Mr Speaker, this House had, on two previous occasions, raised separate motions on stepping up our nation’s efforts to tackle the climate emergency.[1] Following these debates, the government announced revised targets for our long-term carbon footprint,[2] peaking at 65 megatons of carbon dioxide emissions (MtCO2e) over the next few years, before tapering down to 60 MtCO2e by the end of the decade, to achieve the net-zero target by 2050.
As a net energy importer,[3] these are undeniably ambitious targets. Still, ensuring that our planet is livable in the future requires that we be bold in setting goals that are adhered to not only by our government, but also our households and businesses. Today, therefore, I wish to speak about our road toward decarbonization, with an eye specifically on our nation’s corporations.
I will speak about three related issues. First, I will touch on why focusing on the carbon emissions of the big players alone isn’t good enough. Second, I will discuss who we need to train to ensure that our carbon monitoring efforts succeed. Third, I will explain what role finance can play in all this. I shall close with thoughts on why climate mitigation efforts need to undermine our business competitiveness.
What is the current approach of the government?
The current slate of policies aimed at decarbonization. In theory, this involves two steps: decarbonizing electricity production, and electrifying industry, transport, and construction. In practice, this encompasses a diverse mix of policies: carbon taxes, energy efficiency standards and grants, shifting our transportation infrastructure toward electrification, and sourcing electricity from alternative sources, both in terms of energy type, as well as geographically.[4]
While the government has, appropriately, taken the lead in these, we will only succeed when businesses are also aligned with the program. And this requires widespread buy-in by companies that, understandably, face a bottom line and are primarily responsive to their shareholders, who may or may not share the C-suite’s enthusiasm for incorporating environmental goals. Ensuring that pro-environment sentiment is widely shared by companies and their shareholders is therefore crucial.
Why focusing on carbon emissions by the big players isn’t enough
The bluntest measure for addressing emissions is our carbon tax. This was recently raised to $25 per megaton (from a miserable $5), and will step up to $45 in 2026, before reaching a range of between $50 and $80 by 2030. While this remains below the preferred range for the Workers’ Party—not least because it remains somewhat below the median in other advanced economies, as well as the costs of carbon capture—we have acquiesced to the increase, given how it is nevertheless superior to the original status quo.[5] We have also spoken about how the tax could be adapted according to the contemporaneous state of the economy, to allow firms the latitude to adapt to prevailing economic conditions.[6]
I had also previously shared why I believe a broad-based carbon tax is not only consistent with public finance principles,[7] but also ensures psychological buy-in from all carbon generators (and to be clear, that would be everyone). I wish to return to this theme here, in the context of businesses.
In Singapore, the overwhelming majority—an estimated four-fifths—of carbon emissions are accounted for by just 50 facilities, spread across the manufacturing, power, water, and waste sectors.[8] While one may argue that this would largely absolve us from worrying too much about how the remaining companies contribute to emissions, I believe this mindset is mistaken.
This is also because climate change is a global problem, and if corporations—including those that are not the primary source emitters—fail to seriously consider their total carbon footprint, they may inadvertently outsource their midstream and downstream activities to other emitters without well-defined carbon action plans. Inattention to midstream activities—such as electricity usage, raw material and equipment procurement, and commuting and travel policies—could undermine the upstream efforts by their home country governments. Similarly, downstream choices by firms—decisions over their distribution network, or how they deal with the end-of-life treatment of their products—also contribute toward the ultimate impact that corporations impose on the climate.
This is becoming increasingly recognized by observers. It is no longer sufficient to pay attention to only so-called Scope 1 emissions, which are the sources an organization owns or controls directly. Scope 2 emissions—which are caused indirectly by a company based on where it chooses to buy its energy and how it uses it—also matter, as does Scope 3 emissions, which are those not covered by Scope 1 or 2, but are nevertheless created by a business’ value chain.[9]
Responsible businesses are also getting on board. This includes more than 9 out of 10 Fortune 500 companies, and these standards have been road-tested by diverse firms across the world, such as 3M, Acer, Airbus, Coca Cola, Mitsubishi, Pfizer, and Shanghai Zidan.
In Singapore, listed companies will be required to make mandatory climate-related disclosures, consistent with the International Sustainability Standards Board (ISSB),[10] by 2025, and this will extend to large non-listed companies[11] by 2027.[12] This will include their Scope 1 and 2 emissions, but only listed companies will be required to do so for Scope 3 emissions from 2026. Larger, nonlisted firms are not expected to do so before 2029, which strikes me as an excessive amount of leeway. Shortening this timeline by a year, for instance, would ensure that they are held to the same standards and expectations as locally-listed firms. Doing so will also prevent Singapore from losing its competitive edge and status as a global exemplar of climate leadership.[13]
On its part, the public sector has, appropriately, stepped up. The government commenced its reporting effort in 2023, with the GreenGov.SG.[14] To complement this report, statutory boards will also publish annual environmental sustainability disclosures, starting this fiscal year.[15] Such disclosures will offer an important demonstration effect, showing not only what the government is doing to advance environmental sustainability, but also what is achievable for the private sector.
Who we need for our carbon monitoring efforts to succeed
Ultimately, a mandatory monitoring and reporting regime will require clear and uniform Environmental, Social, and Governance (ESG) standards. This, in turn, also calls for a whole new set of “Green Skills”: the ability to perform corporate carbon accounting, manage firm assets with an eye toward sustainability, and provide reporting on a company’s ESG impact. Such capabilities are key to Singapore’s long-term survival and adaptability in a carbon-constrained world. But they are also presently scarce, a fact that has been repeatedly highlighted as important needs in the multiple editions of the Skills Demand for the Future Economy report.[16]
A Green Skills Committee was set up in 2023, under the auspices of the Ministry of Trade and Industry.[17] The group—comprising representatives from government, unions, industry, and academia—placed their focus on two areas: clean energy, and sustainability reporting. If we take this signal seriously, there will be a need to further ramp up training for companies, so that they will be equipped to deliver their climate and sustainability reports at international standards. Similarly, there has to be a body of professional assurance providers that are prepared to audit emissions reports.
Institutes of higher education will be crucial to help fill this gap. The number of sustainability-related courses supported by SSG almost doubled to nearly 500 in 2023, up from about 250 in 2022. A quick search on the MySkillsFuture website lists 134 courses related to sustainability reporting, with the most affordable course starting at just $84 for eligible Singaporeans (I declare, at this point, that I am employed at a business school that offers sustainability-related education).
Still, impending compliance requirements will steadily accelerate the demand for skills in sustainable finance, carbon management, decarbonization, and sustainability risk assessment. These capabilities must be seen as central to Singapore’s long-term survival and adaptability in a carbon-constrained world. Businesses need to be able to hire professionals with such tools and skills, and afforded time to train and groom their existing workforce in acquiring green skills and competencies. A study by Arup and Oxford Economics estimates that there could be as many as 170,000 green-related jobs, across all sectors, by next year,[18] although the government’s own Environmental Services Industry Transformation Map is more modest, pointing to around 1,600 PMET jobs—the ones most likely to be filled by locals—by that time.[19]
To further support upskilling and reskilling in the sector, the government can offer tax deductions or subsidies for employers with a clear training roadmap, in partnership with accredited or approved training providers. Of course, training providers must also be kept accountable, with education materials subject to checks for accuracy, and subject to update and improvement. Such consistent review should be required to secure SkillsFuture accreditation.
The Economic Development Board and Enterprise Singapore currently provides funding support for large companies[20] to cover their first sustainability report, which have to be consistent with the International Sustainability Standards Board’s (ISSB) standards.[21] But with over 600 listed companies in Singapore, all of whom will be required to make climate-related disclosures, they will have their work cut out for them.
More can also be done to help our small and medium enterprises (SMEs). Workforce Singapore (WSG) launched a Career Conversion Programme for Sustainability Professionals (CCP-S) in December 2022, aimed at supporting SMEs in their pursuit of sustainability. However, it remains unclear what the takeup rate for the proposed target of 200 CCP-S professionals[22] is, and how many of these will be operating out of SMEs.
And unlike multinationals with substantial budgets they can dedicate to such objectives—and public reputations and reporting requirements to do so—SMEs are often forced to be selective about the aspects of sustainability they wish to invest time and capital into. Direction on what such firms should focus on will undoubtedly be appreciated, and the government can work on a set of guidelines for priority targets.
SMEs will also need to be able to plan for shifting regulations and community expectations, especially when they venture abroad. Smaller firms do not have the same capacity to tailor their market research to not only traditional consumer needs and cost constraints, but also environmental and regulatory considerations. Here, EnterpriseSG will need to expand its scope to also provide advisory and assistance on how SMEs can best embed sustainability into their overseas ventures.
What finance can do to help usher in the green transition
Just like how we cannot succeed in our climate-mitigation efforts by focusing only on large firms, we likewise cannot expect to get to net zero by relying only on public sources of green financing. After all, our public expenditure needs are vast, and the investment gap that has to be met by companies adapting to higher carbon prices, even larger.
This is where ESG financing comes into the picture. There is already a burgeoning sustainable finance ecosystem in Singapore, with lending from both private sector financial institutions as well as public sector entities. Green, social, and sustainability-linked loans have exploded, to $30.4 billion last year, from just $3.3 six years ago,[23] as has bonds, rising from $1 to $7.4 billion over the same period.[24] By 2030, the government and statutory boards are expected to issue green bonds that amount to $35 billion,[25] up from the $2.1 billion last year.[26]
Still, we should not allow the usual hype over the ESG financing to eclipse some very real challenges on the ground. Some financiers have suggested that there is still insufficient, reliable data on green projects that assure them that corporate actions do not merely amount to greenwashing. This reprises the concern I raised earlier, about the need for high-quality standards reporting and professionals. In the medium run, it may be worthwhile exploring whether subsidies for the green transition should always be directly channeled to businesses, or whether there is room to do so via responsible financial intermediaries, who will be in a position to scrutinize business activities and ensure that they truly adhere to green best practices.
Now, some may think that sustainable projects entail a “green premium”—such that borrowing costs would be higher than the market rate for comparable brown opportunities—the shift toward ESG-conscious investing has often meant that pollutive enterprises now frequently face higher costs of capital, as they should if we expect to wean ourselves off such dirty technologies in the longer run.[27] In any case, the evidence is remains unclear about whether responsible investing must necessarily imply inferior returns.[28]
Conclusion: why the pursuit of climate initiatives need not undermine business competitiveness
Mr Speaker, I have offered three practical suggestions for how businesses in Singapore can embrace the carbon transition. First, we need to broaden the base for carbon taxation, both to include smaller players, as well as stages higher and lower in a firm’s value chain. Second, we have to monitor our progress with transparent reporting, which in turn has to be supported by workers with green skills. And finally, the financial sector must play a role in providing the funding to move things along, which they will only be able to do well if they have access to reliable ESG data.
Allow me to close by addressing the most common, knee-jerk fear to the pursuit of climate initiatives by businesses: that it will raise costs and hence undermine competitiveness. This claim, while seemingly intuitive, is (at best) incomplete.
While the explanations for why going green may not only be environmentally but also financially sustainable are both complex and multifacted, the logic can be expressed in a more straightforward manner.
Think about any kind of investment: whether in knowledge, or the latest technology, or even old-school buildings and equipment. These investments always take time before they pay off. Businesses don’t set aside earnings for R&D, AI, or capital expenditure for fun. They do it because they expect, years—perhaps even decades—down the road, they will be in a more profitable position with these investments, than without.
The same can be said for spending on sustainability and green technology. While it may sometimes seem like such money goes directly into a cost black hole, in reality, these are investments, which will more than pay off in future. These may be direct; for example, over the past decade, solar and wind power became cost-competitive with fossil fuels, even without financial support.[29] They may also be indirect. After all, if irreversible climate change were to become entrenched, business costs will themselves be elevated by higher insurance and other business costs due to natural disasters, as we’ve observed in countries as diverse as Bangladesh, Mexico, Poland, Spain, and Thailand.
While there’s no sugarcoating how companies will have to dig into their pockets, in the near term, to decarbonize, in the future, they will reap the benefits of their green investments, which will not only be better for their own bottom lines, but for the only planet we all inhabit, too. And so long as we, as a society and economy, continue to direct technological change in favor of clean, rather than dirty, inputs,[30] we will also be able to realize the dream of sustainable growth for our companies and communities, of course, our children.
[1] Hansard (2021) 95(16): Feb 1; Hansard (2022) 95(46): Jan 12.
[2] National Climate Change Secretariat (2022), “Singapore Commits to Achieve Net Zero Emissions by 2050,” Press Release, Singapore: Strategy Group of Prime Minister’s Office.
[3] EMA (2024), Singapore Energy Statistics 2024, Singapore: Energy Market Authority.
[4] This final strategy includes efforts at developing a regional electricity market, as well as exploring purchases of carbon credits from ASEAN partners that may be able and willing to sell offsets to us.
[5] The Party’s suggested target range is between $58 and $133, with the lower bound being the midpoint of such taxes among industrialized economies, and the latter being the average cost of carbon capture and sequestration activities. The midpoint is $96, somewhat higher than the maximum target set by the government, but closer to the scientific consensus, for which the median is $93 (USD 70) in 2030, and $133 (USD 100) in 2050. See Drupp, M.A., F. Nesje & R.C. Schmidt (2024), “Pricing Carbon: Evidence from Expert Recommendations,” AEJ: Economic Policy 16(4): 68–99.
[6] Hansard (2022) 95(74): Nov 8.
[7] This is the notion is that, ideally, taxes should be small and broad, to minimize their distortionary effects.
[8] The next largest group, which is not subject to the carbon tax, is transport, which accounts for about 14 percent of all emissions.
[9] GHG Protocol (2022), Greenhouse Gas Protocol FAQs, Washington DC and Geneva: World Resources Institute and World Business Council for Sustainable Development. The problem may be even more pernicious if climate policy is uncoordinated between countries, as supply chains become endogenously rewired. See Benincasa, E., O. Carradori, M. Ferreira & E. Garcia-Appendini (2024), “Rewiring Supply Chains Through Uncoordinated Climate Policy,” SFI Research Paper 24-56, Zurich: Swiss Finance Institute.
[10] The ISSB’s two global standards, promulgated in 2023, are known as IFRS S1 and IFRS S2. See IFRS Foundation (2023a), IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information, London: International Sustainability Standards Board; and IFRS Foundation (2023b), Climate-Related Disclosures, London: International Sustainability Standards Board.
[11] These are defined as those with annual revenues of at least $1 billion and total assets of at least $0.5 billion.
[12] Tang, S.K. (2024), “More Singapore Businesses Will Have to Report Sustainability Information, Starting with Listed Firms in 2025,” CNA, Feb 28.
[13] For instance, the United States’ Securities and Exchange Commission (SEC) adopted a new slate of standardized climate-related disclosure rules for both public companies and foreign private issuers. These rules are the SEC’s most wide-ranging disclosure initiative in decades, and are to be phased in, with first disclosures due in 2026.
[14] MSE (2023), GreenGov.SG: Report for Financial Year 2022, Singapore: Ministry for Sustainability and the Environment.
[15] MSE (2023), “Ministry of Sustainability and the Environment Releases Inaugural GreenGov.SG Report,” Press Release, Dec 15, Singapore: Ministry for Sustainability and the Environment.
[16] SSG (2021, 2022, 2023), Skills Demand for the Future Economy, Singapore: SkillsFuture Singapore.
[17] MTI (2023), “New Green Skills Committee to support Skills Development for Green Jobs,” Press Release, Nov 15, Singapore: Ministry of Trade and Industry.
[18] Richard, B. & J. Lambert (2023), The Global Green Economy: Capturing the Opportunity, Singapore and London: Arup & Oxford Economics.
[19] NEA (2023), “Environmental Services Industry Transformation Map 2025 To Strengthen Innovation, Improve Productivity And Create Quality Jobs,” Press Release, Jan 16, Singapore: National Environment Agency.
[20] These are defined as those with annual revenue of $100 million and above.
[21] The grant defrays up to 30% of qualifying costs, capped at the lower of $150,000 per company, in the preparation of their first sustainability report.
[22] WSG (2024), “First Career Conversion Programme for Sustainability Professionals by Workforce Singapore,” Media Factsheet, Singapore: Workforce Singapore.
[23] Tan, S-A. (2024), “Sustainability-Related Loans in S’pore Register Sixth Year of Rise to $30.4b,” Straits Times, Jul 4.
[24] The peak for bonds was, however, in 2021, where issuance reached $14.4 billion. See MAS (2024), Sustainability Report 2023/24, Singapore: Monetary Authority of Singapore.
[25] Tan, C. (2022), “Budget 2022: $35 Billion in Green Bonds to be Issued by 2030 to Fund Green Public Sector Projects,” Straits Times, Feb 18.
[26] MOF (2024), Singapore Green Bond Report for the Financial Year 2023, Singapore: Ministry of Finance.
[27] Asness, C. (2017), “Virtue is its Own Reward Or One Mans Ceiling is Another Mans Floor,” AQR Insights, May 18.
[28] Pedersen, L.H., S. Fitzgibbons & L. Pomorski (2021), ” Responsible Investing: The ESG-Efficient Frontier,” Journal of Financial Economics 142(2): 572–97.
[29] Osman, A.I., L. Chen, M. Yang, G. Msigwa, M. Farghali, S. Fawzy, D.W. Rooney & P-S. Yap (2023), “Cost, Environmental Impact, and Resilience of Renewable Energy Under a Changing Climate: A Review,” Environmental Chemistry Letters 21: 741–64.
[30] Acemoglu, D., P. Aghion, L. Bursztyn, and D. Hemous (2012), “The Environment and Directed Technical Change, ” American Economic Review 102(1): 131–66.