From smoggy skies to rancid rivers and staggering slums, environmental challenges loom large for Asia. While much has been said about the role of government and NGOs in achieving a sustainable future, Mark Clifford, executive director of the Asia Business Council, believes companies are an indispensable but often overlooked part of the solution.

In The Greening of Asia: The Business Case for Solving Asia’s Environmental Emergency, the former journalist makes the argument for the role of the private sector to find lasting solutions to environmental problems. The book draws on more than a dozen detailed case studies, ranging from electric vehicles and renewable energy to initiatives protecting tropical forest and water sources, to show how business is driving innovation across a spectrum of environmental issues in Asia.

In a conversation with the China Environment Forum, Mark Clifford discusses the book and his views on the role of companies and government in fighting pollution and climate change in China.

Given your experience, how would you say that businesses operating in Asia have evolved in terms of how they view the environment?

When I joined the Asia Business Council eight years ago I inherited a project on green buildings. Now it seems like a pretty mainstream topic, but at the time it was exotic. It’s interesting how much things have changed. That’s how I began to learn about the work on energy efficient buildings that companies are doing, often well before their governments develop an official policy.

Over the past few years, my sense is that some of the best companies in Asia have internalized the notion that they need to pay more attention to the environment because it’s good business. This is so much more ingrained in the corporate culture than is often believed.

The speed at which things have been changing is impressive. Take the example of green buildings; as I mentioned, eight years ago this was an exotic concept. Now you look at Singapore and by 2030 the goal is for 75 percent of their building stock to go green. The same thing goes for China. In 2007, President Hu Jintao made the first statement about carbon and now with President Xi Jinping we have had some very significant commitments, like the joint statement made with the U.S. last November.

You discuss at length a Chinese producer of solar panels, Suntech, that looks like a failure rather than a model. Why did you pick Suntech?

When Suntech founder Shi Zhengrong returned from Australia where he received his doctorate, he got local Chinese government support to start his business. Many Chinese companies are able to secure cheap land, tax breaks, and inexpensive high quality labor thanks to government policies. Shi made some good business decisions at the beginning. Several European countries were subsidizing solar power and he realized he could take advantage of those policies by providing solar panels much more cheaply.

In many ways it’s a classic story of Chinese companies coming in with cheaper but high quality services and products. It offers examples of the best and worst of the Chinese model: the emergence of copycat companies made the business environment unsustainable but, crucially, prices declined as a result.

This is ultimately good for the world. There’s been a 99 percent fall in solar energy prices since the 1970s and it’s because of companies like Suntech. These may not all be companies you want to invest in, but it’s undeniable that, collectively, Chinese manufacturers have brought down the prices of wind and solar to grid parity.

In China, it appears government action was crucial to the success of many of the companies you discuss. What do you think is the broader lesson here?

Companies may succeed in making an impact on the market, but without government policies that back them up, they may not have an overall positive impact. This is true everywhere in the world; even in countries with the most open, free market institutions, the government plays a crucial role. This is especially the case in the energy sector, where large investments and coordination are required – the government inevitably has a lot to do in setting policy.

Again, Suntech offers a good example. The Wuxi government wanted to see jobs and growth and decided to help the company out. In Europe, feed-in-tariffs have been instrumental in jump-starting the renewable sector. Something that isn’t talked about enough is that fossil fuel subsidies are huge. The International Energy Agency estimates that between $500 and $600 billion go to supporting fossil fuels each year. That is five times the subsidies to renewables. The United States, incidentally, has some of the highest fossil fuel subsidies in the world.

Often I hear the question, can solar survive without government subsidies? But I think that’s the wrong way to look at it. Solar has faced an uphill battle against much more heavily subsidized fossil fuels. Governments should help the transition to cleaner energy by removing fossil fuel subsidies, including those for nuclear energy. A carbon tax, for example, would have a long-term effect and help adjust prices, which are more effective than regulation at effecting change.

You cite many examples of success stories in several other Asian countries, especially Singapore. Do you think that companies in China can learn from the experiences of Singapore and other Asian countries?

I think Singapore offers some great examples to China. The government has repeatedly used a model where after testing policies through pilots, policymakers set short, medium, and long targets. This is because resource efficiency was identified as a political and strategic priority at the city-state’s founding to ensure successful survival as an independent nation. The lesson is countries that see resources as a strategic issue tend to look at energy in a more efficient way.

You can see a similar story in Japan after Fukushima; they now have more aggressive policies to promote solar power and energy efficiency.

You mention that more citizen awareness can help drive a revolution in energy efficiency and help address environmental issues. Does this apply to China?

Citizens are particularly important in places with strong civil society, for example, Denmark, the United States, Japan, Singapore, Taiwan, and South Korea. The viral spread of the documentary Under the Dome is a good indication of how Chinese citizens want to play a more significant role in the environmental sphere. However, the Chinese government is very cautious and tends to not want to see independent action from citizens. So, while it’s encouraging to see the response to Under the Dome and citizen action around air pollution, until China has a more developed civil society the government and companies will not have as strong of a response as they might otherwise see.

You write that “business needs to be given the incentives to ensure that it acts correctly; governments and civil society need to establish these incentives.” How do you achieve this ideal relationship?

The public sector and NGOs receive so much attention, people have forgotten that companies deal with problems all the time and have access to money, technology, and the ability to solve issues. I want to remind the public that pronouncements matter, but then someone needs to make things happen.

The right way to think of it is as a triangular relationship where the government is at the top, the first mover. Civil society, on the other hand, is crucial in ensuring accountability and putting pressure on government and firms to take action. Businesses can do a lot to come up with creative solutions, but they need direction, and much of the business community is waiting for the right signals.

A major achievement in China is that reducing the economy’s carbon intensity and improving efficiency are now top policy priorities. We’re seeing some improvement in energy efficiency and we can start to see the light at the end of the tunnel.