Asia is going green, like it or not

Businesses in Asia may not be as strongly bound by law to go green as Western counterparts, but economic pressures will take care of that, says ILOG chief scientist.

Businesses in Asia are not as constrained by legislation to keep an eye on carbon emissions, but they are under pressure to go green, all the same--it's a simple matter of economics, according to ILOG's chief science officer.

Speaking to ZDNet Asia in an interview, David Simchi-Levi said enterprises in the region are not as pressured as their counterparts in the United States or Europe to go green because there is a greater focus in the West on green initiatives, such as with legislative penalties on carbon emissions.

However, with businesses dependent on each other along the supply chain, the pressure from big Western companies enforcing green "taxes" on logistics partners will force Asian companies to heed the green call, all the same.

Simchi-Levi brought up Wal-Mart as an example: the U.S. retail giant earlier this year rolled out a green "scorecard" to gauge the environmental-friendliness of suppliers' packages.

Back in 2004, Wal-Mart's directive calling for its larger suppliers to use RFID tagging caused a surge in the RFID market as suppliers rushed to comply--its packaging "scorecard" is expected to have the same effect, especially in large manufacturing economies such as China, said Simchi-Levi.

Furthermore, future legislation in the United States is expected to exert added pressure on Asian supply chain partners in the coming years by focusing on emissions "caps"--or limits--and companies stand to rise or fall by emissions trading, he said.

With software and planning, a savvy manufacturer can lower carbon emissions by refining its logistics chain through making transportation more efficient or relocating warehouses, for example.

The extra carbon credits can be sold for a profit, turning out financial incentive, in addition to keeping a more efficient supply chain, Simchi-Levi said, adding that some 40 billion euros (US$63 billion) changed hands in the emissions-trading market last year.

But Asian enterprises need to maintain good data housekeeping in order to keep up with these trends. "There is a challenge with getting accurate logs on transportation...there is a lack of standardized, comprehensive and up-to-date data," Simchi-Levi said, on businesses in the region.

"The processes are slower to adopt in Asia, and businesses are not as used to investing in technology compared to the United States," he said.

But the pace will pick up because green is now global, due in no small part to both dealings with U.S. companies and the MNC presence in the region, he added.