Singapore became fully independent in 1965 and since then has rapidly asserted itself as a leader in all aspects of state impact and power. Its social and economic growth and potential have been awe inspiring.
Singapore is a city state located at the Southern tip of the Malaysian Peninsula. It is made up of Singapore Island and then around 60 small islands of which the main island takes up all space excluding 18 square miles. Singapore is the largest port in South East Asia and one of the world’s busiest. Once a British colony and now a member of the Commonwealth, in 1963 Singapore joined the Federation of Malaysia and then seceded to become an independent state in August 1965. Nearly two thirds of the main island is less than 50 feet above sea level. A dense network of short streams drains the island, but floods can be severe because the streams have low gradients and because of excessive water runoff from cleared land. Characterised by uniformly hot and humid weather all year round, Singapore’s focus on sustainability from an economic, social and environmental perspective has clean impetus.
As sustainability becomes another marker of strength and resilience for countries across the world, it is interesting to look at how, in recent years, Singapore has also become a pioneer in sustainability and has made concerted efforts to associate itself with best green practice. The city state adopted a variety of long-term goals and decade spanning plans which would balance sustainability with its ongoing priority of economic growth.
Sustainability encompasses many different focal points, from climate change prevention to social issues and economic stability. We spoke with Seng Ti Goh of Focal Partners and Chair of the Association of Corporate Treasurers in Singapore, who explained Singapore’s particular commitment to sustainability, “Since the independence of Singapore in 1965, our Government led by the late Minister Mentor Lee Kuan Yew made a conscious decision to make Singapore a clean and green city. In 2019, our Prime Minister Lee Hsien Loong devoted his national day rally speech to why Singapore should be preparing for climate change especially with global warming and the resultant rising sea levels that pose a real threat to low lying Singapore. He expounded the expedient need for Singapore to find sustainable solutions and that it might cost Singapore S$100bn to prepare ourselves against rising sea levels.”
Certainly Singapore’s unique positioning both in terms of geography, population and regional ambition create a particularly powerful case for sustainability. We spoke with Melissa Moi, Head of Asia Pacific Environment Social Governance at Bank of America, who expanded on Singapore’s somewhat unique positioning, “Part of understanding Singapore’s relationship to sustainability is context and understanding how the country is positioned. Singapore is a city state, it’s a relatively prosperous city state. It also has relatively high exposure to sustainability-related risks. So, if you look specifically at climate risk, we don’t have a source of naturally fresh water. Singapore is very exposed to climate change and to issues around sea level change. On top of that, Singapore is also impacted by the effect of climate change on the other countries in the region – both environmental and social. What is most interesting about Singapore is, number one, I think we’ve seen the country and its government and its corporate citizens as well, take a very strong position in terms of building up the resources and the resilience needed to battle and deal with climate change.”
Moi also expanded on the complexities of the reclaimed land in Singapore. The reclamation of land (https://blogs.ntu.edu.sg/hp331-2014-10/?page_id=7) from surrounding waters was employed in Singapore to expand the city state’s limited natural land. The process involves rocks, soil or sand being added to water to create land. Moi explained, “They’re always really taking into account, what are the projections for sea level rise? And can we build on reclaimed land a metre higher than it needs to be? There are barrages that have been put in place to divert water. There are rainwater and wastewater systems diversions all through the city and they’ve really invested in terms of the infrastructure around dealing with some of the physical changes, which I think is really great to see.”
When it comes to government policy says Moi, “In the Singaporean government’s most recent budget, they’re really focusing on things like food security. Also ensuring that 30% of the country’s nutritional needs are locally and sustainably accessible by 2030. Looking at public transit, there have been various licences required, for example, to own a car. There has been a really big push to encourage individuals to move from personal car ownership to taking advantage of public transit. Then they are focused on transitioning the public transit so it could be in cleaner energy, public buses, even the cars and taxis needing to have clean energy models, electric vehicle charging points. And finally, real estate, implementing guidelines around energy efficiency, green buildings and benchmarks for energy efficiency, really promoting solar energy.”
As Seng Ti Goh also explained, “More recently in 2020, the Government announced the Singapore Green Plan 2030 that involves multi-ministries and agencies with five pillars: 1) City in Nature, 2) Energy Reset, 3) Sustainable Living, 4) Green Economy and 5) Resilient Future. The shift is profound and there is a strong impetus from the leadership and amongst the business and social communities. Singapore aims to be a leading centre for Green Finance in Asia.”
Leading by example
Moi explains how Bank of America are playing a part in this mission, “From a financial institution’s perspective, we are trying to drive change around sustainable finance. There’s been a lot of work by the regulator here, the stock exchange here, the government here, to really establish Singapore and position itself as a leader in encouraging sustainable finance. The Monetary Authority of Singapore (MAS) has come out with a taxonomy that is so specific, much like the EU taxonomy, language and specific categorisation of what can be considered green and sustainable from a sustainable finance perspective. This is to try to put guardrails and guidelines from a market development perspective. Also looking at establishing a sort of an environmental governance framework, whereby ensuring that the financial institutions that are based in Singapore and operating in Singapore have environmental and social risk integration across their governance. MAS is also a member of the steering committee of The Network for Greening the Financial System. Singapore also has sustainable or ESG-labelled bond incentives. It’s a really big push, from a governance, from a monetary authority, regulator and central bank perspective, that I think is trying to really develop, not just in Singapore, but also to encourage a lot of the South East Asian countries that are around us to look at making this a priority.”
Hong Kong and Singapore have a rivalry that is well established and in the case of sustainability can serve for the good of everyone as it spurs on both places to do better on sustainability. This is now becoming another tick and another mark of distinction. Moi explained, “Hong Kong is also in the similar position of establishing itself as a sustainable finance centre within Asia. This healthy competition is a good thing because it means that you drive for better standards, you implement more forward-thinking policies.”
Seng Ti Goh concurred, “The MAS has announced its Green Finance Action plan to 1) Strengthen Financial Sector Resilience, 2) Develop Markets and Solutions, 3) Harness technology, 4) Build Knowledge and Capabilities. We have seen the increased awareness and activities in the markets and eco-system with regard to Green Financing.” In addition, when it comes to influencing operations, or standards from an environmental perspective, of companies with headquarters that are operating out of those countries and some of the more active central banks and regulators. Moi mentioned the progress she has seen coming out of Malaysia and Thailand and in The Philippines around growing sustainable finance and the role that regulators and financial institutions play in financing transition to a low carbon economy.
Investors in Asia, are asking questions about ESG plans of corporations they work with and the sophistication of the questions is increasing, such as; ‘How are you going to do it?’ ‘Are you going to do it by 2050?,’ ‘What is your plan for 2030?’ ‘How is this tied to your business goals?’ ‘How is this tied to your projections?’ ‘How is your leadership?’ ‘How is it integrated into your governance?’ ‘What are you measuring, what are you reporting?’ The ecosystem requires investors, it requires the corporates, it requires that regulators and governments, that they all have a piece to play in this puzzle of really driving sustainability forward.”
Looking ahead
When Treasury Today Group began it’s research into sustainability with first steps towards our Global Sustainability Study in 2019 there were distinct regional variations, with Europe leading the way and North America and APAC some way behind, in terms of corporate awareness. As Moi said, the pace of change in Asia can really be quite rapid, “In Asia, things can happen quickly and rapid changes can occur, so there is the opportunity to leapfrog. What took years of development in the EU could happen within a much shorter span of time in Asia.” The pandemic has only served to highlight some of the real arguments for sustainability, as it has exacerbated issues particularly around things like income inequality. Then we have the stark reality that the pandemic is a harbinger of what happens when we don’t tackle the climate crisis.
As we look ahead to the future of Singapore post-pandemic we will continue to see Singapore trying to position itself as a leader in the space. Moi mentions, “One of the interesting stories is that of the plant-based meat alternative market and the community around things like vertical farming here in Singapore; hydroponics. So, as well as sustainability and self-sufficiency in the country, there’s also going to be a push in terms of investments and understanding.”
Treasury Today Group remains committed to covering all aspects of sustainability and this summer we will release the results of our 2021 Global Sustainability Study where we will be able to assess the impact of the pandemic as well as assess the results on a regional basis. We are particularly keen to see how the pioneering example of Singapore impacts the sustainability journey corporations and governments alike, certainly the speed of awareness and dialogue has been quite remarkable over the past two years. As Seng Ti Goh concluded, “It is certainly an exciting sustainability journey ahead in Singapore!”
