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HSBC Business Insights: Outlook for Sustainability
Sustainability will foster Singapore’s economic and business growth.
Why businesses in Singapore should go green?
To understand how Singapore values sustainability, consider how it has managed its water supply. With no resources of its own, the city suffered severe water shortages in the past. But now it produces much of its own water through desalination and by treating used water. Its water industry pumps S$2.5 billion a year into the economy.1
Singapore has long integrated sustainability into its economic planning and activities. And now it sees economic growth through green industries and more sustainable use of resources as essential to its long-term economic development.2
From developing ‘super low energy’ buildings and green housing estates to imposing a carbon tax, Singapore is stepping up efforts to reduce its carbon footprint and mitigate the impacts of climate change. And businesses, like other sectors of the economy, are expected to do their part. But they can also gain by capturing value for their organisations.
Here’s what businesses can expect from Singapore’s drive to become more sustainable.
Going green can unlock future prosperity for companies.
New policies to make inaction costly
The Singapore Government is the driving force behind the shift towards sustainability as it works to meet its Climate Action Plan. Businesses can expect the government to review existing policies and roll out new ones – and failure to keep up with these changes may be costly.
The carbon tax, for example, will be a substantial new cost for large carbon emitters if they don’t cut their emissions of several greenhouse gases. The government expects to collect almost S$1 billion in carbon tax revenues in the first five years under the new tax alone.3
Other businesses will feel the knock-on effects of increased energy prices as large polluters try to pass on the tax.
More businesses are embracing sustainability
A growing number of Singapore businesses are setting the bar high in sustainable practices, and this is likely to encourage other companies to follow their lead.
Large corporations such as City Developments, CapitaLand and Singtel now rank among the world’s most sustainable.4 Property group Ho Bee Land has developed a green finance framework with HSBC Singapore to enhance its sustainability practices. With HSBC’s help, the company secured Singapore’s first green loan in 2018.
In 2019, HSBC Singapore and OCBC Bank arranged a S$248 million green development club loan for Soilbuild. The property company has been developing buildings with green designs and now also uses sustainable finance to lessen its environmental impact.
S$1 billion set aside by government for research on urban solutions and sustainability planning.
Demand for green products to grow
Demand for eco-friendly products and services will continue to grow – and this will have consequences for supply chains. According to a YouGov survey, more than half of Singaporean respondents believe businesses must ensure their supply chains don’t harm the environment.5
To earn customers’ trust, businesses will have to show that they care not only about their bottom lines, but also about the environment.
Tips to stay ahead
So, what can businesses do to prepare for Singapore’s move towards greater sustainability?
- Stay on top of changes in policies. The government will continue to adjust its policies to adapt to a changing climate. Proactively reduce your environmental footprint to ease compliance with new regulations.
- Invest in technologies and take advantage of support schemes. Technologies can speed up your efforts to become sustainable, so invest in them. Sensors, for example, can help you monitor and manage your carbon emissions. If you need support, consider applying for grants that help improve your business’s energy efficiency.
- Consider green financing. This can accelerate your transition to a low-carbon economy. Through funding solutions such as green loans and deposits, HSBC has helped Singapore businesses grow while reducing their environmental impact. Globally, it has deployed more than US$36 billion in green finance and is recognised for supporting the global shift towards sustainability.
More programmes to support businesses
Singapore has introduced several funding schemes to help businesses achieve growth through sustainable practices. These include the Productivity Grant (Energy Efficiency) and the Energy Efficiency Fund, which encourage companies to become more energy efficient.
The government also set aside S$1 billion for research on urban solutions and sustainability planning.6 It is expected to offer more grants and assistance in the future.
How can we help today?
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1 Channel News Asia, ‘Singapore water industry contributes S$2.5b in value added to economy annually, creates 14,400 jobs to date’. https://www.channelnewsasia.com/news/singapore/singapore-water-industry-contributes-s-2-5b-in-value-added-to-10511576.
2 Singapore Ministry of the Environment and Water Resources, May 2018, Opening keynote address of Minister Masagos Zulfikli at the 5th Singapore Dialogue on Sustainable World Resources. https://www.mewr.gov.sg/news/opening-keynote-address-by-mr-masagos-zulkifli--minister-for-the-environment-and-water-resources--at-the-5th-singapore-dialogue-on-sustainable-world-resources--18-may-2018.
3 The Business Times, ‘Singapore Budget 2018: Singapore to slap carbon tax from 2019, to collect revenue of S$1b in first five years’. https://www.businesstimes.com.sg/government-economy/singapore-budget-2018/singapore-budget-2018-singapore-to-slap-carbon-tax-from.
4 Corporate Knights, 2020 Global 100 ranking. https://www.corporateknights.com/reports/2020-global-100/.
5 YouGov, ‘56% of Singaporeans believe businesses have a responsibility to prevent environmental damage’. https://sg.yougov.com/en-sg/news/2018/01/04/businesses-and-environmental-damage/.
6 Singapore Ministry of Finance, Budget 2020 speech. https://www.singaporebudget.gov.sg/budget_2020/budget-speech/d-sustaining-singapores-success-for-our-future-generations.
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