Why do SMEs in Singapore need a sustainability toolkit?

In today’s dynamic and competitive business landscape, sustainability has become more than just a buzzword for SMEs. A 2022 report highlights that 3 out of 5 SMEs in Singapore recognise the importance of weaving sustainability into their day-to-day operations. Beyond just being eco-friendly, businesses understand that sustainability is a key player in long-term growth, fostering a competitive edge and reputation building.

Concrete risks associated with environmental, social, and governance (ESG) factors pose a genuine threat to the ongoing growth of many businesses. Failing to address these concerns could have a significant impact on the global economy, potentially losing up to 18% of its current GDP by 2048 if effective climate action measures are not taken.

Given that SMEs constitute 99% of Singapore’s economy and contribute to 70% of employment, prioritising sustainability is crucial for them. Continue reading to discover more about what sustainability involves, the specific benefits for SMEs, and how to effectively implement and measure the success of sustainable practices in this sustainability toolkit for SMEs.

Importance of sustainability toolkit for SMEs in Singapore and beyond

Sustainability is a multidimensional concept that encompasses ESG considerations. In the context of business, sustainability refers to practices that minimise environmental impact, promote social responsibility, and ensure ethical governance.

A common misconception is that sustainability initiatives are costly and only relevant for large corporations. However, this is not necessarily the case. In an evolving landscape, stakeholders and investors are increasingly urging companies to measure and disclose their ESG impacts. This shift means that SMEs can capitalise on new opportunities, gain a competitive edge, and access suitable financing.

While it is true that sustainability measures often involve substantial upfront investments, they also lead to more significant long-term savings. Notably, Singapore’s carbon tax is set to increase substantially from $5/tCO2 to $25/tCO2 in 2024 and 2025, and further to $45/tCO2 in 2026 and 2027. With this escalating carbon tax and the anticipation of higher grid costs, the savings from sustainable practices will become increasingly apparent in the years to come. Minimising waste and adopting resource-efficient practices are also methods that SMEs in Singapore can achieve cost savings.

Beyond cost, sustainability can enhance brand reputation, attracting environmentally conscious consumers who value ethical business practices. 4 in 5 consumers say they are more likely to choose a brand with a positive approach to environmental sustainability. As consumers become increasingly aware of the environmental and social impact of their purchases, SMEs that demonstrate a commitment to sustainability can gain a competitive edge and foster brand loyalty, contributing to long-term growth.

How can SMEs in Singapore embrace sustainable practices?

The path to sustainability is paved with a multitude of opportunities for SMEs in Singapore to enhance their operations and contribute to a greener future. One key area where SMEs can implement sustainable practices is energy efficiency. By adopting energy-efficient lighting, appliances, and equipment, SMEs can significantly reduce their energy consumption, leading to lower utility bills and a reduced environmental footprint. Additionally, SMEs can implement waste reduction strategies, such as composting food scraps, recycling materials, and adopting reusable packaging, to minimise their environmental impact and potentially generate revenue from waste streams.

Responsible sourcing is another critical aspect of sustainable business practices. SMEs should ensure their suppliers adhere to ethical labour standards, environmental regulations, and sustainable sourcing practices. By sourcing materials responsibly, SMEs can minimise their environmental impact and contribute to a more sustainable supply chain. Furthermore, sustainable product design plays a pivotal role in reducing the environmental impact of products throughout their lifecycle. SMEs can incorporate sustainable materials, minimise packaging, and design products for disassembly and recyclability to enhance the sustainability profile of their offerings.

Numerous SMEs in Singapore have successfully adopted sustainable practices, reaping benefits in the process. For instance, City Developers Limited (CDL), a multinational Singaporean real estate operating organisation, implemented robust energy management solutions and adopted efficient fittings and solutions in its managed buildings. This led to significant savings of $34 million for 2012-2021 in energy expenses.

Asia Pacific Breweries Singapore is another SME that has implemented several sustainability initiatives. They aim to be free of plastic packaging by 2025, reach carbon neutrality, maximise circularity, and conserve water. They have begun to achieve their goals by investing in solar energy, recycling water, reusing glass bottles, and engaging in community initiatives. Furthermore, they have saved the use of several tonnes of metal each year by making their cans thinner and reducing the diameter of can lids. These measures have reaped cost savings for the company, resulting from the reduced use of metals and lower energy bills. This has not only greatly enhanced their brand reputation but also attracted environmentally conscious consumers.

How can SMEs in Singapore access resources and support?

Embarking on a sustainability journey can be an exciting yet challenging endeavour for SMEs, as many face hurdles such as insufficient knowledge, resources, and training. To ensure that SMEs have the necessary resources and support to succeed, the Singapore government has implemented a range of initiatives and programmes. 

The Enterprise Sustainability Programme (ESP), administered by Enterprise Singapore, provides financial assistance, training, and guidance to SMEs seeking to adopt sustainable practices. The ESP offers co-funding for sustainability projects, such as energy efficiency upgrades, waste reduction initiatives, and sustainable product development. Additionally, the ESP provides access to training courses and workshops to enhance the sustainability knowledge and skills of SME employees. 

The Monetary Authority of Singapore (MAS) has also been providing suitable financing for eco-friendly initiatives in companies. Their Green and Sustainability-Linked Loan Scheme (GSLS) provides financing to corporates of all sizes to support their investments in green projects and move towards a sustainable business model. 

Beyond government support, business associations and sustainability consultants play a crucial role in assisting SMEs with their sustainability efforts. Business associations, such as the Singapore Business Federation (SBF) and the Singapore National Employers’ Federation (SNEF), offer networking opportunities, expert advice, and access to industry-specific sustainability resources. Sustainability consultants, on the other hand, provide tailored guidance to SMEs, helping them assess their sustainability performance, develop sustainability strategies, and implement sustainable practices. The expertise of sustainability consultants can be invaluable in navigating the complexities of sustainability and ensuring that SMEs make informed decisions that align with their business goals.

Measuring and reporting sustainability performance for SMEs in Singapore

Measuring and reporting on sustainability performance is an essential practice for SMEs to track their progress, demonstrate commitment to stakeholders, and identify areas for improvement. By quantifying their sustainability efforts, SMEs can gain valuable insights into their environmental impact, social responsibility, and governance practices. 

There are numerous sustainability reporting frameworks available to SMEs, each with its own set of indicators and guidelines. The Global Reporting Initiative (GRI) Standards are the most widely recognised and comprehensive sustainability reporting framework, providing a comprehensive set of indicators across ESG dimensions. However, the GRI Standards can be quite extensive and may require more resources for SMEs to implement. 

Alternatively, SMEs can opt for a simpler approach by defining business-wide sustainability Key Performance Indicators (KPIs) and monitoring progress. Common sustainability KPIs include greenhouse gas emissions, workplace diversity, energy consumption, supply chain miles, renewable energy usage, waste reduction, and community investment and volunteering. Measuring and reporting progress in these key areas offers a straightforward and cost-effective method to evaluate overall sustainability performance.

Additionally, several sustainability reporting tools and platforms have been developed specifically for SMEs to measure various sustainability KPIs. These tools provide user-friendly interfaces, tailored guidance, and automated reporting functionalities to simplify the sustainability reporting process for SMEs. Examples of such tools include the OnePlanet Platform, the SME Climate Hub’s Carbon Calculator, and the CDP Supply Chain Reporting Platform.

Adopting sustainability reporting practices allows SMEs in Singapore to boost transparency, demonstrate commitment, and uncover opportunities for continuous improvement. Sustainability reporting goes beyond compliance and external communication; it serves as a valuable tool for internal management, enabling SMEs to track progress, identify improvement areas, and ensure that sustainability remains a core component of their business strategy.

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In summary, sustainability is crucial for SMEs in Singapore and beyond. With 3 out of 5 recognising its significance for long-term growth and competitiveness, SMEs, making up 99% of the economy, need to prioritise sustainability. 

Facing real threats from environmental and social factors, SMEs must understand, adopt, access resources, and measure sustainability for practical benefits. It’s not just a compliance measure but a strategic move, providing SMEs with resilience, growth, and lasting success in the competitive business landscape.

We hope this sustainability toolkit for SMEs in Singapore will help you embrace more green initiatives and help your business grow while caring for the environment.