Keynote Address by Ms Grace Fu, Minister for Sustainability and the Environment, at the Unlocking Capital for Sustainability 2022, on 21 September 2022
Ms Jessica Cheam, Founder and Managing Director of Eco-Business,
Ladies and Gentlemen,
1 Good morning. Thank you for inviting me to join you today. This week is Climate Action Week, which is our Ministry’s annual initiative to rally our businesses, people and communities to take collective climate action. It is heartening to see so many partners stepping up to organise programmes and roll out initiatives to bring sustainability issues to the forefront. I thank Eco-Business for organising this event in support of Climate Action Week, to discuss the role of sustainable finance.
2 We are living in an increasingly uncertain and disrupted world, as evidenced by recent global health issues and geopolitical events. The COVID-19 pandemic brought countries to a standstill. As our economies recover and reopen, pent up consumer demand has driven prices upwards, leading to inflation. The Russia-Ukraine conflict has disrupted global supplies of essential items such as grain, oil, and gas, resulting in higher energy and food prices. Some countries have reacted by imposing restrictions on food items. Indonesia’s palm oil export ban, India’s wheat and sugar export bans, and Malaysia’s chicken export ban are some recent examples.
3 Amidst these challenges, climate change remains an existential threat to all of mankind. The Intergovernmental Panel on Climate Change warned that climate change has resulted in more extreme weather events, such as the recent unprecedented heat waves and dry spells in Europe the US and China, and record-breaking rains and destructive floods in parts of Asia. These incidents have not only disrupted the livelihoods of those directly impacted, but have knock-on effects for many more around the world due to its impact on supply chains.
4 In the recent National Day Rally, Prime Minister Lee Hsien Loong cautioned that we must brace ourselves and be prepared that in the next few decades, the region might not be as peaceful and stable as it has been. Being a low-lying island-state with limited land, manpower and alternative energy options, Singapore is also especially vulnerable to the impact of climate change. Amidst this turbulence and uncertainty, how we steward our resources and investments now will be key in ensuring a green, liveable and climate-resilient Singapore for the future.
Role of finance in driving sustainability
5 Sustainable development is no longer a matter of regulatory compliance or government policies. The financial sector must bring heightened awareness to issues of sustainability, whether through funding of research and development of low carbon solutions, or supporting businesses in their green transition.
6 Green financing to support sustainable projects such as renewable energy or clean technologies is becoming more mainstream. From 2018 to 2021, over S$39.8 billion of green and sustainability-linked loans have been issued in Singapore. In particular, sustainability-linked loans have experienced exponential growth, with volumes quadrupling since 2019. Just recently, PUB, Singapore’s National Water Agency, raised S$800 million through the issuance of its inaugural green bonds. This marks a significant milestone in PUB’s long-term efforts to ensure a resilient and sustainable water supply amidst the challenges of climate change. The issuance of the green bonds will accelerate PUB’s goal of achieving a greener water system.
7 Globally, the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) was established by eight central banks and supervisors, including the Monetary of Authority Singapore (MAS), in 2017. Its membership has since grown significantly to 116 members across the five continents, representing a diverse group of advanced, emerging and developing economies. In the near term, the NGFS is focused on areas such as enhancing supervisory practices on climate risks, assessing the implications of climate change for monetary policy, designing actionable climate scenarios, and providing guidance for central banks on their own net-zero transitions.
8 Last year, the Glasgow Financial Alliance for Net Zero (GFANZ) was formed. GFANZ comprises more than 450 financial institutions from the global financial sector which have made science-based commitments to reach net zero. It provides a practitioner-led forum for financial institutions to accelerate the mobilisation of green finance and drive forward the transition to a net zero global economy. DBS Bank, a member of the Net-Zero Banking Alliance – the banking segment of GFANZ – recently published a set of decarbonisation targets for their financed emissions in 7 sectors – Power, Oil and Gas, Automotive, Aviation, Shipping, Steel and Real Estate. According to the Bank, these targets were developed based on internationally recognised and industry-accepted glidepaths such as The International Energy Agency (IEA)’s Net Zero Emissions by 2050 Scenario. And they will guide the Bank in its financing decision away from high-emitting activities towards low-carbon alternatives.
Public Sector Remains Bedrock of Climate Action
9 In public finance, the recently passed US$369b Inflation Reduction Act of the US will spur the adoption of clean energy and finance climate action that is expected to bring the US closer to its declared 2030 target. Europe is also setting ambitious targets to boost renewables development. A 300 billion Euro package under the European Commission’s REPowerEU plan will drive investments into renewables and necessary infrastructure. More about Singapore’s plans later.
10 These are positive steps in the right direction, but more needs to be done. The IEA has estimated that emerging and developing economies around the world need over US$1 trillion a year in clean energy investment by 2030 to achieve net-zero emissions by 2050. This has yet to include the cost of adaptation, which the UNEP estimates to be at least US$140 billion a year. This far exceeds the resources of governments around the world. We will need technology and innovation to deliver needle-moving solutions, and private sector finance will hold the key to unlock this potential.
Investing for sustainability
11 The green transition involves a fundamental rethink, from the way we produce electricity, manufacture goods, consume goods and services, to how we dispose our waste. It presents many growth opportunities in emerging areas like agri-tech, clean and renewable energy, low-carbon solutions, turning waste into resources and circular economy.
12 Allow me to share some examples of how investments can drive innovation that support companies’ bottom-line, reduce environmental impact, and meet key societal needs.
13 As many of you are aware, agri-tech is attracting investor interest as new technologies allow us to grow more food with less resources. One such innovation developed by Temasek Life Sciences Laboratory (TLL) is Temasek Rice – a high yield, hardy, and climate-resistant grain variety. Temasek Rice seedlings do not need to be planted in flooded fields, allowing water usage to be reduced by 50 per cent and for up to 90 per cent less seedlings to be used. The rice is also resistant to fungal and bacteria attacks and can survive both droughts and floods. On average, farmers are able to produce nearly four times more rice grains per hectare with Temasek Rice compared to conventional jasmine rice. This helps farmers to get more out of their existing plots of land while using less water and with less chemicals. Temasek Rice also contributes to efforts to combat climate change by reducing the amount of methane generated during rice cultivation. This is significant as rice growing accounts for 12 per cent of global methane emissions and 1.5 per cent of total global greenhouse gas emissions.
14 Another example of agri-tech’s potential is cell-based alternative proteins, which are much more efficient in terms of land use compared to traditional livestock production. Having an alternate method of protein production can also reduce greenhouse gas emissions, potentially delivering up to 20 per cent of the emissions reductions needed to keep below 1.5oC of warming by 2050. With a robust food safety regulatory regime established in Singapore, alternative proteins can deliver the food we need in a resilient and sustainable manner.
15 Investments have also been channelled to pilot and deploy low-carbon technologies and fuels in the maritime sector. The Global Centre for Maritime Decarbonisation was formed last year with funding from the Maritime and Port Authority and six partners, namely BHP, BW, DNV Foundation, Eastern Pacific Shipping, Ocean Network Express, and Sembcorp Marine to support the decarbonisation of the maritime industry. Port companies – PSA and Jurong Port – have also teamed with Sembcorp Industries, Singapore LNG Corporation, City Gas, Chiyoda Corporation and Mitsubishi Corporation to work on the movement, import and storage of hydrogen as an alternative energy source.
16 Earlier this year, I announced that the Government has allocated S$220 million for R&D in resource circularity and water technologies, with S$80 million for the Closing the Resource Loop Funding Initiative to develop sustainable resource recovery solutions for our key waste streams. The push towards a circular economy cannot be achieved by the Government’s efforts alone. We will need the support of the private sector. For instance, the Plastics Recycling Association Singapore has been conducting a feasibility study since last year for a PET bottle-to-bottle recycling plant in Singapore to unlock the recycling opportunities from our plastic waste stream. Such a facility will create economic value and green jobs locally. It will also bring expertise in areas such as precision engineering, manufacturing of recycling equipment and plastic recycling processes.
17 These are some local examples of how investments can catalyse our sustainability journey. I believe the world’s path towards sustainability and net-zero can be accelerated, when investments are stewarded to the right areas.
18 Let me conclude. We have reached an inflection point in climate action. Recent events and disruptions remind us that the window to act is closing rapidly. How can we trade-off economic growth, social inclusivity and environment protection? How can we steward our assets and investments responsibly today to minimise the impact on those who come after us? What are the respective roles of the public, private and people sectors in decarbonising our industry, economy and society? These are conversations that we need to have with all stakeholders under the Forward Singapore exercise. I welcome you in your capacity as business leaders, investors, and individuals, to bring sustainability issues to the forefront, and come forward with concrete commitments or proposals to drive the sustainability agenda. On this note, I invite those of you based in Singapore to visit the Forward Singapore website, and make a Green Nation Pledge – as individuals, and on behalf of your organisations – to make Singapore a green, liveable and climate-resilient nation. By the way, MSE is setting our air-conditioning temperature, including at our events, at 25 degrees Celsius. I hope that you will join us on this 25 degree Celsius movement.
19 How we decide to invest today will have an impact on our future generations. As business leaders, you have the power to move the needle and make a positive impact on the world.
20 Thank you, and I wish all of you a fruitful discussion ahead.