welcomes all business innovations carried out by the company in order to achieve the 2030 Net Zero Emission program. Although the challenges include financing , technology and human resource capabilities, but this can be achieved with the collaboration of all parties such as the government, business people and the community. "KADIN has initiated the KADIN Zero Hub program, which is expected to help companies become net zero companies," he said.