A gentlest reminder from SM Teo to businesses: No sustainable practices? Prepare to be a ‘laggard’ then.

08/06/2022

Now here’s a gentle reminder to the private sector: Incorporate decarbonisation and climate risks into the strategies to stay competitive. If not, prepare to be written off as laggards for “doing too little, too late”.

Senior Minister Teo Chee Hean rang the alarm bells in his keynote address at Temasek’s Ecosperity Conference 2022 on June 7, 2022.

“As demand for sustainable practices increase, first movers will capture upsides while laggards may be written off as doing too little, too late. Questions will be asked about your companies’ strategies to avoid stranded assets or legacy lines of production that may be rendered obsolete,” he warned.

He then cited examples of the oil and gas industry, which found itself under the spotlight, and how the oil giants have responded by pledging to reduce emissions.

SM Teo added that companies can no longer solely focus on short term returns because various stakeholders such as shareholders, customers and employees will demand more sustainable practices and plans.

The important role of the private sector and private finance

Be it providing investments or adopting greener business models, the private sector and private finance have an important role to play in the shift towards the green economy, said SM Teo.

And one way is to force other companies to go green or face difficulty getting financing.

“Sustainable private financing and corporate net-zero targets have a powerful mutually reinforcing effect, by drawing capital preferentially towards sustainable projects and new opportunities in the global green economy. This in turn makes it more difficult and expensive for companies to obtain financing if their projects are not green.”

He gave an example of GenZero, a recently-launched investment company by Temasek that focuses on carbon markets and accelerating decarbonisation solutions.

“This will direct more private capital towards green opportunities and encourage companies to place greater emphasis on delivering sustainable long-term financial returns. And Singapore intends to switch our economy towards a growing green economy.”

Policy makes a difference

Other than efforts from the private sector, policy is important too as it sets the framework for achieving ecosperity, which SM Teo said it’s not just about reducing carbon emissions but achieving goals and creating a circular economy that eliminates waste and maximises value of natural resources.

Turning to the topic of transportation as an illustration, he said that sustainable urban transportation is not just about replacing all internal combustion engine vehicles with electric vehicles.

“If we did that, we would convert our traffic jams of combustion engine vehicles to traffic jams of electric vehicles. Instead, the more fundamental system solution is to minimise the need for cars, through well-integrated urban planning and a comprehensive public transport system.”

This is also the reason why Singapore invested heavily in public transport and implemented a zero-growth policy for vehicles.

“We aim to be a 45-minute city in 2040 – nine out of 10 trips between homes and workplaces will take less than 45 minutes on our public transport network, even during peak hours. Today, we are already two-thirds there.”

Investing in R&D

Finally, Singapore, more than many other countries, needs to invest in research and develop innovative solutions to tackle the climate crisis.

“If we use technology right, it can be a valuable tool to help us overcome resource constraints and unlock greener and more sustainable solutions. To do this effectively, we need to adopt an ecosystem approach – the government to create a conducive environment that promotes green opportunities; the private sector to invest in emerging technologies; the scientific and research community to focus on developing innovative solutions; and all sectors working together to cross-fertilise and generate new ideas.”

To show commitment to R&D, the Government’s Research, Innovation and Enterprise 2025 Plan sets aside around S$25 billion for for research in strategic domains including Urban Solutions and Sustainability.

Cover photo credit: SM Teo Facebook page