Event: B20 Indonesia 2022 – Panel discussion: Creating a sustainable resilient economy through innovation
Speakers: Jennifer Westacott, Chief Executive, Business Council of Australia; Anderson Tanoto, Managing Director, RGE Group; Jon Moore, CEO, BloombergNEF; Michal Kurtyka, COP24 President; Shobana Kamineni, Executive Vice Chairperson, Apollo Hospitals Enterprise Limited; Zhou Yuan, President Director, Virtue Dragon Nickel Industrial Park; Hans-Paul Buerkner, Global Chair Emeritus, Boston Consulting Group
Date: 13 November 2022
Topics: B20; renewable energy; transitioning to a net-zero economy; supply chain issues; emissions reduction; living standards
Hans-Paul Buerkner, Global Chair Emeritus, Boston Consulting Group: Good afternoon. And thanks for staying for the very last panel session after a long day, and hopefully, a day with lots of ideas and thoughts and food for thought for you. So, creating a more sustainable and resilient economy through innovation is really key, obviously. And we have a large panel, and lots of questions and lots of great examples, as we have seen in our discussion, which we had beforehand. So I would like to jump right into it. And start with Jon Moore and ask him about how do you see technology and innovation, really creating opportunities for a more sustainable and resilient economy?
Jon Moore, CEO, BloombergNEF: Thank you, Hans. And, yeah, I think it's essentially a technology transition, we're going to go through, there's $100 to $150 trillion over the next 30 years going to get invested in clean technology. So clean technology will be absolutely key. We call them pillar one and pillar two technologies, there are technologies that exist today that really need scaling. So the wind, solar batteries, EV’s that really needs to scale. So that's mobilisation. And then there's sort of pillar two technologies, which really need innovation. So, CCS, hydrogen, those kinds of things that actually, Bill said, those are things that aren't economic today. So those are the things that really need investing in to bring down the technology costs. So I think that's where that investment will go. The other thing I'd say, in terms of resilience, the supply chains will just need to be designed such that we're not too dependent on any single place, we've seen in Europe with a dependence on gas on Russia, just how painful that can be. So I think as these new industries are built, we need to just keep an eye on resiliency. A final point I would just say is, it's not just about technology, clearly, you need policy, and you need finance, to line up to support all of that technology. So those three important components.
Hans: Very good, Zhou as the President of Virtue Dragon Nickel Company you have some specific examples where you through your innovation technology, you created a really more sustainable product, nickel product, and steel?
Zhou Yuan, President Director, Virtue Dragon Nickel Industrial Park: Good afternoon everyone. First of all, I needed to apologise to everyone because my English is not as proficient as possible. I prefer to use Chinese but luckily we have the translator. Yeah, definitely It's tough to answer this question. [through translator] The palm tree has very strong and resilient fibers, President Xi Jinping says that the technology, technology is the most important to let us understand that the technological innovation is a very important way to strengthen our enterprises. And through our understanding of the nickel Indonesia using multiple technologies, we have greatly increased the utilisation of resources on water, electricity, wind and gas, greatly reduced them. So we have also used new energy cars in our industrial parks, and that helps us to reduce the consumption of power in our industrial parks. These innovative measures can promote sustainable developments at the same time, it also elevated our company's competitiveness. Thank you,
Hans: Jennifer. You know, one of the you know, we all talk about innovation. Everybody builds on innovation, but what are the big obstacles really to make innovation work, will we really have the innovations, you know, to make it work?
Jennifer Westacott, Chief Executive, Business Council of Australia: I think the biggest obstacle that we don't talk about enough is that the community rejects it, all of this. For many people in the community, globalisation, technology is a frightening concept. And we have to make sure that sustainability is more than just about emissions reduction, it's got to be about the improvement of living standards. So, off the back of my concern about the community's rejection is my concern about government responses. Governments make bad decisions, they retreat to nationalism, they reject supply chains, they stall energy transition, or they intervene in markets, very unhelpfully. My fundamental concern, though, is that the there is a lack of dynamism, particularly in the G7 economies that is not equipped to manage this transition at the speed it needs to be managed. The technology change is so fundamental, so fast, geography starting point won't matter anymore. Value will be created by the inventors the risk takers, the inclusive societies. I think there are two forces at work that don't get talked about enough. The first force is the rise of the consumer, the consumer will decide and dictate new business models, the consumer will be power generators, solar providers, they will disintermediate, these big energy supply chains. And the second, of course, is the decarbonisation at the company level, and the country level. And I always say that needs to get into the DNA of companies and the soul of countries. All of this, I think, requires the B20 and the G20 to give a renewed focus on coordinating for impact for that dynamism, that's a fundamental role here over the next couple of days, the mobility of labour, the skilling of people for the transition, for task change for industry change the reimagination of multilateralism, and including this transition in multilateral agreements. The fast tracking of new business models and removing the friction to business model creation and investment, removing the barriers to investment, huge investment in R&D, unleashing intellectual capability, a renewed effort on productivity and wages, if this transition comes with a decade of wage stagnation, it will be rejected by the community. Therefore, we need to unleash productivity and wage rises for people across the globe. And that requires predictability of market structures, particularly in energy. Because fundamentally, this has got to be done by the private sector and I'm concerned that we do not have the dynamism that's going to unleash the private sector innovation and investment that's going to get this transition done in a way that lifts the living standards of all people.
Hans: Very good. Michael because you have been the president of COP24, and we are now at COP 27, how optimistic are you about progress? And what do you see as the key obstacles to really moving forward, both in terms of innovation, but of course, then also creating a more sustainable and resilient economy around the world?
Michal Kurtyka, COP24 President: Thank you very much. Well, I'm optimistic by nature. So if you ask this question, following on as Jennifer just said, she spoke the language of COP24 of Katowice, just transition. So how to get our societies from fossil fuel, fuel-based economies to new, clean tech economy. This is what we call a gradual shift and we need to have people at the heart of this shift. And this was symbolically what happened in Katowice. That's a very industrial region in Poland four million people employed in the mining industry and right now we have more people working for I.T than for mining. That's what we call a gradual change. So what I'm proud of and what I'm happy that we have right now, a set of rules governing global climate policy, we have Paris agreement, we have Katowice rule book. But if you ask me where I'm pessimistic I have been president of COP, I have presided over ministerial meeting of food and agriculture organisation, international energy organisations, and many others. And let me show you one very pessimist thing, we will not make the change by doing this big masses, especially now in the fragmented world. We have COVID and southern countries are disillusioned about the ability of northern countries to provide them with finance. We have war by Russia in Ukraine, and we have tectonic waves all over the world in terms of energy prices, gas prices, inflation, food insecurity, water problems, we have environmental and climate crisis. So where is the solution? And this is my deep belief that we need to change the way we move forward on this path. First of all, it's going from global negotiations to local implementation. It's exactly what has been just said, we need to make sure that local bottom up dynamics are created amongst communities, so that communities become more resilient, they can produce their own energy, they can produce their own food, they can have water saving, so we need to equip them with technologies. And that will be my last point, a call for my colleagues in G20, and that could be, also I call B20 community to G20. We need to think of different new ways of international solidarity, it will be extremely complicated to mobilise new finance out of developing countries and I have just come back from Sharm el-Sheikh from COP27. But we need technology. So let's create a global fund of technological solidarity. Let's put intellectual properties inside this fund, and let's share them in controlled manner. So that it allows developing countries to benefit fully from the shift to clean technologies. This is the only practical way that we can advance in given circumstances. So I'm optimist by nature and I believe that this call will be heard and that we'll be having lots of fruits in the coming month.
Hans: Shobana, you heard you heard Michael mentioning the pandemic. And so, you know, as the chairperson of Apollo Hospitals how do you see innovation really shaping not just your industry, but the whole economy, given that you are so closely involved in the healthcare sector? And how can we make all our economies more resilient by really upgrading the activities in the healthcare sector?
Shobana Kamineni, Executive Vice Chairperson, Apollo Hospitals Enterprise Limited: When India went into lockdown on March 22nd, 2020, in our hospitals, we have 10,000 beds and more than 7000 doctors who had no access to their patients. Fortunately, one month before that we had launched a digital app. So within 45 days we brought 3000 doctors online to do tele consults. And I think this was the live example of what innovation and technology could actually serve for the greater good. And I think from there, the story is just how ubiquitous that healthcare, you know, technology is for healthcare, and innovation is for healthcare. And we continue to push that boundary, not just India, but I think all over the world, even the smallest of countries have realised that, you know, a couple of things. If they want to have greater access for their people, you need to bring in healthcare technology, whether it's through video consulting to the highest mountain, or, you know, to be able to deliver drugs through drones, or, you know, there's so many used cases now available that really make it live. But the most important thing I think we have to understand, and this is this is the battle of our times, but this is the challenge of our times that innovation will come and innovation will get funded. And there will be enough people at governments and private sector, who will bring this together to collaborate and meet and bring vaccines to the world at the time that we needed it most. But the real two things that bother us in our times that we have to keep thinking about is, is ethics. We can push the boundary of any one of these but have we started questioning whether we should change the entire DNA of the human or how humanity will look on everything that we look at what are the second order consequences. So I think ethics especially in forums like this has to play a serious role. And the next thing I talk about is equity. What is the point in having a million dollar cure, if only point 0.01 per cent of humanity can access it? So I think equity is super important and equity comes from not making a difference between the colour of your skin or your gender or where you live. So, I think more and more of healthcare must talk and across the board, whether it's sustainability or any other field of business, we have to start engaging and asking ourselves these questions.
Hans: Very good. And as last but not least, I want to in this first round of questions to hear from you about the key learnings on using innovation, pushing innovation, you know, the obstacles, but also, I think the success stories?
Anderson Tanoto, Managing Director, RGE Group: Thank you. Good afternoon, everyone. Probably the only Indonesian company amongst the panelists. So I can bring a little bit of insights, how very practical things that we've done in the last three or four years actually have materialised in driving sustainability. Take, for example, just now I think Mr. Bill Winters mentioned, that solar panel in terms of capex costs has dropped over 80 per cent. So companies like us, we generate most of our energy from renewable sources, because we're in the cellulose pulp business. But there's still 10 per cent of our energy from fossil fuel and what we did was in 2020, we invest in our first megawatt of solar panel and the payback at that point of time was 11 years. But because capex continued to drop in terms of solar panels, coal prices go up so fossil fuel prices go up. Our payback right now is less than six and a half years, and we expanded our solar panel from one megawatt to 11 megawatt and 25 megawatt next year, and 50 megawatt by 2025. My point being is, you don't need crazy innovation to actually implement sustainability, take practical solutions that are already in existence, and private sectors like us, even Indonesia, this is not Europe, can actually make a big difference. In doing so we're able to reduce our emissions by over 5 per cent in terms of fossil fuel consumption. So these are very pragmatic solutions and a lot of other companies in Indonesia are doing them. And if we can do it in Indonesia, I think many other countries in the whole of ASEAN can also do it. That's first. Second, of course, Indonesia is always a big question of forest, the threat of deforestation, land use change, etc. We're also in the plantation business, actually in COP21 in Paris, seven years ago, we pledged something called one for one, so for one hectare of plantation we have one hectare of conservation. So private sectors actually have a huge role to play in nature based solutions to reduce emissions. So in that process we have 150,000 hectares of restoration project in the beautiful province of Rio. And last year, I went through a Vera carbon audit, actually, it's one of the largest carbon projects registered over 350 million tonnes of avoided emissions for 56 years. My point being is you don't need crazy innovation. Take proven technologies, existing framework, it's not perfect, but not doing anything, it's not a solution.
Hans: Thank you very much Anderson. I would like to have a second round of questions, you know, to all of you. This is a two pronged question, what do you see as the role of B20 in really helping innovation and technology and more generally, in creating a more sustainable and resilient economy? And at the same time, what are specific actions that you want us to take today? Jennifer, maybe I start with you.
Jennifer: I think the first thing is to coordinate for impact, because I think I'm concerned about this bifurcation and this decoupling process. If we don't have the rising tide lifting all boats, to use that expression, I think we'll get that community pushback that I've talked about. So coordinate that drive for dynamism, which we see in in Asian economies, but we're not seeing it so much in the G7 economies. I think act in tandem with the G20 to unleash the power of the private sector, because it still is the greatest force for innovation in technology, but drive greater accountability with the G20. I've gone through all the communiques in the last 10 years and I challenge someone else to do the table I did a couple of days ago, just to check how many actions have actually been done at a global scale. And there's not many that fit into that category. So a focus on action. I think one action that we could take today that I think is really important is the point about morality and ethics. So technology and innovation are going to bring up a whole new construct around what is moral driven growth. What is morality driven growth, what is ethically delivered technology, whether it's cyber, whether it's healthcare, whether it's decarbonisation. The issue I think is for this B20, and perhaps for the B20 in India to really focus on what that ethical framework looks like, because if we do not do this, we'll find ourselves at the next G20 still talking about that community rejection that community divide. Which is pushing against government taking the structural actions they have to take to get this done.
Hans: Thank you. Maybe Jon I can ask you about what can B20 do? And also what would you specifically engage on immediately if you were to make it work?
Jon: I mean, I think the first thing I would say is focus on standards and frameworks. This is a very complicated transition and in order to have productive discussions, we need to have standards and frameworks where we can discuss clearly. So I think there's a lot of initiatives going on right now, I know G fans have just won in the financial world, there are other initiatives. So I think just being clear on what the correct standards, or the best effective standards today are and making sure that everybody has some, you know, involvement and understanding of that would go a long way. And then I think the second thing would be around sort of silo busting between government, company, finance and civil society. Because as a platform, I think we need all of those to come together to have effective change.
Hans: Very good. Zhou I understand that this is the first time you are at the B20. So how do you see the B20 helping to create a more resilient and sustainable economy? And what actions would you like to see coming from the B20 here in Bali?
Zhou: Sustainability, I don't think we should set one set of standards, it should be tailored according to the country, according to the sector to define the standards, but the only standard must be total participation, it is not just participation of the government leaders or the high level management only. If the participation is only confined to the high level, then the policy cannot continue to be implemented. For example enterprise, we produced in the steel downtime and our products have extended the lifespan of the steel by three to five times. So I think the product itself is good continuation. In addition, how do we promote sustainability of our enterprises, we must let everyone feel that there is some benefit for them, we have a very large organisation and the cultural standard of employees may not be so high. So a few years ago, I talked about innovative approach to develop our area as a tourism resort in the industrial park. We want our employees to have a sense of pride, and to have society supervise what we do. So if we can maintain a united outlook, so these environmental concepts can be implemented successfully and effectively in our enterprises. So we use I.T, we use information only so that I can improve our resource utilisation. We use solar, we use new energy vehicles, so that we can achieve our green standards. But the successful implementation of every measure is a challenge to the employees. It is a new challenge. So I believe, to promote sustainability, the first step, the most important step is to unite the thinking pattern of all.
Hans: Shobana. Your take, you've already mentioned ethics, morality as key steps, but what are the very concrete things that we should be doing now? And maybe which the B20 can really start getting done?
Shobana: Yeah, I think that the reason for us in business to come to forums like this, is because there's really not just a global connection, but this is really a forum where government and business is talking to each other. So one of the best examples I can give is in our country the unified payments institutions, when they started that nobody in the world believed that you could have that, you know, it was so disruptive because it took away the entire layer and set of payments. And so we just use a number and it can be bank to ban, b to c, b to b, anywhere and everywhere. It's ubiquitous, and it's just a federated model and it took down so many established entrenched, it took away the, you know, really reimagined, it allowed so many small businesses to come in. And I think that inclusiveness that it created, the transparency it created is something that now what India can do is help so many parts of the world to say, let us help you open up. And I think that is where governments and business will start to collaborate to see what it is we can do for the greater good to be able to take some of these down to, you know, because most of us in G20 have very large populations. And we also have a very K shaped economy, that there are the very rich, and then there are the struggling. And in that we have to find innovations that can go deeper in and strengthen the overall economy and that's where I would start to say that the more innovations we have, so I particularly like the themes that Indonesia took. And as we move in India towards taking over the presidency, one of the first things we did is we said, let's not disrupt too much of what those themes are, because the agenda is not finished and I think this continuity of agenda is very important.
Hans: Very good. Thank you. Anderson what's your take? How would you like to push us all forward?
Anderson: Because I have the most difficult job because everyone has had such good recommendations. But again, I think I'm 100 per cent aligned with everyone, standards framework and let the market do itself. Right. So I hope one thing that we can take away from B20 is solidifying the carbon market. Very important topic for Indonesia, how can we put a value on extending natural forests? This is always a big question mark. And once the carbon market is established, we can do that in Indonesia, and in many other parts of the world. So standards frameworks and let the market do itself. And specifically for one takeaway, we can really drive the carbon market agenda, it will be a fantastic takeaway out of this B20.
Hans: Very good. Michael you have been there at many these big meetings, some optimism, some also some pessimism that you expressed earlier. What would you like us to do going from here?
Michael: I think that it would be great if we are able to realise all the ideas that you just proposed. But my experience from big international meetings, especially when you start to have many partners, with divergent views, sometimes on different subjects. Let's not expect a silver bullet either. I mean, it would be great to have all of this. But what I think, at least that we could expect out of the G20. So the most powerful economies in the world might agree on values that we want to bring forward in terms of where we want humanity, because when we are driving the most populous and the most powerful economies of the world, in fact, we are sometimes set setting the direction for the world. And my guess is that there is right now a questioning of the global liberal order. And there are many different conflicting ideas and values about that, so what should this new world look like? And if we are able to put at the center of this new world order, value such as prosperity based on the cooperation, dialogue for peace, respect for the planet, respect for people, then we will be winning and if G20 can show the way in terms of values to be followed, then we will all win.
Hans: Let me maybe, in conclusion, emphasise that even though there were some words of skepticism, I think there is good reasons to be optimistic. At the Boston Consulting Group, we've worked with many countries and even cities, big companies and medium sized companies in developed markets, but also in emerging markets defining their paths to net zero over the next 10, 20 30,40 years. And as Bill has mentioned, as mentioned earlier, many of the innovations that we are also hoping for are not yet fully developed. There is a good path for countries for cities, for companies, and I think for all of us to move forward. But of course, it requires enormous effort. it requires trying out many things, experimenting, innovation, even accepting there will be setbacks. There will be years when we will not make progress, but I think it really requires all our efforts, very much as Jon has emphasised, and also Shobana. You know, really mobilising everybody, because everybody, all of us, and all of the people out there can make a contribution have to make a contribution. And if we all do that, we'll make it work. So let's make it work. Enjoy the rest of the time here in Bali. The reception tonight. And actually many of the discussions tomorrow and work together and exchange ideas together will make it work. Thank you.