1. A very good afternoon to everyone; and thank you, Mr Goh, for your opening address. We have come a long way since our climate pledge under the Paris Agreement in 2015.
2. Climate change is an existential threat to a small tropical island like Singapore, which is especially vulnerable to rising sea levels. There is much at stake for us in global efforts to mitigate climate risk.
3. Singapore has always been committed to sustainability efforts. Since our independence, sustainability has been integral in our nation-building. With limited land area and other natural resources, we needed to find a way to integrate nature and greenery into a small city-state, and to prudently manage and use scarce resources such as water and energy. We regulated and shifted pollutive industries, enacted laws against pollution, and limited our car population by imposing a quota. We are also working towards our vision of a “Zero Waste Nation”. Last year, the Ministry of Sustainability and the Environment (MSE) looked at closing the waste loop for e-waste, food waste and packaging waste loops to catalyse the shift towards a circular economy.
4. This year, however, COVID-19 created an even greater and urgent need to act on the socio-environmental challenges facing the globe. The pandemic unleashed an economic crisis, accelerating pre-existing trends, including rising protectionism, as well as social and income inequalities. It has shown us how vulnerable our healthcare system and global supply chains can be in the face of environmental and health threats, with many people’s lives and livelihoods at stake. The pandemic may be the most dangerous crisis this generation has faced, but it has also presented us with an opportunity to think about how to build a greener, more sustainable economy; and to turn disruptions caused by COVID-19 into new areas for growth.
5. Protecting our environment and capturing new economic opportunities are not binary. Therefore, while companies take this time to evolve their business models and explore new ways of doing things, it is also timely to begin incorporating sustainable practices into their businesses so that they can seize the global demand for sustainable goods and services. This includes leveraging green finance as well as undertaking new processes and solutions to maximise resource efficiency, reduce waste, and reduce our carbon footprint.
6. I would first like to share about the growing opportunities for green business and green finance. I will then talk about the role that the Singapore Government is playing in building a sustainable economy, and lastly, the role that businesses can play as well.
(II) Opportunities for Green Business and Finance
7. In his latest film, ‘A Life on Our Planet’, released this year, Sir David Attenborough provided a glimpse at how quickly the planet’s natural resources have depleted during his lifetime, and the devastating impact on our biodiversity. The film was part of Sir Attenborough’s larger call for the world to invest US500 billion dollars a year to protect nature, and this has contributed to a surge in interest in sustainable investing among businesses.
8. Increasingly, investors are recognising that companies solving the world’s biggest challenges today, also have strong growth potential. Investors no longer just care about how they make their money, but also where their returns come from. Globally, there are studies that suggest an increasing desire by millennials to invest in companies with good ESG track records. A survey by Morgan Stanley, for example, showed that 90 per cent of high net worth millennial investors want to tailor their investments to their personal values.
9. This “Attenborough Effect” is also present in Singapore. For instance, a report released by Standard Chartered Private Bank this year indicated that nearly four in 10 investors in Singapore are considering allocating 5 to 15 per cent of their funds to sustainable investments over the next three years.
10. There is still a lot to be done in green finance to bring about the transition to a low-carbon and sustainable future. In 2015, ASEAN countries set an aspirational target to secure 23 per cent of their primary energy from renewable sources by 2025. To achieve this goal, the region will need to invest around US27 billion dollars a year. Green bonds have taken off. From 2019 till the first half of this year, approximately SGD 4.8 billion of green and sustainability bonds were issued in Singapore. In the same period, corporates also borrowed SGD 10.2 billion through green and sustainability-linked loans. However, the green share of total loan and bond transactions in Singapore remains at less than 5 per cent, reflecting a significant opportunity for growth.
11. There are also many opportunities for Singapore to develop as a green growth hub providing green solutions to the world. Having a high urban density, flat terrain, low wind speeds, and competing uses for land also mean Singapore is well-positioned and incentivised to undertake entrepreneurship, R&D and creative problem-solving for a sustainable future. Through these actions, we can also inspire and catalyse change in the world. For example, within the CleanTech sector, which is one of our strategic growth areas, Singapore has secured several key investments in high-value manufacturing, engineering, biofuels, R&D and regional headquarter activities. The CleanTech Park, which is being developed by JTC Corporation as Singapore’s first eco-business park, will also serve as a platform for test bedding and prototyping clean and urban solutions in Asia Pacific.
12. Opportunities for green business and finance abound, and will only grow bigger as we shift towards a low-carbon future. I will now outline some of the concrete steps the Singapore Government is taking to leverage these opportunities and to build a sustainable Singapore economy.
(III) Role that Government is Playing in Building a Sustainable Economy
13. As part our refreshed economic strategy for a post-COVID world, sustainability has become one of the key priority areas. Sustainability can be a source of growth and competitive advantage.
14. To promote the decarbonisation of the economy, we will increase deployment of renewable energy sources, such as solar energy, both at the national and industry level. We are working towards achieving a solar target of at least 2 gigawatt-peak (GWp) by 2030, and an energy storage deployment target of 200 megawatt (MW) beyond 2025. These renewable energy initiatives, as well as various carbon management initiatives, create new business opportunities:
• We are partnering the industry, research community and international players to harness the potential of low-carbon technologies such as carbon capture, utilisation, and storage.
• We have the potential to establish ourselves as a carbon services hub in Asia.
• Efforts to limit the growth of carbon emissions will also increase demand for engineering, as well as legal and consultancy services in this area.
15. Our efforts to improve energy efficiency in all sectors is also part of our sustainability drive. We are encouraging our industries to implement energy efficiency improvement projects, which will in turn help companies to reduce operational costs and improve business competitiveness. We will also work with small-and-medium enterprises (SMEs) and start-ups across different areas, ranging from adopting sustainability standards, to creating innovative solutions.
16. The sustainability focus is also transforming old industries into new ones. For example, the agricultural sector. While Singapore does not have any significant agricultural industry, we are building up an urban farming and agri-food tech industry. Singapore has limited land, but we managed to turn this weakness into strength, and establish ourselves as a leading Asia hub for urban agriculture and aquaculture technologies. We can become home to high-tech urban farms that produce high-value nutritious food, including functional foods with health-enhancing properties. We can also be a hub to develop new technologies, innovations and systems that will transform farming in our region. The development of these sectors can generate new jobs, such as systems engineers, plant scientists, and aquaculture nutritionists, not just in Singapore but also in the region.
17. Finance is an important enabler of the various green growth initiatives. The Monetary Authority of Singapore (MAS) launched the Green Finance Action Plan one year ago to support a sustainable Singapore and to facilitate Asia’s transition to a sustainable future. More details of this will be shared during the panel session later.
18. Finance can also play a role in incentivising corporates to green their supply chains. Through sustainability-linked financing programmes, banks can provide preferential interest rates to corporates who meet sustainability criteria within their supply chains. We have seen some examples of corporates in Singapore tapping on sustainable financing to do so. For instance, local food and agri-business company, Olam, has secured sustainability-linked loans which will see their pricing reduced if Olam meets certain sustainability KPIs, such as ensuring farmers’ and food systems’ prosperity, supporting local communities and the regeneration of nature. This will help to incentivise sustainable practices across its suppliers, including smallholder farmers.
(IV) Role that Businesses can Play in Building a Sustainable Economy
19. This brings me to my last point – how businesses can do their part in building a sustainable Singapore economy.
20. We have laid out the Singapore Government’s plans, but how can companies also take the giant leap towards sustainability while accruing business benefits? This would require redefining what value creation means for their enterprise and, if necessary, the reinvention of their core business and mission to integrate sustainability principles.
21. Companies must first recognise that our current trajectory will have immense human and financial costs. But these forecasts, while daunting, also contain huge opportunities and a competitive imperative for companies to pursue innovative solutions. For instance, businesses could examine how sustainability can contribute to costs-savings, efficiencies and sales; and through innovation, expand their market reach beyond a niche group of customers by making sustainability part of a holistic value proposition.
22. ESG can have a real positive impact on businesses, and should not be viewed as solely a matter of corporate social responsibility. A recent McKinsey article highlights that upward of 70 per cent of consumers surveyed in Europe and the United States are willing to pay more for “green” products. The same article points out that if ESG is employed properly, operating expenses such as raw-material or water costs can be reduced, affecting operating profits by as much as 60 per cent. In Southeast Asia, a Euromonitor report also found that there is high consumer trust in products with green labels. It is expected that consumers will gradually move away from environmentally-harmful products, such as disposable plastics. As the demand for products that abide by ESG standards increases, businesses can witness real benefits to their top- and bottom-lines, if they were to meet this demand.
23. Sustainability needs to be embedded in every corner of the company, and this is where risk management, capital planning, investor relations and budgeting, are vital.
24. In Singapore, the real estate sector has traditionally dominated green and sustainable financing volumes. Many developers have secured green bonds and loans from banks, to develop new green buildings, install solar panels, and retrofit buildings with energy-efficient equipment. This is largely driven by the ease of identifying green assets in the real estate sector, as well as leveraging on accepted and robust industry certifications for green buildings, such as the BCA GreenMark.
25. Beyond the real estate sector, there is also room for a broader range of sectors to leverage financing to fund sustainable activity and projects. Here, sustainability-linked bonds and loans are useful tools, and can provide corporates the incentive to embed sustainability considerations in their financing decisions. Sustainability-linked instruments incentivise green performance, as discounts on the coupon or interest rates are awarded if the corporate meet its sustainability performance targets. These targets span across various ESG outcomes – for instance, common environmental targets can be centered around the corporates’ operations, such as targeting a reduction in carbon emissions or electricity consumption. These loans are also more accessible to a larger pool of corporates, as loan proceeds are not tied to specific green projects and can be used for general corporate purposes insofar as borrowers set material and ambitious sustainability metrics.
26. There is also growing ambition from banks in Singapore to increase access to green and sustainable financing to their clients. For instance: DBS launched the world’s first Sustainable and Transition Finance Framework and Taxonomy to help clients advance on the sustainability agenda. This year, HSBC also launched Singapore’s first Green Loan Framework for SMEs, which provides straightforward assessment of SME green loans, through utilising existing industry certifications to verify green projects or assets.
27. I urge corporates to continue forging partnerships that focus on meaningful action at scale, including partnering with banks in Singapore, to press on in their green journey and transition to more sustainable business models.
28. I would like to conclude by going back to our larger purpose, why this is important, and why we are having this ESG event today.
29. Across the globe and in Singapore, more and more people are paying close attention to climate change and its impact. Climate change is the ultimate challenge for humankind, and has become a rallying cry to inspire people to take collective action for the common good of our planet.
30. Reconciling environmental sustainability and economic growth is essential for our survival and also an opportunity to be seized. There is no better time than now to focus on sustainability in our recovery from the pandemic. To do this, we can harness the power of finance, innovation and technology to drive transformation in all sectors of society and improve our lives.
31. If we want to have the hope of avoiding radical changes in climate and catastrophes, hope for a comfortable life for our future generations – the change begins with us.
32. Thank you.