Niko Safavi, President Director, Mowilex Indonesia

Why environmental, social and governance alignment can raise investment appeal

Global Platform

In this Global Platform video, Niko Safavi, President Director, Mowilex Indonesia, discusses the steps paint and coatings manufacturers can take to promote environmental and social protection, and also evaluates the business opportunities presented by adherence to environmental, social and governance (ESG) principles. Prioritising ESG activities not only aligns with government sustainability objectives and consumer demand, but also has the potential to improve business operations and create a virtuous cycle.

In terms of the environment and sustainability for Indonesia's manufacturing segment, I am optimistic.

A number of leading companies have undertaken really important initiatives to fulfil the mandate that has been set up by the government with respect to carbon neutrality, clean air, clean water and the electrification of vehicles.

It is incredibly encouraging.

At the same time, like any other market, you see the risks of green washing.

One of the cures for that is certification of claims.

With respect to the hazards extending from paint, lead is a 20th-century problem that largely affects Asia and Africa.

Exposure to lead causes permanent damage to development in children, and irreversible damage in adults.

The Global Alliance to Eliminate Lead Paint is a really important initiative with which the World Health Organisation (WHO) is involved, and has set a limit of 90 parts per million.

The cost of eliminating lead pigments from paint is at most 3%, but there is a lack of a regulatory stance.

Its impact is approximately 3% of GDP for Indonesia, close to $400bn.

That is more than the entire value of the paint industry itself.

A little bit of care could potentially have a huge, positive impact.

There are a number of steps that paint manufacturers can take to improve the sustainability of their business and their product.

One of the biggest challenges is packaging.

Traditionally paint was sold in metal tin cans, very easy to recycle.

Unfortunately, because plastic solves a number of problems so easily, the whole industry has migrated to plastic buckets.

With this came a host of other problems, like an insufficient number of recycling centres in Indonesia.

But it is really going to require a different mindset, not just by the actors inside the industry, but by the consumers themselves.

There are other things that manufacturers can do to increase the sense of sustainability of their products.

For instance, through the elimination of lead, mercury and formaldehydes used in paints, and the use of biomass to create resins.

Developing more regulations to deal with all aspects of production can lead to greater sustainability.

If you think of environment, social and governance (ESG) as a form of taxation, you have missed the boat.

ESG is good business.

It creates a good cycle that we are looking for.

There is gender equity, brain management training programmes, and access to clean water and sanitation.

It leads to companies becoming more successful and therefore having more capital to invest in ESG.

The younger generation demands this and there are studies that show that 78% of Indonesians care about companies being ethical.

There is a real business opportunity attached to the ESG activities, and the sooner companies embrace that, the better.

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Niko Safavi, President Director, Mowilex Indonesia

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