Boards concerned about climate resilience, but face information gap: Singtel sustainability executive
Making decisions on resilience investments requires companies to look at the issue from a broader lens
[SINGAPORE] While company directors are increasingly interested in climate adaptation and resilience, the limitations of historical data and the complexity of climate science can make it difficult for them to assess where to invest to strengthen their companies’ resilience to climate change.
This is why it is important to provide company boards’ with the right amount of information, at the right time, said Lee Cheh Hsien, vice-president of group sustainability at Singtel.
“I’m sure the level of board leadership in these matters will grow, but I think sometimes it’s also important to understand that time is not on their side, especially when we are making big infrastructure decisions where the life cycle of an asset is 20 to 30 years,” said Lee, who was speaking at a panel on Friday (Oct 2).
While these are long-term assets and could be exposed to extreme weather events, historical data alone may not provide sufficient information for companies to assess the climate-related risks they could face over the assets’ lifetimes, he added.
Lee was responding to a question on how he works with the telecommunication company’s board on long-term investment decisions aimed at improving the resiliency of the business to climate change.
The panel was part of an event marking the launch of a climate resilience centre of excellence by professional services firm EY.
With extreme weather events becoming more frequent, companies face higher risks of damage to their physical assets, as well as disruption to their operations and supply chains.
Hence, adapting to and building resilience for the impact of climate change are emerging as important aspects of companies’ business continuity plans.
However, Lee pointed out that making decisions on resilience investments requires companies to look at the issue from a broader lens, than compared with conventional business investments.
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In addition to objective metrics such as an asset’s lifespan, resilience investments require companies to assess potential losses to revenue, the value of the asset and even the impact on the company’s reputation.
“Therein lies challenge of how do you quantify that in a way that is science-backed, that would justify certain financing or even internal support for this project,” he said.
Lee also gave some insights on Singtel’s approach to developing its infrastructure.
This includes inbuilding resiliency within the asset from the beginning, as well as operating the asset in a way that is highly efficient and also responsive to varying scenarios and needs.
The company also recognises that it cannot cater to every event, and therefore, puts in place business continuity plans which allows them to recover in the shortest time possible and safeguard their reputation.
“When we take a multi-pronged approach, then we can take a more nuanced view to how much redundancy to take, how much investment to take, and I think it’s important... I think no business exists just for the sake of being resilient. I think we all exist so that we can be viable. And so therefore, when we take a more holistic view, more science-backed view, then I think we can make the best decision possible,” said Lee.
Climate adaptation – which refers to measures aimed at helping society prepare better for, and reduce vulnerabilities to, climate impact – has generally received less attention and funding compared with measures aimed at reducing greenhouse gas emissions, which are under the broad pillar of climate mitigation.
One reason is that adaptation projects currently lack commercially viable revenue streams, and therefore attract less interest from commercial investors.
Hence, governments need to do their part – whether by putting in place the right regulations and enabling environment – to facilitate financing, said Jackie Surtani, who heads the Asian Development Bank’s Singapore office, and was also speaking at the panel.
Preparing for climate impact and building collective resiliency is a strategic imperative for Singapore, said Calvin Chong, divisional director for energy and climate policy at the Ministry of Sustainability and Environment.
“That sets up Singapore to be competitive and to be resilient to future shocks. Many of the moves that we put in place for adaptation... set Singapore up to do well in the long-term... In the long term, we envision a future where there will be more carbon constraints. There will be increasing pressures on countries to decarbonise, but at the same time, it’s going to be climate-impacted,” said Chong, who was also on the panel.
He added that Singapore will engage with its Asean neighbours on issues of common interests as it takes on the chairmanship of the regional bloc next year. This includes agriculture, food and water security, as well as flood resilience.
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