Sustainability key to business growth for Singapore SMEs: Survey
Three in five (60 per cent) small- and medium-sized enterprises (SMEs) in Singapore believe in the importance of incorporating sustainable practices in their businesses, according to the UOB SME Outlook Study 2022. They said having sustainability core to their business will help to improve the company’s reputation (54 per cent), make it easier for them to work with multinational corporations (MNCs) who care about their sustainability goals (45 per cent) and enable them to help build an environmentally- and socially-responsible Singapore (44 per cent).
On their sustainability journey, SMEs are integrating environmental, social and governance (ESG) considerations into various aspects of their business. The key ESG-related practices SMEs plan to implement include clear operational policies and processes such as risk management and financial control (45 per cent), more efficient use of resources to minimise waste (43 per cent) and use of energy-efficient equipment and technologies (35 per cent).
In addition, SMEs are responding to the call for a more sustainable future by aligning their initiatives to the Singapore Green Plan 2030. In particular, almost all of the wholesale trade companies (98 per cent) in the study plan to do so by stepping up recycling efforts (60 per cent), training employees in climate risk or environmental protection (60 per cent) and switching to energy-efficient sources to reduce carbon footprint (56 per cent).
Companies in construction and infrastructure (98 per cent), as well as real estate and hospitality (98 per cent), are also actively aligning their practices to the Singapore Green Plan 2030.
More support needed on the sustainability journey
When implementing sustainable practices, small businesses face challenges such as insufficient knowledge to identify and to execute relevant initiatives for the organisation (40 per cent), as well as inadequate non-financial support such as sustainability training (33 per cent).
They are also concerned about the potential increase in cost for end customers (31 per cent) and inadequate financial support from the government and banks for such initiatives (31 per cent). In comparison, medium-sized businesses3 said inadequate non-financial support (47 per cent), insufficient knowledge (46 per cent) and the possible impact to short-term revenue (44 per cent) are their key barriers to adopting sustainable practices.
Lawrence Loh, Head of Group Business Banking, UOB, said, “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.”
In advancing their sustainability journey, SMEs are also on the lookout for collaboration opportunities with industry bodies, government-linked companies or large businesses (43 per cent). They also want connections to industry peers and ecosystem partners (39 per cent), as well as training or solution providers (38 per cent) to deepen their capabilities.