Political inertia will end when climate-change impact is ‘too big to ignore’: Ravi Menon
Nature will set the timeline regardless of electoral or business cycles, says Singapore’s ambassador for climate action
[SINGAPORE] The political inertia regarding climate change will end when extreme weather and resource shortages disrupt livelihoods on a scale “too big to ignore”, said Singapore’s Ambassador for Climate Action Ravi Menon.
“Eventually, nature will call the shots, regardless of electoral or business cycles. Nature will set the timeline, whether we are ready or not,” said Menon, speaking at a sustainability event at the Singapore Exchange on Monday (Mar 17).
The Republic’s former central banker acknowledged that with the recent political developments in the US – such as President Donald Trump’s orders to expand fossil fuel exploration and cut renewable-energy subsidies – some wonder if now is really the time to invest in sustainability.
“I understand the hesitation. Political priorities are indeed shifting day by day… and it may seem prudent to wait for clearer signals,” said Menon.
However, he noted that there are some positive signs, for instance, with China reaffirming its commitment to the green transition at the recent Two Sessions, or the country’s annual parliamentary meetings.
More broadly, Menon pointed out that the world is moving towards a future that is “climate-impaired” – with climate change disrupting supply chains and infrastructure – and also “carbon-constrained” – where greenhouse gas emissions will have to be sharply reduced and businesses will have to abide by stricter regulations.
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He called on businesses to get ready for this future with “transition planning”, even if it is “difficult and will incur costs”.
“Companies that act early will be able to shape their strategies on their own terms, secure market leadership and attract capital that increasingly prioritises sustainability,” he said.
In contrast, those who wait “will scramble to adjust amid abrupt regulatory shifts, supply chain disruptions and dwindling investor confidence”.
This is especially as more multinational corporations (MNCs) are demanding low-carbon products from their suppliers. He cited a report by Standard Chartered Bank, which showed that 78 per cent of leading MNCs plan to remove suppliers globally that endanger their carbon transition plan, by 2025.
Understand risks
To begin transition planning, businesses will have to understand the key risks they face, added Menon.
One such risk is the rising price of carbon. For instance, the European Union’s carbon price of 80 euros (S$116) per tonne is projected to increase to 135 to 160 euros by 2030. This will drive up the effective levy under the Carbon Border Adjustment Mechanism, raising costs for exporters into the EU market.
“Carbon pricing is proliferating, and we can expect businesses to face progressively higher carbon prices globally,” said Menon, noting that Thailand has already introduced a small carbon tax, while Malaysia plans to roll out one in 2026.
Another risk is failing to keep up with the pace of innovation in low-carbon technologies – with electric vehicles displacing those with combustion engines and renewable energy gradually replacing fossil fuels.
“Businesses should evaluate how much of their legacy infrastructure and carbon-intensive assets could become stranded as cleaner alternatives gain traction,” he said.
Businesses also have to contend with the physical risks of climate change. Rising temperatures will mean lower labour productivity. Sectors such as construction and logistics could be hit by heat stress and higher cooling costs, added Menon.
Extreme weather can also delay shipments and threaten global food supply, affecting food importers, retailers, and restaurants in Singapore.
Need for action
Menon called on businesses to start taking action. Companies in high-emission sectors – such as manufacturing, energy and heavy transport – may need to restructure their core business activities and diversify product lines.
Meanwhile, those with lower emissions may want to leverage new growth opportunities, he said. For instance, IT companies can develop carbon-tracking software and smart energy systems.
He also called on businesses to set climate targets that “account for stakeholder expectations” and are “sensitive to shifts in consumer preferences”.
He reckons that industry and business associations are well-positioned to lead transition planning, by working with government agencies to develop sector-specific road maps.
“The question is not whether the transition will happen, but how prepared we (are) for it. The choice is not whether to start transition planning, but whether we do it on our own terms or are forced to react later.”
No silver bullet
Also speaking at Monday’s event, Singapore’s Minister for Sustainability and the Environment Grace Fu noted that the effects of climate change are already being felt. She cited how there are more wildfires and droughts, and that coffee prices have gone up.
Tackling the crisis would need not just a “single silver bullet” but many efforts, such as substituting energy sources and carbon capture, Fu added.
She also cited carbon credits as a “short to medium-term instrument” for the city-state to decarbonise. Singapore is set to launch a request for proposal later this year to procure credits to offset its emissions.
“We don’t have the land that’s needed to decarbonise completely with solar or wind, but we can work with (other) countries on decarbonisation, provided that the standards, the quality of the projects meet our criteria. But we want to mobilise the capital,” said the minister.
She also noted that carbon credits and services is an “interesting growth sector”.
“I think this is where Singapore probably can play a role, because you can find in one location that expertise in finance, expertise in technical know-how in universities that can do some nature-based research… At the same time, we do have carbon services such as ratings (agencies), project developers,” said Fu.
“The challenge for us is how (to) make this network work fast and find the partners, find the solutions quickly, so that we can actually establish ourselves as pioneers in this new area of carbon credits.”
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