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Small to medium-sized enterprises (SMEs) have to be a part of the dialog concerning sustainability. In spite of everything, they’re the “drivers of inexperienced and inclusive development”, in line with a 2018 white paper by the Organisation for Financial Co-operation and Improvement.
Shouldering equal accountability in direction of the financial, social and pure environments as massive companies, SMEs are a power to be reckoned with, particularly since they make up 99 per cent of Singapore’s enterprises.
In keeping with the Division of Statistics, there have been 273,100 enterprises in 2019.
Conducting companies extra sustainably
When SMEs uphold robust sustainable practices and requirements, these can decrease price of capital, leading to higher operational performances.
In flip, investor calls for and buyer expectations are met, boosting the economic system in the long term whereas contributing to international efforts in direction of sustainable improvement — a purpose Finance Minister Heng Swee Keat talked about throughout the 2017 Singapore Apex Company Sustainability Awards.
Sustainable practices might embrace insurance policies on emissions, waste administration and water effectivity, constructing moral provide chains, and growing environmentally pleasant services. And SMEs might select to hunt sustainable finance to fund sustainability initiatives in these areas.
For example, whether or not an SME is working a inexperienced enterprise or remodelling the present enterprise mannequin to be extra sustainable, it will possibly leverage OCBC’s SME Sustainable Financing Framework to attain its purpose.
This framework is validated by Vigeo Eiris (a Moody’s affiliate) as sturdy and aligned to the 4 core elements of the Inexperienced Mortgage Ideas. Such Second Occasion Opinion validates the standard of inexperienced financing and ensures that the options meet market expectations and {industry} finest practices.
This may also complement the Financial Authority of Singapore’s (MAS) new Inexperienced and Sustainability-Linked Mortgage Grant Scheme launched final month.
Inexperienced loans will help finance new or current inexperienced initiatives, whereas sustainability-linked loans might present value incentives for debtors to attain sustainability targets.
SMEs’ position in enabling sustainable improvement of Singapore and the area
SMEs can present know-how, services for sustainable initiatives in areas equivalent to renewable vitality, inexperienced buildings, sustainable water and waste administration, for Singapore and the area.
So far, SMEs right here have labored on different know-how, services, with the cleantech sector having some breakthroughs, as beforehand reported by The Straits Occasions. For example, a hybrid photo voltaic photovoltaic system primarily based on top-cooling know-how, and using skinny, versatile natural photo voltaic movies on constructing facades underneath tropical local weather had been pioneered.
Not solely will such endeavours cater to initiatives and companies in Singapore and the area searching for to construct sustainable processes, they’ll additionally unlock new financial alternatives and jobs, which might be useful in post-pandemic restoration plans.
In her keynote tackle on the Singapore Dialogue on Sustainable World Sources final month, Minister for Sustainability and the Surroundings Grace Fu stated the sustainability sector is predicted to create 55,000 jobs within the subsequent decade, with 4,000 created in 2021. These embrace expert roles within the high-tech agriculture and aquaculture {industry}, waste administration, and public hygiene.
Additionally, going inexperienced might carry as much as US$1 trillion (S$1.3 trillion) in annual financial advantages to South-east Asian economies by 2030, international administration consulting agency Bain and Firm reported in November 2020.
Specifically, better investments in renewable vitality, lowered consumption and higher waste administration, much less damaging crop rising practices and improved city planning are among the many areas that might carry new development alternatives for economies, and these are additionally the place SMEs can contribute.
How OCBC’s SME Sustainable Financing Framework helps drive success
SMEs rising in these areas can look in direction of OCBC’s SME Sustainable Financing Framework, which incorporates its sustainable finance providing for SMEs, no matter their inexperienced certification standing. The framework is designed to assist SMEs seize rising alternatives in renewable vitality and inexperienced buildings sectors, in addition to different sectors that contribute to sustainable improvement.
OCBC’s framework, which qualifies for the MAS Inexperienced and Sustainability-Linked Mortgage Grant Scheme, will allow SMEs to entry sustainable financing of as much as $20 million, overlaying inexperienced initiatives associated to classes equivalent to vitality effectivity, inexperienced buildings, and air pollution management, amongst others.
With a powerful foothold within the SME area, OCBC goals to advertise and affect SMEs to undertake sustainable practices and allow change in industries by means of the providers that they carry in alternate vitality, water administration and extra.
OCBC additionally aspires to broaden the scope of initiatives and markets that the Framework can help, particularly to Indonesia and Malaysia the place micro SMEs occupy a big a part of the economic system.
OCBC financial institution head of world industrial banking Linus Goh beforehand informed The Straits Occasions: “This framework is designed to make it easy for SMEs to entry inexperienced financing for his or her companies and initiatives, with out the complexity and price of creating a personalized framework for every firm.
Financing underneath the framework consists of options equivalent to inexperienced loans, inexperienced letters of credit score and inexperienced banker’s ensures, to help sustainability initiatives, in eight classes together with clear transportation, inexperienced buildings, and vitality effectivity, amongst others.
Why extra corporations have to make the inexperienced shift
Whereas MAS and monetary establishments equivalent to OCBC are encouraging companies throughout totally different industries to transition to extra sustainable practices by means of inexperienced and sustainability-linked loans, SMEs nonetheless face challenges.
In addition to considerations about price and the dearth of sources, these corporations additionally view sustainability and profitability as conflicting enterprise objectives, making them resistant to vary.
However authorities and industry-led efforts are reinforcing the message with SME-focused initiatives. For example, Enterprise Singapore launched a Sustainability Open Innovation Problem in 2019, with {industry} leaders and authorities businesses to create progressive options with SMEs in addition to startups.
As OCBC’s Mr Goh beforehand stated, the intention is to assist SMEs speed up their sustainability plans, by means of its framework as an example, equivalent to these “enabling the change of industries and companies as service suppliers in sustainability, and people throughout all industries that are starting to judge and undertake sustainability practices of their companies, directing investments into inexperienced companies, know-how and infrastructure”.
To start out your sustainability financing journey, click on here.
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