Governments, businesses need to work together to tackle climate change: Lawrence Wong

SINGAPORE: Even as Singapore continues to deal with the COVID-19 pandemic, it also needs to plan for a post-pandemic future where climate change will be a major challenge, said Finance Minister Lawrence Wong on Thursday (Dec 9).

“(Climate change) is an existential crisis for the entire world and even more so for Singapore because we are a low-lying city-state,” he said.

While governments can build a strong foundation for sustainability efforts in their respective countries, this alone will not "move the needle" unless there is strong cooperation from businesses, he added in a speech delivered at the start of the Singapore Apex Corporate Sustainability Awards Ceremony.

"It is crucial that governments and businesses work together to speed up the transition to a more sustainable future," said Mr Wong.

In Singapore, the Government will set the "overall framework" to decarbonise the economy, Mr Wong said.

One is through regulations and policies to reduce the amount of carbon emissions. Singapore will start with a "right carbon price", which is necessary to internalise the cost of carbon and bring about a reduction in carbon footprint.

Singapore's revised carbon tax rate for 2024 will be announced in next year's Budget, Mr Wong has previously said.

Another "big lever" that the Government can use is stricter standards, such as the country’s plans to phase out internal combustion engine vehicles and have all vehicles running on cleaner energy by 2040.

The Government is also committed to supporting businesses in making the shift towards more sustainable practices, with programmes and schemes already available to help ease the transition, said Mr Wong.

For example, the new Enterprise Sustainability Programme will support Singapore businesses on sustainability initiatives and capture opportunities in the green economy. More than 6,000 firms are expected to benefit from this new programme over the next four years.

Other efforts include developing a robust financing ecosystem to support the green transition, and a market for voluntary carbon credits.

On the latter, Mr Wong said some companies may face difficulties in eliminating emissions completely or quickly, and one way to offset their residual emissions is through the purchase of carbon credits. 

Carbon credits can also help to channel private financing towards climate-related projects that may otherwise not take off.

The Government is working to develop the carbon credit market in Singapore and position Singapore as a hub for carbon management services, he added.

"In many ways, we believe we are well-positioned to serve as a carbon services and trading hub for Southeast Asia and the Asia Pacific, given our foundation as a regional centre for professional services, commodity trading and financial services," Mr Wong said.

He added that Singapore is already home to more than 70 carbon services and trading firms that use Singapore as a base to serve the region and engage in carbon market activities.

"We will continue to support these companies and more that are interested to be a part of our carbon services and trading ecosystem," said the minister.

Mr Wong stressed that businesses must also do their part given their “enormous reach” to customers and the ability to drive sustainability efforts across supply chains.

He added that several common misperceptions still exist among businesses, such as how the move to reduce emissions is only needed among the big oil and gas firms.

These oil majors are already taking steps, such as Shell, which has announced its target to be a net zero energy business by 2050, he said. Businesses across the rest of the economy will also need to do their part, the minister said.

Other businesses, particularly those in the services industries, may think that their carbon footprint is "really not that large".

“Yes, that may be so. But don’t just look at your direct emissions or the emissions from the electricity that you consume ... But consider the indirect emissions that occur across your company’s supply chain and value chain too,” Mr Wong said.

He added that going green may increasingly become an integral part of business operations, instead of being "good-to-have", as investors and customers place greater emphasis on environmental sustainability.

Businesses that proactively make the transition to green practices will be in a better position to thrive in the coming years.

"Because the future will be a green future and if you are not there, if you’re not making the effort to get there, you will be lagging behind," said Mr Wong.

Apart from business strategy, leaders must also foster a culture of sustainability within their organisation, the minister added.

The annual event was organised by Global Compact Network Singapore (GCNS), the local chapter of United Nations Global Compact.

At a fireside chat held after his speech, Mr Wong was asked for his take on the net zero targets that have been announced by some corporates and countries. The moderator, GCNS president Goh Swee Chen, asked if it was responsible for current leaders to set targets for 2050 or beyond if they are unlikely to see them through.

Mr Wong replied: “But is it responsible not to even do anything and let our grandchildren end up carrying the burden of a future that may potentially pose tremendous risks to humankind?

“So if you (ask), is it responsible? I will say yes, we do have a responsibility to make sure that we steer the economy and the world towards a more sustainable future. That's for the benefit of our next generation.”

“But at the same time, you can’t just set targets then pretend … because no one will hold you accountable to it,” he added, noting “that’s not the Singapore way either”.

Mr Wong went on to say that Singapore has not set a net zero target for now because it wants to make sure that when it sets one, “(it) will make it happen”.

“And we will ensure that all of the policies we have – whether it is a carbon tax, whether it is decarbonising our power supply – all of it aligns to that particular target. So, we are studying this very carefully.”

In the country’s latest Nationally Determined Contributions (NDCs) report which was released in 2020, Singapore had stated an aim of “achieving net zero emissions as soon as viable in the second half of the century”. NDCs are national roadmaps explaining how each country plans to reach net zero.