A powerful, effective strategy to combat climate change

THIS WEEK'S TOPIC: What will be the impact of Singapore's new carbon tax on industry and economy? Is there a trade-off between going green and economic growth?

Chris Foster Regional President Y&R Asia

FUNDAMENTALLY, it is now the role of business to help make the world a better place. Occasionally, some incentives are required.

Singapore is doing the right thing, and demonstrating good leadership on this front in the region and in the world. I believe business and industry will lean in, embrace the new standards and help to lead the way.

After all, there is really no choice in the matter.

Victor Mills Chief Executive Singapore International Chamber of Commerce

BY the next Year of the Dog, global population is projected at nine billion. The pressure on our planet and its resources will increase exponentially; so will climate change unless we act. It is no longer a matter of trade-offs between going green and economic growth. It is about the survival of us humans and this planet. Urgent, consistent collaborative innovation is needed to find ever-more sustainable ways of doing business and using this planet's resources responsibly and equitably. This is what the circular economy means. The carbon tax is a move in the right direction as are the announced tax rate increases.

Terry Yuen Country President BP Singapore

TODAY, we face the dual challenge of meeting society's need for more energy, while at the same time reducing carbon emissions. As scientists and engineers, we recognise the urgency of the climate challenge - and we will be part of the solution. BP has been a longstanding advocate for carbon pricing, and is a member of the Carbon Pricing Leadership Coalition that brings together government, private sector and civil society to expand the use of carbon pricing. We already factor an internal carbon price into investment appraisals and engineering designs for large new projects.

We believe that a carbon pricing framework provided by governments is the most economically efficient policy to limit greenhouse gas emissions. It provides incentives for everyone - producers and consumers alike - to reduce their emissions and offers flexibility in how to do it.

Yeoh Oon Jin Executive Chairman PwC Singapore

PWC'S recent global CEO survey, presented at Davos in January this year, revealed that CEOs across the world are increasingly anxious about societal threats such as climate change and global warming.

Although a small country, Singapore ranks 26th out of 142 countries in terms of highest emissions per capita. More is being done to improve this through means such as the recently announced carbon tax. While a low-carbon economy will require a change in mindsets and approach, the right policies can enable best-in-class technologies and methods to be developed and applied, which can contribute positively to the growth of the Singapore economy in the medium to long term.

Adam Lyle Executive Chairman Padang & Co Pte Ltd

GOING green is not only the right thing, given that we only have one planet, it is the smart thing. Being green means using less energy, less water, and less waste - saving money and providing a better environment for all citizens as then Prime Minister Lee Kuan Yew envisioned when he began tree planting in the 1960s.

Being green, adopting and developing cleantech positions Singapore to be the leading cleantech hub in Asia and drives economic growth as we export goods, services and knowhow across Asean for the good of all. No trade-off there. Now that's a Smart Nation.

Pascal Lambert Group Country Head, Singapore Head of South East Asia and India Societe Generale

SINGAPORE'S bold commitment towards reducing its carbon footprint makes it a leading player in this area regionally and is likely to give the city a clear competitive advantage in the long term, particularly as more economies grapple with profound changes in climate and energy usage.

A clean environment is an economic asset in itself, demonstrated by the increasing global and regional demand for our environmental, social and governance (ESG) advisory and research capabilities across financing, investing and corporate services. As a bank committed to sustainable and positive impact finance, our environmental and social expertise allows us to continue supporting clients through these major green transitions.

Toby Koh Group Managing Director Ademco Security Group

THE S$5 per tonne carbon tax announced in the Budget is fairly low compared to other countries that have also adopted such a tax. The industries affected will tend to pass it off to end-users, and this is likely to be reflected in increased prices for consumers. However, it is important to start with such initiatives to help counter the adverse effects on our environment.

Having said that, I would have liked to see an incentive for environment-friendly initiatives in the Budget. How about a special COE or tax rebate for buyers of electric vehicles? Or perhaps a small tax incentive for installing solar panels? It is perhaps something for our government to consider in the next Budget.

Kent Chaplin Chief Executive Officer Lloyd's, Asia Pacific

WHILE the carbon tax rate is much lower than expected, it is a step in the right direction for Singapore, and highlights how the government is mindful about a gradual transition to green industry while proactively mitigating the economic impact of such a tax. It is a clear signal to companies to take action.

Lloyd's and our partners in the insurance industry have been vocal about supporting governments, companies and communities as they transition towards greener economies, and we have undertaken measures to divest away from high carbon-emitting industries such as coal.

A trade-off between going green and economic growth certainly exists, but it is up to industry leaders to drive awareness and help create business growth that is sustainable and environmentally responsible.

Vipin Kalra Chief Executive Officer BankBazaar International

IMPLEMENTING a carbon tax is a necessary measure for building a sustainable economy, one that many countries across the world are currently pursuing or planning to pursue. With global efforts to reduce carbon emissions intensifying, companies will have to comply in order to be competitive, irrespective of where they are located.

Thus, the long-term benefits of building energy-efficient industries - both environmental and economical - will far outweigh the initial investments needed to reduce carbon emissions.

In addition, the period of review 2019-2023 before the tax rate is further increased will give companies some time to adapt and also give the government an opportunity to test the effectiveness of the tax.

Paul Henaghan Vice President Data Centre Solutions, APJ Dell EMC

INDUSTRIES need to look beyond the perceived economic loss from taxation, and recognise that it ultimately contributes to the long-term prosperity of companies.

Environmental responsibility is more than creating an eco-friendly product or initiative. It's about incorporating sustainability into everything we do - to be part of the wider business strategy.

At the core, technology should be viewed as the key to unlocking regenerative solutions. An area that Dell is committed to, for example, is creating value from waste, pledging to recycle 100 million pounds of post-consumer recycled content into its product portfolio by 2020, thus offsetting carbon emissions.

By pioneering new breakthroughs in areas such as circular economy solutions, we believe businesses are well primed to be at the forefront of tomorrow's digital economy.

Pieter Nuboer Asia Pacific President, DSM Nutritional Products Royal DSM

THIS is a very positive and imperative move. Pricing fossil fuel pollution for the cost that it is causing to society is urgent. Carbon pricing makes renewable energy solutions including solar, wind and advanced biofuels relatively more competitive, and will be a lever to enhance the quality of economic growth including that of Singapore.

This ultimately benefits innovative, low-carbon models, and promotes the technical upgrade or exit of the least efficient firms in emissions-intensive industries. DSM is both a pioneer and an advocate for developing and implementing a global system to put a meaningful price on the use of carbon.

Jasmmine Wong Managing Director Inchcape Singapore

GIVEN the pressing global issue of climate change, a low-carbon, green growth strategy is imperative to achieving sustainable economic growth. The relationship between ecology and economy is not as paradoxical as many assume, and it is possible to achieve both simultaneously.

We welcome the new carbon tax as it will spur businesses to rethink their practices and product offerings to strive to be responsible corporate citizens while remaining profitable.

At Inchcape, we believe that our business is about more than just the bottom line. We ensure that we act responsibly towards the communities and environments in which we work, and towards individuals and society in general. This is why we are constantly adapting our product portfolio and bringing in the right models, focusing on where we can make the most positive impact for our stakeholders and society.

Dileep Nair Independent Director Keppel DC REIT Management Pte Ltd

PRICING carbon is one of the most powerful and effective strategies to combat climate change. Businesses and consumers will be encouraged to switch from emission-intensive industries to low-carbon, climate-resilient alternatives.

The fear that a carbon tax will affect our competitiveness through "carbon leakage" whereby oil-related companies leave for countries with less stringent rules, is misplaced. All industries are moving towards improving efficiency and reducing emissions. Revenue from the carbon tax can be used to assist affected companies in the short run. It is a false trade-off between green policies and economic growth.

Lee Kuan Yew was prescient when he said that a clean and green Singapore would be an economic asset. We must continue doing our part to help make this a sustainable world.

Maren Schweizer Director Schweizer World Pte Ltd

PRICING carbon is one of the most powerful and efficient strategies to respond to climate change and towards being a Smart Nation.

Competitiveness concerns are of particular importance to energy-intensive, trade-exposed (EITE) companies but evidence to date in many countries shows little impact. The economic impact of a carbon price on businesses can be effectively handled through well-designed policies and tax incentives for low-carbon investments.

Speaking as CEO of our PCB technology manufacturing family business, Schweizer Electronic in Germany, our competitiveness concern has turned out to be a competitive advantage today. German electricity tax made us accelerate our efforts towards a more energy-efficient production, and led us to generate our own electricity with a thermal power station. Incentive policies have been crucial to finance these heavy investments.

In fact, it is often the design of policies rather than their stringency or the carbon tax itself that presents challenges to business.

I am convinced that the decision to implement a carbon tax is a good one and would help to accelerate modernisation and productivity improvements that enhance, rather than harm, competitiveness.

Damien Dhellemmes Country President, Singapore Schneider Electric

ACHIEVING carbon neutrality is an increasing priority for consumers, businesses and the government, as it is how we can beat climate change.

The carbon tax acts as a mechanism to drive emission reductions and more importantly, push forward behavioural change within the industry. It drives us to innovate, to achieve better energy efficiency and to find clean sources of energy. Going green can in fact lead to greater economic growth in the longer term.

We strongly believe that sustainability is the endgame of any company in today's world. It is at the core of our business, and a great value that we deliver to our customers, shareholders and employees.

Vincent Magnenat Limited Partner, and CEO Lombard Odier Asia

THE new carbon tax is a watershed moment for Singapore and its progress towards a sustainable economy. This has profound implications for the corporate sector: Companies must adapt their business practices if they are to remain sustainable in the new paradigm. This also has implications for investors as sustainability issues, such as climate change, are increasingly important drivers of economies and investment returns over the long term.

For this reason, we believe that investors need to integrate sustainability in their portfolios by, for example, embedding environmental, social and governance (ESG) criteria in their investment process to mitigate risk and gear the portfolio for more sustainable returns.

This forward-looking sentiment is shared by a growing segment of investors who are seeking to balance their financial and social responsibilities. With investment solutions that fully integrate these values, such as Lombard Odier's upcoming sustainability-focused fund, it is becoming easier to deliver quantifiable environmental and social impact hand-in-hand with financial performance.

Johan de Villiers Managing Director, Singapore and Southeast Asia ABB

THERE is no trade-off between going green and growing the economy. It is not a zero-sum game. On the contrary, I believe that there is a tremendous opportunity to decouple economic growth from emissions and energy consumption.

Of all the actions that can and are being taken to limit carbon emissions and mitigate the effects of climate change, none holds more promise than improving energy efficiency. The recent carbon tax proposals will help to drive industries to fully realise this potential and at the same time lower operating costs.

Energy efficient technology is still a low-hanging fruit and when combined with digitalisation, business owners can reap even greater returns by continuously improving productivity and reducing energy consumption while helping to create a lower carbon economy and a more sustainable future.

The clock is ticking on addressing climate change, while at the same time economies and markets demand growth. Globally, the main decoupling challenge lies in emerging markets, which will account for more than 90 per cent of net energy demand growth to 2035.

Let's remember the example of Lee Kuan Yew, who decided many decades ago to build gas power plants instead of much cheaper coal plants when Singapore was still relatively poor. History has proven that this was the right decision - leaving a legacy of better efficiency and lower environmental impact. Let's continue to build on this foundation.

Edwin Khew Teck Fook President The Institution of Engineers, Singapore

THE new tax is necessary to fulfil Singapore's international commitments under the Paris Agreement. Starting at S$5 per tonne of emission is low compared to some other countries in Asia, and unlikely to cause big impact on the economy. This entry-level price will give companies time to increase their energy efficiency and adopt renewable energy to offset their carbon emissions. Successfully applying technology to do so will make the affected companies eligible to claim from funds generated from carbon tax revenues.

We should not view this from a trade-off angle, as the well-being of the planet and future generations is at stake. Moreover, going green is pivotal in driving sustainable economic growth over the long term.

Wong Heng Chew Fujitsu Singapore Country President

WHILE the impending carbon tax is targeted mainly at large polluters, the worldwide awareness about global warming and its damaging effects has spurred many companies to take pro-active steps to protect the environment. Each of us can make a difference.

Environmental sustainability has always formed a core part of Fujitsu's business, and we are committed to help resolve global environmental issues through the power of information and communication technology (ICT). Initiatives such as sustainability-led innovation can offer strong business cases to implement programmes that achieve long-term savings, while helping to create a greener and better future for the business, and the economy at large.

Reuter Chua Head ACCA Singapore

IT is right that Singapore is leading on sustainability issues. Accountants should play an active part in efforts to reduce global carbon dioxide emissions, and green taxes have a vital role to play. However, such taxes must be seen as engines of investment, and not an expense of growth. There must be a clear, transparent link to using the tax revenue to fund alternative sources of energy and promoting cleaner practices and more enlightened economic behaviour.

It is also vital to understand that national governments cannot work alone. A truly effective sustainability programme is achievable only through global cooperation.

Frankie Chia Managing Partner BDO LLP

BUDGET 2018 mitigated the impact of the upcoming carbon tax on businesses by revising the initial proposed rate of S$10-20 down to S$5 per tonne. This should give businesses enough time to adjust their operations and mentality moving forward into a more socially and environmentally-conscious business environment.

In the long term, businesses will become even more competitive by finding better and more innovative energy solutions instead of relying on old ways. There is no reason why growth and greening cannot go hand in hand.

Lim Soon Hock Managing Director Plan-B ICAG Pte Ltd

THE new carbon tax on industry and economy is necessary to compel producers and consumers to take the protection of Gaia more seriously. The reality is that today too many businesses are too preoccupied with generating profits than to worry about the longer-term potential ill effects of climatic change, which they may not be around to experience. In other words, it is a problem for future generations to solve.

The tax is therefore a necessary cost for businesses and consumers to incur now, while there is still time, for the larger benefit of preventing any future calamities arising from climatic change.

There is therefore no question of a trade-off between going green and economic growth. Going green is an imperative. There is no economic growth to talk about in the future if the earth is constantly beset with various problems and consequences associated with climate change.

Businesses do have a choice: pay the price now to go green or end up paying a much bigger price in the future, for not doing so early.

Laletha Nithiyanandan Managing Director, Behavioural Consulting Group Head, APSCo Asia

THIS is an important measure that serves society as a whole by ensuring that large emitters of greenhouse gases employ more efficient methods to reduce pollution. While it may affect some industries downsteam because the increase in costs will get passed on, these costs can be recovered from savings in other areas. Going green does not have to compete with economic growth; studies have shown that going green actually increases profits over time.

Julius Tan CEO Electrify Pte Ltd

DUE to movements in oil prices, Singapore's carbon tax could increase electricity prices even further, in addition to the recent increase in household electricity costs. The tax represents an opportunity for the government to price in negative externalities brought about by carbon emissions, introducing price signals that help manage long-term effects on society. This will naturally drive industries to become more energy efficient and produce lower emissions.

While the current rate of the carbon tax is marginal when compared against other countries, companies should strive to increase efficiency and seek cleaner sources of energy before the tax goes higher after five years or so. This is a fair and prudent approach, as opposed to directly subsidising renewable energy.

Jayaprakash Jagateesan Chief Executive Officer RHT Holdings Pte Ltd

WE expect the initial rate of S$5 per tonne of emissions to spur energy-intensive industries to invest in more sustainable solutions to mitigate the effect of even higher rates in the future. However, it remains to be seen whether companies can cope with rising costs in the near term.

Despite potential headwinds, we are confident that a dynamic economy will fuel greater economic activity in sectors such as green technology.

Any correlation between economic growth and green initiatives should not be quantified in monetary terms alone. We believe that a long-term view is needed to maintain an environment where high standards of living can be enjoyed for generations.

Zaheer K Merchant Regional Director (Singapore & Europe) QI Group of Companies

ENVIRONMENTAL considerations and economic growth are not irreconcilable parallels. It is widely accepted that climate change has a direct impact on global economic growth. Singapore's policy on imposing a new carbon tax should be a win-win scenario as it effectively reduces carbon emissions while generating revenue which can then be redistributed back to the economy for growth in needed areas. Industries will also be spurred to adjust their business models in line with environmental objectives.

Finally, the potential trade-off here - that the new tax might not sit well with the populace - can be mitigated. I am confident that assurances that the revenue generated from the carbon tax will be used for, for example, social benefits, rather than simply going into the reserves, will surely be given. The concern that environmental improvement comes at the cost of business loss or a rise in business cost, is no longer a truism.

Helen Ng Chief Executive Officer General Storage Company Pte. Ltd

CLIMATE change is real, and it inflicts high direct and indirect costs on society. The carbon tax will help boost revenue while curbing greenhouse gas emissions in Singapore. The funds collected should be set aside for job creation and research and development in the clean energy sector, thus creating a win-win situation for households, businesses and society at large.

Ronald Lee Managing Director PrimeStaff

I APPLAUD the new carbon tax as Singapore, being a world-class city, needs to take a leading position in the fight against climate change.

At the same time, I empathise with the businesses that will be affected - the oil & gas industry in particular, which has already not been doing well for some time now. Certainly, there may be an adverse impact on Singapore's economic growth, given the city's position as a premier oil business hub.

But the world as we know it has been undergoing a massive transformation, with disruptive technologies changing the game by the day.

This new carbon tax is just another example of how change is now par for the course, and businesses need to be as nimble as ever.

The grants for the first five years may help to offset the additional business costs of the tax but in the long run, we have to accept that this new tax may cause Singapore to lose more business to the region.

Olive Tai Co-founder and Managing Director Beautiful.me & Synagie.com

I DON'T see the carbon tax affecting businesses too much, to the point of affecting bottom lines and company growth. To me, S$5 per tonne of emissions is reasonable, and companies whose operations result in a lot of waste need to be reined in and have better operational practices to manage, or further reduce, their waste.

The carbon tax should not be seen as a burden to companies but a tool to manage waste, especially excessive waste. Can we as business chief executives say in full transparency that we have done all we can to manage waste? In my opinion, not really, and we can do better. Since we are already Asia's oil hub, how about we take further steps to become a hub of environment sustainability, protecting the air that we breathe and the water that we drink?

David Leong Managing Director PeopleWorldwide Consulting Pte Ltd

GOING green cannot be a blind mantra without actionable plans. The carbon tax is an invasive instrument to get businesses to change their business production methods - essentially to shift production habits to reduce carbon emissions.

For now, it is hard to justify going green with economic benefits because adopting new production methods that reduce carbon emissions need huge capital investments, and may not increase capacities nor competence. It only reduces the carbon footprint.

However, to be an early adopter and the first in South-east Asia means that Singapore can start exploring eco-friendly solutions for innovative ideas. From green manufacturing to construction of eco-friendly buildings and townships, these are new areas of growth, and Singapore can leverage on its first mover advantages to sell green solutions - services and products - to the world.

Alok Ghose Managing Director and Cluster Leader Philips Lighting, Singapore and Malaysia

ECONOMISTS foresee up to a 5 per cent increase in operating costs with the impending carbon tax. Businesses may perceive "green practices" as a cost to output and growth. However, raising energy efficiency offers a sustainable and profitable prospect in the long run.

Globally, doubling the rate of energy efficiency improvement could realise up to six million new jobs by 2020, reduce fuel costs by over two billion euros (S$3.2 billion) by 2030, and cut household electricity bills by one-third.

Philips Lighting has avoided 30,000 kilotonnes of carbon emissions with 1.2 billion LED products delivered to date. Achieving our 2020 goal of delivering two billion LED products would save energy equivalent to decommissioning 60 medium-size, coal-fired power stations - without affecting business and economic prosperity.