Date: October 11, 2021
Ladies and Gentlemen,
1 Good afternoon. It is my pleasure to join you today.
Global Risks and Trends
2 There are three pressing global challenges today: COVID-19; Climate Change; and Income Inequality.
3 COVID-19 has upended our lives. It has put our healthcare systems under tremendous strain, disrupted supply chains and businesses, and exhausted the financial resources of countries. It has also given us a glimpse of what could happen with climate change. With higher temperatures, we may see the emergence of more new pandemics, and disruptions in food supplies. Just like COVID-19, climate change has the potential to cause widespread and irreversible damage to countries around the world.
4 We are already experiencing the adverse impacts of climate change in the form of more extreme weather conditions around the world. There are floods in Germany and heatwaves scorching North America, with Canada registering a record-breaking high of 46.6 degrees Celsius this summer. In South America, Argentina is experiencing extreme drought while sea level rise is threatening its coastal settlements.
5 All these are the consequences of an increase in global temperature since pre-industrial times of just 1.1 degrees Celsius. Can you imagine the upheaval a 2-degree increase could cause — not in the next century, but within the next decade? We could face widespread disasters such as famines, water shortages, floods, and wildfires. Properties would be destroyed, workers working outdoors would suffer from heat strokes, and biodiversity would face mass extinctions. The recent report from the Inter-Governmental Panel on Climate Change (IPCC) is a sobering assessment of the challenges that lie ahead. United Nations Secretary-General Antonio Guterres has rightly described it as a ‘code red for humanity’, emphasising the urgency to step up efforts to curb carbon emissions and rein in global warming.
6 These twin threats of COVID-19 and climate change will affect countries, societies and communities to different extents, and increase inequalities. Those with more resources will be able to weather the storms better and recover sooner. Socio-economic groups that are under stress from COVID-19 might find themselves being left behind as nations recover. They will also suffer disproportionately from the adverse impacts of climate change and environmental degradation.
7 Global tech companies are coming under increasing scrutiny for making handsome profits from large foreign markets, despite not having a physical presence in those places. China has taken a few moves against their own tech companies and super-rich, enacting reforms to achieve a more inclusive “common prosperity”, prompting large donations from the wealthy classes and organisations. Meanwhile, a global minimum tax rate of 15 per cent for large multinational firms is being created.
8 These trends I have mentioned threaten sustainable development and destabilise societies. And we know that businesses need stability and predictability to thrive. What shall and can the private enterprises do to mitigate the risks to sustainable development?
Mitigating climate change
9 To answer that, I will focus on climate change. There are two ways to tackle climate change — mitigation and adaptation. Mitigation strategies will help limit global warming to 1.5 degrees Celsius or below. To do so, we need to collectively cut carbon emissions by 45 per cent by 2030, and achieve net zero by 2050. That goal requires a drastic transition away from fossil fuels, in favour of alternative, renewable and non-carbon energy sources. Solar, wind, hydro, geothermal and nuclear are current options. Singapore has limited options to deploy them but we will do our part.
10 Our climate action strategy aims to transform our industry, economy and society by drawing on cutting-edge and future technologies. This year, we launched the Singapore Green Plan 2030, a national roadmap which charts concrete sectoral targets over the next ten years, positioning Singapore to achieve net zero emissions as soon as viable.
11 We are positioning ourselves to seize new business opportunities in the green economy and to support companies to develop new capabilities. Singapore is working closely with our international counterparts and partners to co-create the right policies, fostering collaboration in areas such as carbon markets and regional energy grids that will support our push for decarbonisation. We have put in place a carbon tax which puts a cost on CO2 emissions and will review this tax.
12 Our public service has also been pressing ahead to take the lead. Under the GreenGov.SG sustainability movement, the public service has set new and ambitious targets to reduce its energy and water usage, including a target to peak emissions around 2025, ahead of the national target. The public service will also use green procurement to influence those within and outside the service to adopt sustainability practices.
13 The Monetary Authority of Singapore (or MAS) has developed a Green Finance Action Plan to strengthen the financial sector’s resilience to environmental risks and develop green finance solutions and markets. It has awarded the mandate of US$1.8billion under its Green Investments Programme, to promote sustainable investment strategies and develop the green equity market. MAS has also introduced the Green and Sustainability-Linked Loan Grant Scheme (GSLS), which will enhance borrowers’ ability to obtain green and sustainability-linked loans.
14 Recently, Enterprise Singapore launched the Enterprise Sustainability Programme, setting aside up to S$180 million to help 6,000 Singapore companies go green. As a leading financial hub in the region, we are also well-placed to support Asia’s sustainability journey through green finance.
15 Countries around the world, particularly the large, developed ones, are pledging to reach net-zero by the middle of the century. This means they will set correspondingly high sustainability standards in products and services that are sold in their markets. A recent McKinsey article highlights that more than 70 per cent of consumers are willing to pay more for green products and services. Companies which are unable to transform their business models to meet these new sustainability standards will face shrinking demand, and risk sitting on stranded assets and infrastructure with limited secondary value or financing options.
Adapting to climate change
16 Apart from mitigation, the second tool we have, to tackle climate change, is adaptation. As a responsible Government, we have to put in place safeguards and adaptation measures.
17 That is why we are investing significantly in coastal protection and enhancing our drainage systems to cope with more frequent intense rainfall. To cater for long-term sea level rise, we have raised the minimum land reclamation level to 4 metres. Just as we have closed the water loop, we are seeking to close the waste loop by pursuing circular economy principles. We are also investing in state-of-the-art agri-tech and food technologies to expand our capability and capacity to produce food locally and sustainably, and continue to diversify our food sources to build food security.
18 Businesses, too, will have to adapt to climate change — whether it is the impact of extreme weather on real estate at beachfronts, low-lying warehouses, or supply disruptions to commodities, energy and natural resources.
19 Private enterprises have a huge part to play in our transition towards a low-carbon and climate-resilient economy. Climate action will cause some industries to fade away and new ones to emerge in their place. For instance, the automobile industry is facing the electrification of vehicles, and newcomers are disrupting well-established companies that produce Internal Combustion Engines (ICE) vehicles. Policies will shift to support the growth of more low-carbon businesses. Therefore, I urge companies to start planning and executing the transition, and seize the opportunities that are coming your way.
Value of diversity
20 Eight years ago, in 2013, I was invited to speak at SIAS’s 4th Corporate Governance Week. I called for more female representation on companies’ boards. I want to take this opportunity to reiterate that call. Having more qualified women in leadership helps to accommodate the needs of women at workplaces, and is a mark of an inclusive and future-oriented organisation. This is crucial as our workforce growth slows, and when every member of our population, man or woman, is important. Economies that are able to employ women in their companies are have much better, history has proven that. The rise of feminist movements such as the #MeToo movement and rising societal disdain for misogynistic work environments, including the reputational risk for all-male company boards further reinforces the need for women to be represented.
21 Allow me to conclude. Climate change is a real, global, and pressing crisis, with widespread and lasting impact to businesses and communities. Singapore, with our Green Plan set in motion, stands ready to mitigate and adapt to climate change. For companies, there are burgeoning opportunities available, brought about by green technologies and the accelerating demands of consumers for sustainable products and inclusive corporate cultures. By learning to navigate the complexities of these shifts and transforming their business models, companies can deliver on their sustainability mandates, strengthen their resilience, and become future-ready.
22 I wish you a fruitful conference. Thank you.