Some 3 in 5 SMEs believe sustainability is key to business growth: survey

Helene Tian

Published Wed, Mar 2, 2022 · 06:42 AM

ABOUT 60 per cent of small and medium-sized enterprises (SMEs) in Singapore believe in the importance of incorporating sustainable practices in their businesses, according to the UOB SME Outlook Study 2022.

The top motivations for adopting sustainable practices were to improve the company's reputation, cited by 54 per cent of all respondents; to make it easier to work with multinational corporations which care about sustainability goals, cited by 45 per cent; and to help build an environmentally- and socially-responsible Singapore, cited by 44 per cent.

"With tougher net zero targets now front and centre in the minds of government and industry leaders, large corporates may start to move faster on working with SMEs that are compliant with sustainability standards within their supply chains," said managing director of group commercial banking at UOB, Eric Lian.

The survey was conducted from late December 2021 to early January 2022, with 800 respondents.

The top 3 environmental, social and corporate governance (ESG) practices which respondents have already adopted were using resources more efficiently to minimise waste (44 per cent); implementing clear operational policies and processes such as risk management and financial control (42 per cent); and using energy-efficient equipment and technologies (34 per cent). These were also the top 3 practices that respondents said they planned to incorporate in their business in the future.

More than 90 per cent of respondents said that they plan to adopt some sustainable practices in line with the Singapore Green Plan 2030, with the wholesale trade, construction and infrastructure, and real estate and hospitality industries having the highest proportion of firms that plan to do so.

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For respondents in the wholesale trade industry, as well as those in construction and infrastructure, common practices included stepping up recycling efforts and applying for green certification schemes. Meanwhile, real estate and hospitality companies are looking mainly at reducing packaging waste such as single-use plastic.

But the survey also found that despite their commitment to implementing sustainable practices, SMEs have faced challenges such as having insufficient knowledge to identify and execute relevant initiatives for the organisation, as well as inadequate non-financial support such as sustainability training.

They were also worried about the possible impact on their revenues in the short term, with more than a third of respondents citing that challenge, and construction and infrastructure firms being particularly concerned.

The most-preferred form of support for incorporating sustainable practices was collaboration opportunities with industry bodies, government-linked companies, or large businesses, cited by 43 per cent of respondents.

Firms also hoped to have connections to industry peers and connections to the right training or solution providers.

This was in contrast to the previous year's survey, in which tax incentives or rebates were cited as the top preferred form of support, followed by easier access to funding or grants.

Many SMEs lack the resources and knowledge to adopt sustainability practices, and are unsure how they can do so in a cost-efficient manner, said head of group business banking at UOB Lawrence Loh.

UOB aims to bridge the gap by offering advisory and suitable financial products that will support SMEs, he added. Besides providing green loans, UOB's Sustainability Innovation Programme, run by its innovation accelerator The FinLab, allows SMEs to gain insights into how they can build sustainable businesses with the right technology solutions.

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UOB SMEs ESG sustainability

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