The Business Climate Imperative

by Michael Tang
08 Apr 2022

While the damage has been done, hope is not lost. Here's a brief look at the sustainability efforts put in place by some of Singapore's top companies.

Fifty years ago, a team of international researchers at the Massachusetts Institute of Technology published a seminal study, “The Limits to Growth”. Using a computer simulation model based on prevailing information, they found that if the world population, pollution, and resource depletion continued to increase exponentially, we would reach the limits of the physical ability of this planet in 100 years. Simply put, Earth cannot support the present rates of economic and population growth.

Climate change is a manifestation of the results of unabated growth. Human activities like the use of fossil fuel and deforestation result in more greenhouse gases in the atmosphere, changing climate patterns and making the planet warmer. Such changes have a profound effect on our lives.

For example, the annual mean temperature in Singapore has increased from 26.9°C to 28.0°C between 1980 to 2020; at the same time, annual rainfall has become more intense, increasing at an average rate of 67 mm per decade.

Climate change presents risks for businesses, but at the same time, also presents potential new opportunities. These developments have led to different entities taking action to combat climate change and its impacts.

The Singapore Government unveiled the Singapore Green Plan 2030 in February this year, which charts the nation’s green targets for the next 10 years. Policy solutions will be put in place to help Singapore achieve its long-term net-zero emissions goals.

Financial institutions, including investors and banks, are scrutinising their investment and lending portfolios for climate risks. Last December, Singapore Exchange launched a roadmap to progressively mandate climate-related disclosure for Singapore-listed companies.

Lastly, consumers are increasingly more environmentally-conscious, and have made spending decisions based on the impacts of their consumption.

Singapore corporates have responded positively to these trends.

Take telecommunications giant Singtel, for example. Electricity and fuel use in its business operations represent 95% of its total carbon emissions. Over the years, it has upgraded its mobile networks and converted them into energy efficient base stations. Almost 100% of its Singapore base stations are now ‘green’.

(Related: This Singaporean created the WeChat of Sustainable Properties)

Many of us upgrade our phones, modems, or routers periodically – but what do you do with your old devices? Discarding these electronic items leads to ‘e-waste’. They contain toxic substances which may cause pollution and health issues if not disposed of properly. As a participant of the e-waste management initiative implemented by the National Environment Agency, StarHub sets up e-waste recycling bins at selected StarHub shops for customers to drop their deprecated devices.

Buildings represent almost one-third of global greenhouse gas emissions, which explains why reducing carbon emissions in buildings is a key priority. Local sustainability pioneer City Developments Limited introduced Singapore’s first eco-mall, City Square Mall. Visitors may notice that the roof of the mall allows natural light to pass through. It is also fitted with sensors to regulate the use of electrical lighting. Condensate water from the air-conditioning system is recycled.

Or look at where you work. CapitaGreen, located in Raffles Place, is designed with many eco-friendly features. You may have wondered about the petal structure that crowns the top of the building. It actually serves as a wind scoop, drawing in cooler, cleaner air from above the building and channelling it into the building’s air conditioning system. Doing so saves energy consumption. CapitaLand has rolled out a 2030 Sustainability Master Plan which charts its goal towards building a resilient and resource efficient real estate portfolio.

Sustainability is also top of mind for agriculture producers. Rice is a staple for many Asians, but growing rice produces methane, a greenhouse gas that is about 30 times more potent than carbon dioxide in global warming. Rice grows in rice paddies, where the flooded field creates ideal growing conditions for bacteria that emit methane. Leading food and agri-business Olam, listed on Singapore Exchange, is a founding member of the Sustainable Rice Platform, which promotes better cultivation practices to reduce greenhouse gas emissions.

Palm oil is a key export commodity of Southeast Asia and is used in a variety of consumer products, including food, detergents, and cosmetics. One by-product of palm oil production is palm oil mill effluent, which causes serious environmental damage if not properly treated. Wilmar, another Singapore-listed company, has constructed 25 methane capture facilities as at 2020. These facilities recover biogas for use in power generation, with any excess flared off to ensure minimal methane leakage. Each facility can potentially reduce the mill’s greenhouse gas emissions by up to 90%.

A classic problem in environmental economics is “the tragedy of the commons”. Every individual has access to a shared resource (a common) and is free to use it, but with no way of stopping others from doing so. If everyone acts in their own interest, the resource will ultimately be depleted.

Mark Carney, a former governor of the Bank of England, has called climate change the “Tragedy of the Horizon”. Its effects are felt beyond the traditional horizons of most actors, imposing a cost on future generations. We can only break this tragedy if everyone – governments, financial institutions, companies, consumers – act together to arrest the development.

The time to act is now.

Michael Tang is the Head of Listing Policy & Product Admission at Singapore Exchange Regulation. He oversees listing policy and rules development and leads efforts to promote sustainability across stakeholder groups.