Why sustainability matters for expanding companies
2022-07-14
You’re expanding your business overseas and want to implement sustainable development programs and meet environmental and social performance requirements. The catch? You’re feeling a bit stuck. Let’s help you evaluate some key sustainability considerations to take into account when expanding internationally.
All over the world, countries are facing the impacts and effects of climate change. Natural disasters such as fires, floods and earthquakes are inevitable. Their frequency and intensity continue to increase with the growing impacts of climate change.
As a result, governments are taking action to incentivise companies to reduce their carbon footprint and drive sustainability. Governments continue to introduce incentives and penalties around reducing carbon emissions. They are putting companies under pressure to reduce their impact on climate change.
This includes tax incentives for green and climate-friendly initiatives, funding and support for businesses with sustainability plans. There are also penalties for companies who partake in greenwashing. Tax penalties will be imposed on those who do not manage to adhere to the rules and guidelines omitted.
Learn more about the country-specific Green tax and incentives by signing up for Centuro Connect.
COP2026
At COP2026, the message was clear: If companies align their business strategy with government sustainability targets, they will benefit and receive financial rewards. If companies do not align with these targets, penalties and fines may apply.
Aligning sustainability policies to governments’ incentives can help to :
- Reduce carbon emissions and help to achieve net zero
- Reduce pollution and have a positive environmental impact
- Help to create jobs and work towards sustainable economic growth
- Receive tax concessions and reductions
- Avoid penalties and fines
So, what might some of these incentives and penalties look like for expanding companies? Let’s evaluate what Singapore is doing to improve its legislation around sustainability and what incentives are in place to achieve the UNSDG goals and the goal of net zero.
Singapore Sustainable laws
Singapore has established several laws and policies aimed at achieving the sustainable goals and objectives of the country. The laws were introduced to govern emissions, improve waste disposal and move towards sustainable renewable energy.
Resource Sustainability Act
One of the recently introduced laws is the Resource Sustainability Act 2019. The law contains measures which are aimed at combatting electronic waste, food waste and excess packaging.
E-waste: measures introduced by the law
E-waste refers to waste generated by old and/or unwanted electrical and electronic equipment (EEE). Part 3 of the Resource Sustainability Act creates an extended producer responsibility (EPR) framework for producers of certain EEE, including companies that manufacture or import covered EEE for supply on the local market. There are three main categories of obligations imposed under the EPR:
Registration of producers
All producers of regulated EEE products (consumer or non-consumer items) will be required to register with the National Environment Agency (NEA).
Licensing of certain producers
Part 6 of the Resource Sustainability Act required producers of regulated consumer goods which supply more than the threshold to be licensed in terms of the producer responsibility scheme. This imposes financial and physical obligations for the collection and recycling of e-waste. To reduce the regulatory burden, small producers will be exempted from the licensing obligation.
UNSDG Agenda 2030
Singapore has shared in the UN’s experience on sustainable development with fellow developing countries through technical assistance under the Singapore Cooperation Programme (SCP), which was established in 1992.
More than 131,000 officials from over 170 countries have participated in SCP courses in areas such as water and sanitation (SDG 6), sustainable cities (SDG 11), and climate action (SDG 13). Nevertheless, the unmatched scale and objectives of the 2030 Agenda demand renewed commitment and enhanced partnership from all stakeholders.
Additionally, the COVID-19 pandemic threatens to stall or even reverse progress on the SDGs. Singapore and the partnering countries will need to work together to increase efforts as we embark on this Decade of Action. Singapore undertook the UN’s first Voluntary National Review (VNR) of the SDGs at the 2018 UN High-Level Political Forum.
To track the progress in achieving the SDGs, the Singapore Department of Statistics (DOS) introduced an SDG webpage in September 2019. The Singapore government has cooperated with countries that are members of ASEAN by way of the ASEAN Community Statistical System’s Working Group on SDG indicators to develop indicators to track the SDG progress more effectively regionally.
Singapore’s plans
Singapore is a signatory of the 2030 United Nations Sustainable Development Goals (SDG). The 2030 sustainable development agenda places importance and focus on responsible business practices to lower the effects of climate change. As a small country with limited land and natural resources, Singapore recognizes the challenges of sustainable development. This is why Singapore has engaged in negotiations regarding the 2030 SDG Agenda and continues to assist in efforts to implement and achieve the SDGs worldwide.
Singapore is currently working to achieve its Green Plan 2030, which works toward ambitious and concrete targets to advance Singapore’s national agenda on sustainable development. The five key pillars under the Green Plan encompass targets that will touch almost every dimension of the lives of Singaporean residents.
These five key pillars include:
- City in nature
- Sustainable living
- Energy reset
- Green economy
- Resilient future
Sustainability within the business context is generally defined as the management of environmental, social, and governance issues. It is extremely important in various areas, such as new product development, reputation building, and overall corporate strategy; regulation, specifically environmental regulation, can have a significant effect on companies’ sustainability impact.
For expanding companies, the Green Economy key pillar may be an exciting opportunity for investment and funding. They define the Green Economy pillar as ;
” New Investments to be Among the Best-in-Class
Seek new investments to be among the best-in-class in energy/ carbon efficiency.
Sustainability as a New Engine for Jobs and Growth
2030 targets:
- Jurong Island to be a sustainable energy and chemicals park
- Singapore as a sustainable tourism destination
- Singapore is a leading centre for green finance and services to facilitate Asia’s transition to a low-carbon and sustainable future.
- Singapore as a carbon services hub in Asia
- Singapore is a leading regional centre for developing new sustainability solutions.
- Groom a strong pool of local enterprises to capture sustainability opportunities.”
These incentives intend to cut emissions whilst promoting economic growth, reducing the impacts of global warming, and reducing greenhouse gases in order to become carbon neutral.
Government support for companies investing in sustainability
- In July 2014, the Singapore government pledged S$100 million to accelerate and improve research and development expansion as it funds two new initiatives within the energy sector. The funding will be split up between the Building Energy Efficiency Research Development and Demonstration Hub, which will be administered by the Building and Construction Authority; and the Green Data Research Hub Programme, which will be run by the InfoComm Development Authority of Singapore.
- There is also an added registration fee (ARF), a tax levied upon registration of a vehicle in Singapore. There is a 45% rebate off the ARF for electric cars and taxis from January 2021 to December 2023 at a cap of $20,000, with an ARF floor of $5,000. The ARF floor will be reduced to S$0 for electric cars and taxis from January 2022 to December 2023.
Key considerations for expanding companies
Choosing to expand to a country where the local government offers sustainable incentives does not only lead to cost savings for companies. It demonstrates how the private and public sectors can work together to achieve a greater goal and a more sustainable future.
Read our article on knowing when is the right time to expand your company overseas.
Companies looking to expand into new markets should consider the incentives offered by both developed countries and those that are less developed, as there is extensive opportunity for receiving funding for green incentives and businesses.
Although some countries, such as the United States government, do not have compulsory legislation in place currently, many are working on legislation that will come into effect in the upcoming years and months. It is thus important to stay ahead of the latest legislation, as your product or service offering may be impacted by the restrictions and rules that policymakers decide to implement.
Conclusion
Suppose you are unsure about which country you should expand into and are interested in some of the other sustainability incentives currently available to green companies. Why not register for Centuro Connect?
This technology-driven platform provides detailed country-specific information outlining government legislation around ESG, what incentives are on offer, and what penalties and taxes may apply. Learn more about it HERE.
