As sustainability becomes a burgeoning concern, there have been greater calls for private companies to adopt measures to ensure that their operations are more environmentally sustainable. In Singapore, these calls have come from a myriad of sources, including the government and civil society.
Government programs and policies to nudge firms in this direction have largely coincided with state rhetoric about the existential threat of climate change to Singapore. These include rising sea levels, disruptions in food supply, increasing temperatures, and more extreme weather events, among others. It is thus not surprising that there are many government schemes to encourage SMEs to shift into more sustainable business practices and operations.
These policies are often necessary as many Small and Medium Enterprises (SMEs) struggle to transition into more sustainable alternatives. For one, doing so often means very large upfront investments that are out of reach for these companies. Hence, the government has decided to step in by offering grants and incentives to SMEs to encourage industry-wide and even economy-wide shifts into more sustainable practices. These policies span a wide range of industries, covering many aspects – such as waste reduction and energy efficiency, among others.
Below are several notable government programs aimed at incentivising this shift for SMEs.
1.The 3R Fund
In response to the shortening lifespan of Pulau Semakau, Singapore’s only offshore landfill, from 2045 to 2035 and to ensure it remains operational for a longer period of time, the government has articulated a goal of reducing the amount of waste sent to Pulau Semakau by 30 percent by 2030.
One such policy that aims to do so is the 3R Fund, a co-funding scheme that finances waste minimisation and recycling projects to encourage organisations to reduce the amount of waste sent to NEA’s incineration plants and disposal facilities. This is largely in line with the government’s bid to enhance the projected lifetime of Pulau Semakau.
Source: National Environment Agency
The 3R Fund aims to encourage SMEs to target waste streams with low recycling rates, such as food, plastic and glass. It will co-fund up to 80 percent of qualifying costs subject to a cap of $1 million per project per applicant. Subsequent or multiple onsite waste management systems will also be subsidised, but with a lower co-funding amount.
Any organisation in Singapore, such as companies, non-profit organisations, non-government organisations, town councils, and schools can apply for funding from the 3R Fund.
2. Energy Efficiency Fund (E2F)
The Energy Efficiency Fund (E2F) aims to improve energy efficiency of businesses with industrial facilities. It comprises several components:
- resource efficient design of new facilities or major expansions,
- energy assessment of existing facilities,
- adoption of energy efficient technologies,
- adoption of water-cooled chillers using low Global Warming Potential (GWP) refrigerants, and
- implementation of an Energy Management Information System (EMIS).
These different components are all targeted at different sectors of the economy and cater to companies of varying sizes, thus comprehensively improving the energy efficient practices of Singaporean corporations.
Source: National Environment Agency, E2F
The first grant subsidises the collaborative design workshop costs between the company and external consultants. In doing so, it motivates investors of new industrial facilities or major expansions to incorporate more energy efficient improvements in the early development of these projects. It subsidises up to 50% of the qualifying costs up to $600,000 – including consultancy fees and other logistical fees.
The second grant encourages companies in the industry sector to carry out energy assessments for their existing facilities and identify potential energy efficiency improvements. It subsidises up to 50% of the costs (up to $200,000) of doing so which includes consultancy fees and the use of instrumentation or evaluation tools.
The third grant incentivises investments into energy-efficient equipment or technology. It subsidises up to 50% of the costs of doing so, which includes manpower costs, equipment or technological costs, and the cost of professional services.
The fourth grant subsidises the switch to water-cooled chillers and refrigerants of low global warming potential (GWP), in lieu of the announced ban of water-cooled chillers using high-GWP hydrofluorocarbons (HFCs).
The fifth grant subsidises the cost of companies adopting an EMIS, which would allow them to effectively manage energy use in a structured manner to improve energy efficiency. It covers up to 50% of the cost of doing so, capped at $250,000 per energy-intensive facility and $125,000 for other facilities, such as in equipment and materials cost, professional services, and software and IT services.
Overall, these schemes extensively cover the costs of SMEs in various industries who are looking to upgrade their operations to be more energy-efficient.
3. Green and Sustainability-Linked Loans Grant Scheme (GSLS)
The GSLS, announced in November 2020 and launched in January 2021 by the Monetary Authority of Singapore (MAS), is a loan scheme aimed at supporting corporations of all sizes to obtain green and sustainable financing. It defrays the costs of engaging independent service providers that validate the green and sustainable credentials of loans.
Green loans are loans which can only be used for more environmentally-friendly equipment or projects. Borrowers of these loans commit to specific sustainability performance targets, such as reducing waste or emissions. Upon successfully achieving those, they will be awarded a reduction in their loan interest rates.
Source: Monetary Authority of Singapore
Shifting into sustainable business practices is not only an urgent imperative, but also a sensible business strategy for companies in the long term. As more consumers are slowly shifting their consumption habits to be more environmentally-conscious, so must companies shift their operational practices to keep up and maintain customer trust and loyalty. Being an environmentally-conscious business would be a boon for brand image – and many businesses would do well to begin planning for such a transition.