Singapore has the opportunity to become a leading force in sustainable transformation for the region. With the right actions, the nation is poised to act as a catalyst for green economic growth looking out to 2050.
Covid-19 has triggered widespread disruption worldwide, presenting the nations of Southeast Asia with an unprecedented opportunity to pursue policies, investments, and behavioural changes that mitigate impacts and build a sustainable future. Singapore is already planning significant investment in the range of $100 billion to prepare for the worst impacts of climate change.
By nature of its geography, Singapore remains both vulnerable to climate change, and yet responsible for an almost inconsequential share of the region’s greenhouse gas emissions. But in its role as a global financial centre and trading hub, Singapore is positioned to steer positive change that far outweighs its relative geographical size.
Championing a shared future
Southeast Asia is at a pivotal moment in history. Adopting a strategy that couples localised and targeted national measures with an integrated regional approach has the potential to unlock long-term competitive advantage through climate action and sustainability. These are the findings of Boston Consulting Group’s (BCG) seminal report, “Climate Action & Sustainability: Advantage in Adversity”, released at the Singapore Summit in September.
Southeast Asia is acutely vulnerable to the worst impacts of climate change. Over 75 million citizens in the region live in low-lying land that is 5m above sea level or lower. In Singapore alone, more than 10% of the population are estimated to live below this future watermark and are threatened if global warming exceeds 2°C.
Singapore is Southeast Asia’s most mature economy but faces clear geographical challenges in influencing aggregate regional carbon emissions. The nation is responsible for just 0.1% of global emissions.
Its relative economic status positions Singapore favourably in terms of funding for mitigation and adaptation efforts compared to many regional neighbours. But the nation remains vulnerable to the impact of sea level rises, and the consequential regional impacts such events would trigger.
As a global financial hub, Singapore offers a unique contribution to regional efforts to tackle climate change. It enables the country to position itself as a conduit for green-focused investment which will be critical to building back better following Covid-19. The successes of its manufacturing sector also offers a template for future evolution in sustainable high-value manufacturing that will be fundamental to greener economic opportunities throughout Southeast Asia.
The reality is, there is no one-size-fits-all approach across this diverse region. The ongoing pandemic offers a unique catalyst for change, with more than US$290 billion ($338.08 billion) committed to recovery in Southeast Asia to date. With just 0.5% of that figure currently pledged to sustainability-focused investments, BCG’s report makes clear the vital importance of policies which combine an integrated regional approach with targeted national measures.
Collaborating as a climate champion
Singapore has a proud history of financial excellence and a supportive national framework for business. This will be fundamental in leveraging opportunity from this period of adversity.
Governments, business leaders, and investors across the region must address several key priorities to steer a systematic approach to change that unlocks the greatest value for the region. This should focus on green job opportunities that adapt to changing workforce needs, as part of a carefully navigated jobs transition.
Energy efficiency and energy demand management that is further enabled through digital technologies should be scaled rapidly to reduce the carbon burden while accelerating low-carbon cost savings for businesses and consumers. Scrutinising the full length of supply chains will also be vital, with the report highlighting how emissions from supply chains are up to 5.5 times greater than direct business emissions.
Investing in climate action is undoubtedly a positive investment in the future. BCG estimates that in Southeast Asia, up to 70% of a 2°C path can be achieved with positive economic returns to the region at an investment rate of about 2% of regional GDP.
Singapore is unique within Southeast Asia — boasting both the globally recognised financial infrastructure and reputation to catalyse green investment going forward. The public and private sectors should work to establish Singapore as a hub of sustainable finance, supported through policies that embed regulatory advantage in sustainability. This could include building and scaling an ecosystem around carbon trading and related services, gaining early advantage as these mechanisms become increasingly important in global and regional trade. Singapore’s pioneering move to introduce carbon pricing lays a good foundation for this evolution.
The recent election of Joe Biden in the US is likely to usher in a greener global future, as is the recent Chinese commitment to steer towards becoming a net-zero nation by 2060. Singapore should reflect on this wave of change in steering its own path forward.
Singapore should continue to prioritise zero-carbon investment that drives domestic change while championing this model for the region. Zero-carbon investment in energy, transport, manufacturing, and buildings can reduce emissions while supporting new businesses in emerging low carbon technologies and services.
It is clear that Singapore’s greatest impact on regional climate emissions could be as a partner, facilitator, and collaborator. To this end, stakeholders should work to establish and lead industry coalitions to promote emissions reduction in key global sectors such as shipping, aviation, and petrochemicals.
Shipping is an example of an area of opportunity for Singapore. If bunker fuels used in shipping are factored into national emissions, Singapore’s emissions footprint would expand by 277%. As the world’s largest port and a respected global shipping hub, the nation is uniquely positioned to lead coalitions on technology development in green shipping technologies. Examples of such collaborations can be seen in developments such as the Mærsk Mc-Kinney Møller Centre for Zero Carbon Shipping in Denmark.
Alongside industry, it will also be important to engage society to join in this journey. The appetite for climate action is clear — a 2019 survey by pollsters YouGov revealed 56% of Singaporean respondents believed that the nation could be doing more to tackle climate change. Government, businesses, investors, and civil society should work to educate, engage, and catalyse positive public sentiment, placing civil society central in the climate agenda. Positioning Singapore as a regional champion on climate action offers a powerful opportunity to mobilise the nation towards a successful transformation.
Singapore has faced an unprecedented crisis in 2020. Climate change presents another emerging challenge that gains momentum with each passing day. With the right action, Singapore is poised to become an invaluable collaborator and regional champion at the forefront of a sustainable future.
Dave Sivaprasad is a managing director & partner at Boston Consulting Group. He is also the firm’s Southeast Asia leader for climate action.