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16 May 2023

Econ Digest

Environmental innovation and the “Do No Significant Harm” principle for sustainability


        While various environmental innovations are being introduced currently, any innovation that selects to use/produce/do business may have to take environmental standards as a framework for action in order to truly achieve the sustainability goals. In the public and private sectors in many countries, the “Do No Significant Harm (DNSH)” principle is mostly set as an important criteria in the framework of environment-related actions. For example, the European Union (EU) and Thailand have applied the DNSH principle in classifying their economic activities and have taken environmental considerations into account when developing the EU and Thai taxonomies. In the course of business operations, it is therefore necessary to consider that the life cycle of products and services should not increase greenhouse gas emissions to the point of causing climate change, nor should it affect people, nature and property.

        Today, the electric vehicle (EV) business is becoming increasingly popular as EVs are deemed to use clean energy that does not pollute the environment. Moreover, in order to provide customers with more choices, EV-related services have been expanded to electric scooter rental, which is currently gaining more and more popularity particularly in congested urban areas. Electric scooters can help reduce greenhouse gas emissions, while meeting the needs for convenient short-distance travel due to their lightweight and time-saving advantages.

        However, there are some issues to consider when using electric scooters, as seen in the referendum to ban electric scooter rentals in Paris. On April 2, 2023, 89% of voters voted to ban the rental of electric scooters on the streets of Paris starting from September 1, 2023, as they are deemed dangerous to pedestrians and the users themselves. In 2022, Paris saw a 42% increase in electric scooter accidents from the previous year, resulting in 3 deaths and 459 injured people.

        In addition, several studies have found that the electric scooter rental business faces problems that may affect the environment, besides issues regarding social impact or accidents, as follows:

  • Environment polluting production: The production process of electric scooters has emitted large amounts of greenhouse gases due to its high energy consumption. Moreover, the production of lithium-ion batteries uses raw materials that are toxic to the environment.
  • Low service life: Rental services carry a high risk of damage, low battery life and waste of resources due to frequent replacement. In particular, batteries may need to be replaced every 1-5 months, which increases the risk of reusing and recycling of resources, as well as waste management to avoid environmental impacts.
  • Carbon dioxide emissions from service: The model of electric scooter rental operations that allows the return of a scooter elsewhere has caused the service providers needing to transport scooters back to the charging station before service can be restarted. Providing services in the form of delivery also results in energy waste by using other vehicles to transport the scooter back and forth to their destination, which could emit carbon dioxide if such vehicles are powered by fossil fuels.

        In order to get closer to the “Do No Significant Harm” principle, manufacturers and service providers, including related government agencies, may need to set guidelines to manage production process issues, battery issues, and service models to reduce environmental impacts. This case is similar to that of EVs, where businesses have to demonstrate the sustainability of their business operations, including service processes, battery disposal, and production process management with traceability, recycling certification and toxins elimination, as well as effective management of environmental issues from upstream to downstream. This will help prevent emissions from other processes and obtain products or services that reduce emissions through the entire cycle and become a choice that truly reduces the impact on the environment.

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Econ Digest