Singapore firms on road to sustainability, research says

Singapore companies have been making inroads into sustainability, but it is still a long path ahead, according to experts and research findings.

Experts that The Straits Times spoke to said small and medium-sized enterprises (SMEs) especially can be more sustainable while balancing their profit margins.

This is in line with a poll published last month by global financial data analytics provider Refinitiv.

The report ranked Singapore the second-lowest in Asia in terms of environmental sustainability among its companies. Hong Kong firms came up tops in the list, followed by South Korean companies.

The study analysed more than 900 companies across eight markets in the region, including 40 companies from Singapore.

It noted that while Singapore companies do have policies on their emissions, waste management and water efficiency, fewer firms have actual targets for improvement.

They also have made progress in building ethical supply chains, but lag behind their regional counterparts when it comes to developing environmentally friendly products and services.

Experts agreed that although companies here have made strides in sustainability, they have some way to go in executing their plans, especially if they are SMEs that do not have abundant resources.

Associate Professor Lawrence Loh of the National University of Singapore Business School said: “In our study (by the Centre for Governance, Institutions and Organisations), an interesting finding is that more companies tend to report on their sustainability targets, while fewer reported on their actual sustainability performance.

“The larger companies (also) have more resources and necessary rationale to engage in sustainability. SMEs and start-ups must see that it is in their direct interests to adopt sustainability practices.”

Prof Loh, who is also director of the centre, said the study found that companies in finance, property and communications do better in sustainability compared with those in construction, hotels and restaurants.

Assistant Professor Aurobindo Ghosh of the Lee Kong Chian School of Business at Singapore Management University said moves have been made by bigger organisations such as the Singapore Exchange, which introduced environmental, social and governance (ESG) reporting for listed companies.

But he noted: “As expected, many multinational corporations and big (businesses) are often leaders in sustainability initiatives. SMEs and start-ups often try to catch up, but it’s more challenging for them as they face quite an uphill task to price their products competitively and still maintain sustainability goals.”

He said companies need push and pull factors to devise sustainability policies and goals.

“The main impediment that I see is from price pressure and competition in the crowded marketplace. If consumers are willing to pay higher prices and investors are willing to fund companies with better ESG records, I believe more companies might be able to have and meet sustainability targets.”

Financial institutions can also look at the carbon footprint and sustainability of the companies they work with, so that companies might be pushed to make more sustainable supply chains and products, he suggested.

Leading sustainable companies in Singapore acknowledged that there are challenges along the road to becoming more environmentally friendly.

Hospitality company Banyan Tree pledged against single-use plastic last year. It has eliminated 4.2 million single-use plastic items, equating to a 26 per cent reduction in total usage across its 48 hotels worldwide.

It is also working towards ensuring a sustainable supply chain and reducing food waste, with set goals for waste reduction and diversion from landfills.

Dr Steve Newman, assistant vice-president, group sustainability director and coordinating director of Banyan Tree Global Foundation, said the firm started with internal and external training and awareness, as sustainability is often viewed as a disturbance to business.

“We are moving away from ‘corporate social responsibility’, which often appears as a response to regulation or a separate department, and therefore someone else’s responsibility,” he added.

“Banyan Tree Group strives to move towards integrated sustainability, with science-based targets and partnership, where we share our failures as much as our successes, and we celebrate that honesty and integrity. This is how we can support others to take action, set targets, join forces and go beyond traditional boundaries to ensure business supports societal and environmental resilience.”

A spokesman for Sembcorp said companies here do drive energy-and water-efficiency to reap cost savings in general.

“Singapore companies which are not yet optimised in their energy and water usage can look into lowering their energy and water footprint. For example, they could start by switching to using LED lights and they could install water flow thimbles in their taps,” he suggested.

Companies can also get help from Global Compact Network Singapore, the local chapter of the United Nations Global Compact that supports companies in doing business responsibly.

Ms Esther Chang, executive director of the network in Singapore, said: “One of the more pressing challenges that businesses face is the fear of threats to their short-term competitiveness. This challenge can be overcome by understanding that responsible business and long-term profits go hand in hand.

“Day-to-day pressures are likely to skew companies towards decisions that benefit them in the short term, but potentially at the expense of their long-term competitiveness and resilience.”

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