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SMALL and medium-sized enterprises (SMEs) in Singapore will be able to tap into a programme specially catered to support those looking to decarbonise their businesses.

Launched by the Singapore Business Federation (SBF) and management consulting company Bain on Thursday (Oct 3), the programme aims to tackle the main barriers SMEs face in their decarbonisation efforts.

The lack of in-house capability, limited awareness of existing solutions, as well as a lack of financing support were cited by SMEs as the main challenges in a survey jointly conducted by SBF and Bain.

The training programme aims to support SMEs by linking them up with decarbonisation experts specific to their sector, as well as with financial institutions and other funding providers with green financing solutions.

The programme also plans to use a tool powered by artificial intelligence that could shorten the time required for materiality assessments and the development of decarbonisation pathways, strategies and targets that are sector-specific.

This tool is supposedly 75 per cent faster than the traditional process, which would typically require SMEs to hire a dedicated officer focused on environmental, social and governance responsibilities to do the same work, noted Hu Ching, head of SBF’s net-zero transition programme office during a media conference.

After the completion of the eight-week programme, there will be ongoing guidance for SMEs to track their progress and refine their plans if needed.

There was a pilot run with 21 food manufacturing companies between July and August this year, resulting in 80 per cent of them establishing their emissions baseline for the first time. The decarbonisation levers identified for companies in the pilot could potentially reduce their Scope 1 and 2 emissions by between 50 and 70 per cent, increase their margins by between 4 and 5 per cent, and lower energy costs per unit by between 40 and 50 per cent.

Scope 1 and 2 emissions refer to emissions derived from a company’s operations and its purchase of electricity.

SBF and Bain intend to expand the programme to more SMEs in the food manufacturing industry, as well as those in two or three other sectors next year.

While SBF’s chief executive Kok Ping Soon did not want to specify the sectors, he said during the same media conference that they are looking to support between 800 and 1,000 companies over the next five years. The sectors will be decided based on whether they have substantive operations in Singapore, and the level of carbon emissions they are generating.

“So the selection would be based on the impact, the maturity of the sector; and also – because we do want to work through the trade association and chambers – we want to find trade associations and chambers that are ready to work with us in order to mobilise their businesses to come on board this programme,” said Kok.

When asked why the pilot decided to start with food manufacturers, instead of other sectors with higher carbon emissions, Hu said that SBF found out – through its engagement with Enterprise Singapore and the trade associations and chambers – that the sector was found to be receptive and interested in learning about decarbonisation.

Value creation

In addition to the challenges SMEs faced on decarbonisation, the survey found that about one in two of these companies that have embarked on their decarbonisation initiatives were able to achieve benefits from value creation.

Among SMEs that were further along their decarbonisation journey, a higher proportion (58 per cent) were able to reap these benefits. Even then, about 37 per cent of SMEs that have taken the initial steps have been able to see the uplift.

Companies were able to derive these benefits mainly from having more sustainability-focused customers, generating cost savings by being more operationally efficient, as well as avoiding higher compliance costs set to come through regulations.

The survey, also released on Thursday, polled 476 SMEs from more than 20 sectors, including wholesale trade, professional and business services, as well as industrial and manufacturing.

More than 34 per cent of these SMEs were assessed to be at the “mid” or “advanced” stage in their decarbonisation journey. These SMEs are deemed to have taken moderate or strong actions, such as starting emissions reporting or committing to science-based emissions reduction targets, or even developing a long-term sustainability strategy.

More than 32 per cent of SMEs have taken basic or initial steps, such as undergoing sustainability training or introducing the concept of decarbonisation within the company. The rest have not made such efforts.

The survey found that the size of the company and the sector they are in makes a difference in their ability to develop more sustainable business models.

While one-third of SMEs were found to have made significant progress, the proportion is much higher among large companies at 80 per cent. Consumer-facing SMEs showed about two times less decarbonisation progress compared to business-to-business sectors, due to a perception of lower customer pressure.

SMEs that have started their decarbonisation journey were found to be more focused on short-term priorities, such as identifying reduction initiatives and training, compared with setting long-term emission reduction targets or designing a sustainability strategy.

Regulatory compliance remains the top motivator for SMEs to decarbonise at 47 per cent. Client sustainability requirements came in next at 35 per cent, while cost savings were cited by 32 per cent of respondents.

The survey also noted that there was low awareness, and therefore low uptake of sustainability initiatives provided by the government.

While 67 per cent of SMEs needed public funding support and green financing, 87 per cent of the energy efficiency fund – which has a budget of S$27 million – is still available.