Make this the year sustainability tops the business agenda

THE impact of climate change is continuing unabated, and Singapore and South-east Asia stand at the point end of its impact. HSBC Global Research recently reported that of the 20 global cities most vulnerable to rising sea levels, 15 are in Asia - including five in Asean.

Another World Bank study estimates that a one-metre rise in sea levels would affect 37 million people in East Asia and South-east Asia. If the level rises by 5m, the population figure affected increases to over 160 million. Nothing can make the fact more real than this: the next time you walk along the Singapore coastline, imagine the waves coming in at that height.

Climate change is real and presents family businesses with a fresh set of challenges, as well as significant opportunities - to innovate in the short term, plan for the longer term, and adopt a more globally-minded approach to wealth creation.

FAMILY BUSINESSES ARE INTEGRAL TO A SINGAPORE APPROACH

Small and mid-sized enterprises (SMEs), quite often run and managed by families, employ 72 per cent of the workforce and contribute 44 per cent to the economy. They are certainly a drumbeat to the economy.

With the outsized impact family businesses can have in ushering in the brave new world of sustainability, their collective responsibility is just as great as any multinational corporation (MNC) footprint.

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Perhaps that responsibility is felt even greater by family businesses with a special importance on sustaining the business for future generations. Their emphasis on continuity and family values helps to make the issue more tangible to them. Often, when a business involves multi-generational family members, rallying behind a shared purpose can bind everyone closer together. Without a doubt for any material change to happen, SMEs - family-owned or not - need to be part of the solution.

SMARTER AND BETTER FUTURE

While adopting more sustainable practices is now becoming a question of corporate reputation, many businesses are also discovering the potential profitability, cost savings and value creation offered by associating themselves with positive environmental approaches. Firms that shift to making sustainability a core part of their strategy are finding that it improves the bottom line, reduces risks, increases competitiveness, and the number of satisfied customers.

Transitioning to a more sustainable business model also presents opportunities for innovation and new product launches. As you look at your existing revenue streams, consider what new sales you could deliver by launching new, more sustainable products or services.

Every SME wants to reduce costs to improve cash flow, and sustainable practices can do just that. By cutting down on your use of energy, water and paper, you can make significant savings. Replacing your energy supply with renewable power, retrofitting buildings to make them more efficient, buying used instead of new furniture, and using recycled materials for your products can further pare down your firm's business expenses.

Putting sustainable practices in place and improving your ability to measure and report on your environmental footprint can help you lower your company's environmental risks. This will give you a stronger competitive edge when trying to win contracts with businesses seeking sustainability in their supply chains, as well as with retail consumers.

More businesses are realising that to remain relevant and grow, they need to be more sustainable. HSBC's Navigator research found that 29 per cent of participating Singapore businesses are motivated to use sustainability to gain a competitive advantage.

Once you have defined your plan to become a more sustainable business, the final step is to consider greening your brand - obtaining awards and certifications, to distinguish you as a truly sustainable leader in your industry. Business as usual, on the other hand, can end up costing your company.

MEETING CHANGING DEMANDS

Demand for environmentally responsible products and services has mostly come from customers. But now investors are also demanding that businesses they invest in become sustainable, compelling many SMEs to measure, report and reduce their environmental impact. About 86 per cent of Asian investors surveyed in a recent HSBC report consider environmental issues important. Almost a third (31 per cent) always look at environmental, social and governance (ESG) considerations when they invest.

SMEs could also miss out on profitable government contracts if they do not have robust sustainability practices. The Singapore government, for example, procures only printing paper with the Singapore Green Label. This means that only paper suppliers with sustainable land and forestry management practices can win contracts with government agencies. Future initiatives focused on reducing plastic in the economy will only accelerate this trend.

FINANCING - THE ENABLER OF GREEN CONVERSION

While SMEs may have wanted to change, it is often the perception of cost, competing priorities and complexity that has made green finance inaccessible - until now.

The Singapore government, regulatory, industry bodies and various players in the financial sector have been coordinated and single-minded in ensuring SMEs can have access to green financing tools. We are starting to see the results with a myriad of green financing instruments being specifically designed with them in mind.

For example, HSBC has done away with the complexities associated with the traditional green loan process. It is the first bank in Singapore to offer green loans designed specifically for SMEs by accepting applications based on existing market-leading green certifications awarded to the business by Singapore industry authorities such as the Singapore Environment Council, the Building and Construction Authority and the Singapore Green Building Council.

This saves time and money for the SME, allowing green funds to flow more quickly to projects that support the sustainable revolution.

SMEs can also now access green deposits, designed to help businesses align their surplus capital and yield requirements with their green aspirations.

TAKING THE NEXT STEP

In a world where sustainability and profitability go hand in hand, a clearly outlined plan can amplify the change you make in the world, and bring your family's and your firm's vision and values to fruition.

• Philip Kunz is head of global private banking, Southeast Asia, HSBC Private Banking and Li Lian Ng is head of business banking, HSBC Singapore