Challenges Faced by Small and Medium Enterprises (SMEs) in Adhering to Climate-Related Regulations in Asia

Introduction

The issue of climate change has become increasingly urgent, and its impact on the Asian continent is particularly pronounced. Extreme weather events are occurring with alarming frequency, raising concerns about the effects of climate change on both human rights and economic growth. According to the "CORPORATE ACCOUNTABILITY AND CLIMATE CHANGE" white paper by Asia in Focus, experts predict a 48% probability of global temperatures rising by 1.5 degrees Celsius above pre-industrial levels by 2026. These changes not only demand immediate attention but also call for a collective effort to mitigate climate change and its consequences.

Climate Change in Asia

Asia has been a significant contributor to the world's carbon emissions over the last two decades, primarily driven by the rapid expansion of its industrial sector. In contrast, the rest of the world has seen a slight decrease in emissions during the same period. This makes Asia not only a major greenhouse gas emitter but also one of the most vulnerable regions to the impacts of climate change. Rising sea levels, extreme heatwaves, typhoons, and droughts pose serious risks to Asia's densely populated urban centers.

Public Health and Economic Implications

Climate change is already taking a toll on public health, food security, and economies in Asia. The escalation of climate-induced heatwaves, particularly in South Asia, presents significant health hazards. India, in particular, is expected to lose 5.8% of working hours in 2030 due to heat stress. Agriculture, a cornerstone of Asian economies, is under threat from climate change, resulting in food insecurity and the displacement of communities. A 2022 report by the Intergovernmental Panel on Climate Change (IPCC) underscores the acute and severe impact of climate-related extremes on food security, nutrition, and livelihoods in Asia. Additionally, 11 out of the 15 cities most at risk from climate-induced flooding are situated in Asia. A Greenpeace study estimates that the Asia-Pacific region could suffer annual losses of approximately US$1.2 trillion in capital stock by 2050 due to flood events.

Challenges for Small and Medium Enterprises (SMEs)

Small and medium enterprises (SMEs) are the backbone of many Asian economies, providing employment and contributing significantly to GDP. However, when it comes to complying with climate-related regulations, SMEs face unique challenges. Unlike large corporations, SMEs often lack the necessary financial resources and infrastructure to adapt to heightened compliance requirements. This is where governments and larger corporations can play a pivotal role by offering financial and technical support to help SMEs meet these regulations effectively.

Lessons from Three Key Sectors

To better understand how businesses can address the human rights-related impacts of climate change, we need to examine specific industries and their challenges:

• 1.   Garments and Fashion: Asia is a global epicentre for garment production, encompassing everything from clothing to footwear. This industry confronts multiple challenges, including high energy consumption along lengthy supply chains, a substantial number of factories vulnerable to flooding, and the adverse effects of heat stress on workers. SMEs operating within the garment industry need to enhance their environmental practices, particularly as large labels increasingly focus on reducing their overall greenhouse gas footprints.
• 2.    Palm Oil and Paper: These industries are often linked to deforestation and environmental concerns. Smaller producers that supply larger companies may face resistance or find it challenging to comply with responsible business practices. In response, larger corporations, driven by reputation concerns, are taking measures to improve standards across their supply chains. These efforts include reducing the number of suppliers or collaborating with smaller companies over an extended period to enhance their sustainability practices.
• 3. Mining of Rare-Earth Minerals: The growing demand for rare-earth elements in green energy technology is expected to put mining companies under intense scrutiny for human rights and environmental concerns. Mining companies involved in "transitional minerals" will face significant pressure to conduct meaningful human rights and environmental due diligence (HREDD) to avoid delays in the transition to clean energy.

Conclusion

The challenges posed by climate change are significant, particularly for SMEs in Asia. As the world faces the reality of rising temperatures and more frequent extreme weather events, it is essential that governments and larger corporations take proactive steps to support SMEs in adapting to climate-related regulations. By providing financial assistance and technical resources, Asia can collectively work towards addressing the pressing climate crisis and safeguarding the region's future.

References:

• ·         Asia in Focus. "CORPORATE ACCOUNTABILITY AND CLIMATE CHANGE."
• ·         [Intergovernmental Panel on Climate Change (IPCC). "IPCC Sixth Assessment Report - Working Group II: Impacts, Adaptation and Vulnerability."](Add the publication details if available)
• ·         Greenpeace. "Asia-Pacific Climate and Energy Factsheet."