How Singapore’s businesses can walk their talk on climate change

Among the world’s wealthy nations, Singapore is one of the most exposed to climate risk. As such, reducing CO2 emissions is an urgent task for all parts of the country’s economy. With the world on track for a catastrophic 2.9 degrees of warming by century’s end, prosperity alone will not protect Singapore from heightened climate volatility and the resulting insecurity of essential goods and services, most of which the city-state imports.

While the Singaporean government is establishing itself as a global leader in climate action, the uncomfortable reality is that much more needs to be done – and much faster. That’s especially true for the private sector, where emissions reduction pledges abound but action and ambition do not.

Lightning strikes over the Singapore skyline / Photo credit: Mila Di Bella on Unsplash

Carbon markets offer a pathway

The rapidly growing market for carbon provides a pathway to accelerate decarbonization for businesses that want to walk the walk and talk the talk.

Carbon markets operate on a simple but elegant premise: what is difficult or expensive to achieve in one place may be less so in another. By financing “beyond value chain” emission reduction projects, companies can buy time while they decarbonize within their own value chains.

These high-integrity offset projects, which include the protection and restoration of nature, the capture of landfill methane, and the installation of clean cookstoves, are available and scalable now.

But how should business leaders define high integrity? While views vary, there are a number of factors companies should consider when weighing the robustness of their net zero claims:

• Complementarity: Emissions offsetting, while essential, is a complement to and not a substitute for direct emissions reductions. Any credible net zero plan must include both offsetting and direct reductions.
• Standard: Offsets should be purchased from projects verified by a globally recognized standard, such as Verra, Gold Standard, or Cercarbono.
• Vintage: Carbon credits are issued “vintages” based on the year in which the abatement activity took place. Companies should choose project activities that have contributed to the goals of the Paris Agreement, which means offsets created from January 1, 2016 or later.
• Geography: While almost all developing countries still need climate finance for a just transition, the United Nations’ 46 Least Developed Countries need this support the most and should be prioritized whenever possible.
• Project type: Companies should align their offsetting activities with their impact as much as possible. If the company produces methane emissions, then it should seek to offset using methane credits, such as those generated by improved landfill management, and livestock biogas.

Accessing these credits is easier than ever. In Singapore, the Climate Impact X marketplace offers a curated basket of nature-based offsets of high integrity, with vintages beginning in 2016. The dominant market player, Xpansiv’s CBL Markets, offers hundreds of projects of all project types across its platform, and brokers proliferate in Singapore, Europe, Australia and the US.

Challenge and opportunity recognized

The progress that Singapore has made was apparent at the recent COP27 climate conference underway in Sharm El-Sheikh, Egypt. Already, the city-state has bilateral climate finance agreements with countries as diverse as Australia, Colombia, Vietnam, and Senegal, and has begun discussions with at least 20 more. The national carbon tax – passed by Singapore’s parliament in November and slated to increase to S$50 to S$80 per tonne by 2030 – is pioneering.

Temasek, the state-owned investor, has committed an initial S$5 billion to establish GenZero, an investment platform that aims to accelerate decarbonization with a focus on technology, nature-based solutions and carbon market enablers. Two carbon trading exchanges have commenced operation locally, the GenZero-backed Climate Impact X and the blockchain-based AirCarbon.

There’s no time to waste: Climate finance will become a trillion-dollar opportunity, making early-mover advantage a critical factor. If Singapore is to retain its standing as the leading investment and trade hub of Asia Pacific, then its corporate leaders would do well to join its political leaders at the head of the global pack.