Digital transformation minimises sustainability challenges for SMEs

The pervasive repercussions of climate change and socioeconomic inequality continue to spur calls for more sustainable change across Thailand. Consequently, the rise of sustainability-conscious consumers have significantly impacted the corporate sector as consumers critically analyse the environmental impact of businesses they purchase from. 

Such shifts in consumer behaviour could have contributed to a staggering 96% of Thai SMEs placing a high value on sustainability, as indicated in the UOB Business Outlook Study 2023 (Thailand).

However, this higher attention to sustainability has not proportionately translated into tangible action, with only 51% of Thai small and medium-sized enterprises implementing green initiatives according to the same study. The cause for this wide difference can be linked to common obstacles faced by SMEs, such as limited resources, smaller network access, and lack of expertise.

Herein lies the opportunity for SMEs to leverage digitisation for sustainability-focused initiatives. Since 90% of Thai SMEs are already implementing digitalisation in at least one department, SMEs can redirect this massive digitalisation wave to sustainability efforts by optimising efficient resource management and boosting audience reach. 

Exploring the inextricable link between digitisation and sustainability

Sustainability and digitisation have a two-way "cause and effect" relationship; simply put, Thai SMEs can utilise digitisation to manage sustainability incentives while also elevating their own sustainability impact through such digitisation efforts.

For instance, SMEs can opt to use digital tools that provide real-time operational data and information regarding the processes and activities of sustainability projects. This data and information can be gathered through, for example, Internet of Things (IoT) supplemented by data analytics and artificial intelligence (AI). 

On one hand, Thai SMEs can leverage such data for efficient sustainability reporting that can help attract consumers, investors and general public trust. On the other hand, Thai SMEs can use their enhanced impact visibility to integrate sustainable practices into their operations. 

When calculating the data gathered from digital tools, SMEs can work to optimise and make more informed decisions regarding energy consumption and waste management, thereby increasing resource efficiency and reducing their environmental footprint.

A digital stage begets wider audiences

More than 80% of Thailand’s population access their Internet via mobile, and given the country’s high population density in Southeast Asia, SMEs can capitalise on this mobile penetration by adopting more digital methods to cast a wider net for audiences beyond any physical boundary. 

From there, SMEs – with their expanded communication channels and reach – are more able to attract and retain potential greener consumers and investors in the long run, as they can showcase their green initiatives more seamlessly.

Moreover, Thai SMEs can also use data-analytics tools to gain insight into consumer behaviour regarding sustainability and adapt their solutions accordingly. 

For example, vehicle smog has been noted as a major air polluter in Thailand. Thus, as the numbers of eco-conscious consumers rise in the nation, Thai SMEs can digitally adapt by establishing online storefronts that reduce resource consumption and emissions associated with traditional brick-and-mortar retail.

Beyond reducing their own energy consumption, Thai SMEs can also respond to growing environmental awareness by pursuing sustainability-focused innovation. 

A testament to this strategy is the growing popularity of GreenTech innovations such as electric cars (EVs) and "smart" agricultural machinations in Thailand. Thus Thai SMEs might potentially build a circular green environment by addressing sustainability at both operational and product levels with digital transformation.

The weight of transformation must not be borne by SMEs alone

The success of digital transformation is contingent on the SMEs’ surroundings, which can impact their readiness to undertake digital initiatives. 

Currently, Thailand has risen in digital competitiveness ranking, trailing only Singapore and Malaysia in ASEAN. However, there are still gaps in digital literacy and connectivity, as well as  inconsistent application of environmental policies in the private sector – highlighting the holistic support that SMEs require for any digital undertaking.

According to the UOB Business Outlook Study 2023 (Thailand), Thai SMEs are looking for more support in tax incentives for rebates (36%), easier access to funding grants (33%), and connections to industry partners (33%) for their sustainability initiatives. 

Policy-wise, Thai SMEs require support from the public sector. For instance, features such as the existing voluntary carbon credit trading, under the Thailand Voluntary Emission Reduction (T-VER) standard, can help SMEs gain an edge in transparency as their carbon credits can be registered and verified in the eyes of the public. 

The private sector can also play a vital role in Thai SMEs' success as they can provide end-to-end mechanisms that address common obstacles relating to resources such as talent, financing, infrastructure, product piloting and network access.

These resources are especially important for green innovations that provide sustainability returns for both SMEs and the wider Thai society. For instance, before even implementing an initiative, Thai SMEs can leverage digital tools such as a Sustainability Compass or participate in local incubator or innovation programmes to receive expert mentoring and resource support.

As more SMEs adopt green business capabilities, sustainable output such as green technologies can increasingly emerge in the market. For SMEs who wish to invest in producing GreenTech innovation in the future, they have options to turn to focused accelerator programmes that can provide the technical and financial support to help them boost Thailand's sustainability sector.

A success case can be illustrated by Hydroneo Thailand, a tech company that leveraged a green accelerator programme to impart sustainability and efficiency in the farming ecosystem in Thailand by digitising processes for Thai shrimp farmers through an IoT Smart Farming Solution to analyse production-related data and tailor energy-saving solutions.

These innovation-based tools and initiatives can help SMEs map out their sustainability capacities and strategies in detail while minimising knowledge and resource uncertainties. Subsequently, Thai SMEs can receive operational assistance in the form of capital funding, mentoring, and networking opportunities – all of which can help facilitate innovative minds to ideate the best sustainability-centric solutions for the betterment of Thai society.

Overall, the quest for transformative change is always a collective effort. Digitisation demands high compatibility among all ecosystem players; but, when paired with sustainability goals, it necessitates even more attention from all sectors for the benefit of the environment and society. 

With the correct support mechanisms, Thai SMEs can be the driving force of sustainable development in Thailand – and UOB is eager to witness the developments in this sector.

Banlang Wongthawatchai, head of digital engagement & fintech innovation, UOB Thailand