The concept of sustainability has recently experienced an evolutionary leap, driven by the increased awareness of and subsequent call for action for governments and corporations all over the world – a call to do their part to address climate change. Even during the peak of the pandemic, sustainability and climate change issues were seen as critical to deal with. As our society grapples with the new normal, the ever-evolving virus strain, and a cautious economic recovery, we have to recognise the fact that this recovery cannot come at the expense of our planet.

 

Global and local initiatives

There have been many coordinated global and local efforts to drive sustainability initiatives. The United Nations Climate Change conference held in Glasgow in November 2021 brought almost every country together to discuss about climate related issues, spelling out how and when targets to reduce carbon emissions will be achieved. Closer to home, the Singapore government has launched the Singapore Green Plan 2030 to advance the country’s national agenda on sustainable development. Under the Green Plan, the government has spelt out ambitious targets, such as to achieve 80 per cent green buildings in Singapore by 2030. It also has rolled out a wide range of initiatives, such as the Enterprise Sustainability Programme under Enterprise Singapore, to incentivise efforts.

 

Multiple drivers of a low-carbon economy and how businesses should respond

Keeping the above in mind, it is imperative for companies to RECOGNISE what the market demands. There is a need to consult and understand the perspectives held by the various stakeholder groups and to respond appropriately to their concerns, which are constantly and profoundly shaping the sustainability agenda.

In addition to financial reporting based on traditional accounting standards, shareholders and investors now demand companies to identify and assess how transitional and physical climate changes are going to impact a company’s assets, revenue, expenses, and whether the company will survive in the low-carbon economy. Regulators are increasingly mandating climate reporting by organisations, as outlined by the Singapore Exchange consultation papers released in August 2021.

Consumers are equally awakened by the environmental impact of their products. Large institutional investors are gaining climate awareness and allocating more funds to companies with sustainable practices. This is congruent with the Recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), which provides a framework for climate-focused reporting with a strong emphasis on the transition to a low-carbon economy. This is an entirely new strategic discussion that must be held at the boardroom level to account to stakeholders, whereby the impacts of transition and physical risks on the business model and financials of the company must be considered for. All these allude to the 3Ps concept of People, Planet and Profit, whereby businesses can generate economic value by identifying and addressing socio-environmental problems that intersect with their businesses.

 

Have a strategy for managing and responding to sustainability

Companies should then take these into consideration when STRATEGISING the path forward. Sustainable development, in particular climate change, will result in a long-term structural change in our economic and social systems, with the aim to reduce the consumption of the environment and resources to a sustainable level. Managements would need to be cognizant in identifying risks and opportunities the competitive environment presents, and to do so the enterprise risk management framework and sustainability agenda would have to be aligned.

Improvements in resource efficiency can make consumption patterns sustainable and reverse the harm we have inflicted on the planet. Reduced wastage can also translate into significant cost savings. The organisation will do well in its sustainability gap analysis to establish areas to be addressed to improve sustainability, as well as take advantage of the various government incentives available to reduce the upfront cost of going green. A company with a sustainability agenda is better positioned to anticipate and respond to economic, environmental, social, and regulatory changes.  

 

Businesses should take measurement seriously in order to realise achievements

Last but not least, an organisation needs to MEASURE key performance indicators or KPIs and monitor its progress towards where it wants to be in terms of sustainability. In order to create sustainability value, the organisation needs to incorporate sustainability dimensions within its corporate strategy. Sustainability can be embedded within an organisation’s processes and culture by adding environmental, social and corporate governance (ESG) discussions to quarterly board meeting’s agenda. This allows the board to be aware whether the company’s strategy does or does not align with ESG risks. Perhaps, executives’ remunerations can also be linked to sustainability-related KPIs, such as percentage of buildings greened for a property developer, which will help to ensure alignment of goals within an organisation. To this end, organisations should define sustainability or risk having sustainability being defined for them.

All in all, sustainability is a long-term concept that has to be embraced, and it is one that can be complementary to business growth and strategy. As we welcome the New Year, perhaps the resolutions for organisations to include is a sustainability-related target. That way, we can all play our part to help Singapore achieve the targets set out in the Green Plan 2030, and contribute toward the global effort against climate change together. 

 

To find out more and how we can assist you in your environmental sustainability journey, please reach out to our specialists.

Sovann Giang
Senior Director and Practice Leader for Sustainability Management
T +65 6594 7892
[email protected]