Insufficient knowledge about sustainability, lack of training opportunities and fears of cost increases are some of the concerns raised by SMEs here as they adapt to the green economy.
That said, three in five SMEs in Singapore believe in the importance of incorporating sustainable practices in their businesses.
According to the UOB SME Outlook Study 2022, SMEs believe focusing on sustainability will help improve the company’s reputation (54%), make it easier for them to work with multinational corporations that care about their sustainability goals (45%) and enable them to help build an environmentally- and socially-responsible Singapore (44%).
Conducted between late-December 2021 and early-January 2022, the study spoke to some 800 local SMEs with annual revenue of less than $100 million to understand the outlook and expectations of SMEs in Singapore.
According to a March 1 press release by UOB, SMEs are responding to the call for a more sustainable future by aligning their initiatives to the Singapore Green Plan 2030.
Almost all of the wholesale trade companies (98%) in the study plan to do so by stepping up recycling efforts (60%), training employees in climate risk or environmental protection (60%) and switching to energy-efficient sources to reduce carbon footprint (56%).
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Companies in construction and infrastructure (98%) as well as real estate and hospitality (98%) are also actively aligning their practices to the Singapore Green Plan 2030.
Construction and infrastructure companies are focused on increasing their recycling efforts (41%) and applying for green certification schemes (39%), while real estate and hospitality companies are looking mainly to reduce packaging waste (42%), such as single-use plastic.
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Not just money but more support needed
When implementing sustainable practices, small businesses face challenges such as insufficient knowledge to identify and to execute relevant initiatives for the organisation (40%), as well as inadequate non-financial support such as sustainability training (33%).
Small businesses, defined as those with annual turnover of less than $10 million, are also concerned about the potential increase in cost for end customers (31%) and inadequate financial support from the government and banks for such initiatives (31%).
In comparison, medium-sized businesses, or those that make between $10 million to $100 million a year, said inadequate non-financial support (47%), insufficient knowledge (46%) and the possible impact to short-term revenue (44%) are their key barriers to adopting sustainable practices.
In advancing their sustainability journey, SMEs are on the lookout for collaboration opportunities with industry bodies, government-linked companies or large businesses (43%). They also want connections to industry peers and ecosystem partners (39%), as well as training or solution providers (38%) to deepen their capabilities, says UOB.
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Lawrence Loh, head of group business banking at UOB, says, “While SMEs are increasingly embracing sustainability as an important business growth driver, many of them have limited resources and lack the knowledge to implement relevant strategies and practices. They are also not quite sure of how they can do so in a cost-efficient manner.”
Loh adds: “At UOB, we draw on our expertise to bridge this gap by offering advisory and suitable financial products that will support SMEs in making the transition to a greener business and to forge a sustainable future for all.”
UOB currently has four sustainable financing frameworks to support businesses in the areas of real estate, circular economy, green trade finance, as well as those contributing to the creation of smart and sustainable cities.
At the recent Budget 2022, the government announced that it will issue $35 billion of green bonds by 2030 to fund green infrastructure projects. The government will also publish a green bond framework later this year.
The injection of fresh capital to anchor Singapore as a green finance hub is also aimed at attracting issuers, capital and investors, says UOB.
Eric Lian, managing director of group commercial banking at UOB, says: “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.”
Lian adds: “At UOB, we will continue to simplify sustainable financing for SMEs looking to gain a competitive edge to build resilient businesses.”
Photo: Bloomberg, Infographics: UOB
