SG60: How Singapore’s SMEs are shaping a sustainable future for Asean
They can catalyse responsible action locally and in the region, especially with better tools and stronger support
THE Singapore story is one of pragmatism, adaptability and entrepreneurial spirit, and nowhere is this better reflected than among the small and medium-sized enterprises (SMEs) that constitute more than 99 per cent of all locally registered companies.
SMEs employ 70 per cent of Singapore’s workforce and play a pivotal role in driving our economy. As suppliers to large enterprises, they are also vital links in the local, regional and global supply chains.
With a small domestic market, Singapore’s SMEs are under constant pressure to innovate, move quickly and look abroad to preserve long-term viability. The decisions they take have an outsized impact on how Singaporeans work and live.
Singapore’s 60th birthday this year is an opportune time to reflect on how the nation has grown, and how the country’s SMEs will carry us forward.
As we consider the role that SMEs play in our economic future, we should also reflect on their broader impact – both environmentally and socially.
These businesses influence everything from carbon footprints to community well-being, and understanding these dimensions can help us identify ways to support their growth, resilience and sustainability.
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The sustainability challenge
Sustainability pressures on SMEs are building on multiple fronts.
In a 2024 survey conducted by Schneider Electric, 78 per cent of SME respondents reported losing contracts due to emissions reporting gaps. In another survey by the Singapore Business Federation, in partnership with Bain & Company, 60 per cent reported upstream supply chain pressures.
Meanwhile, the average consumer is requiring more from retail brands. According to a PwC survey in partnership with UOB FinLab, 46 per cent of Asean consumers are making the more sustainable choice at checkout.
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SME business leaders are certainly ready and willing to adapt, as evidenced by the 87 per cent of respondents in the UOB Business Outlook Study 2024 who said that they believe in the importance of sustainability.
Another survey, conducted by NTUC LearningHub and the Global Reporting Initiative, showed that 63 per cent of SMEs are open to training and toolkits.
The sustainability opportunity
This openness to change is good news, as new business opportunities are popping up for SMEs that are willing to invest in new ideas and capabilities.
Consider the example of Novowatt, which is offering landlords a cost-effective way to install electric vehicle chargers on their premises.
Novowatt bears the cost of installation and maintenance, and even shares charging fees with the landlords under a profit-sharing arrangement.
Its innovative solution has allowed it to roll out 800 charge points at 200 condominiums in just within 30 months of operations.
While Novowatt is a startup entering a new field with new technology, older companies can participate in the green economy too by upskilling their workers, seeking adjacencies and adapting their operations to new needs.
Hup Lian Engineering, a 34-year-old steel fabrication and installation specialist, has been involved in solar panel installation projects for the Housing and Development Board (HDB).
The company, a unit of Singapore Exchange-listed Chasen, has built on its expertise to fabricate and install steel frame structures for solar panels.
It secured this win by offering HDB an innovative design using lighter composite materials that are more cost-effective.
Sustainable regional supply chains
Both Novowatt and Hup Lian Engineering demonstrate the role that SMEs can play in lowering carbon emissions.
By spreading their wings and becoming exporters of sustainability services, they could extend their impact further.
Singapore’s various government incentives and its conducive environment for incubation already prime our SMEs well to support regional supply chains, while the country’s reputation for strong governance and sustainability reporting should give them a competitive edge in building trust and alignment with international standards.
Singapore SMEs are therefore well-positioned to lead by example and influence.
With international buyers increasingly expecting their suppliers to report emissions and demonstrate sustainable practices, Singapore SMEs that act promptly can stand out.
Building the Singapore SME brand
As some companies dial back their environmental, social and governance (ESG) commitments, Singapore has a unique opportunity to build an SME brand in sustainability – one that is practical, reliable and regional in outlook.
A Singapore SME that embraces sustainability today does not just protect its bottom line; it strengthens its licence to operate across Asean.
To build such a brand and grow such a culture among our nation’s SMEs however, requires a robust ecosystem that includes the participation of both the public and private sectors.
UOB’s suggestion for such an ecosystem consists of three pillars: clarity, capability and capital.
First, SMEs need help with figuring out their first and subsequent steps. Free playbooks, advisory services and easy-to-use online tools do exist, but the volume of options can be overwhelming for a smaller organisation without the bandwidth to sift through them all.
Second, SMEs need support to build their internal capabilities. Although grants are available to offset the cost of sustainability reporting, these need to be made more accessible and they also need to support capacity building.
Finally, SMEs need patient capital to fund their expansion. While the sustainable financing industry is growing, SMEs remain on the periphery of this industry and deserve more attention.
Doing our part
Even as we advocate for Singapore SMEs, we are conscious of the need to do our part. UOB’s FinLab Sustainability Innovation Programme has helped around 1,800 SMEs kickstart their ESG journeys.
UOB also offers a free diagnostic tool, called the UOB Sustainability Compass, to help SMEs figure out their starting points; there is also the UOB Sage Programme to help SMEs access sustainability-linked financing.
The bank also funded S$7 billion of green trade finance and recorded S$58 billion of sustainable financing last year.
These are only small steps in what is a long journey though. If Singapore’s first 60 years were about growth and resilience, we strongly believe that its next 20 years must be about leadership – and not just economic leadership, but also leadership in sustainability and inclusion.
With the right scaffolding, we believe Singapore’s SMEs are transition enablers that can help decarbonise value chains; nature-positive operators that safeguard our environment; and economic multipliers that help every member of the workforce step up into a greener economy.
The writer is group chief sustainability officer of UOB
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