The Singapore Business Federation (SBF) and Bain & Company will provide Singapore’s small- and medium-sized enterprises (SMEs) with advisory services on decarbonisation, access to ecosystem partners like banks and a new sustainability reporting tool powered by artificial intelligence (AI).
Unveiled on Oct 3, the SME Sectoral Net Zero Transition Programme will first target local food manufacturers. The eight-week programme is designed to tackle the “unique challenges” faced by SMEs by providing a “cost-effective, scalable and action-oriented decarbonisation solution”, say the two parties.
In addition to advisory and matchmaking services, participating SMEs will be offered access to the AI-powered DecarboniSME tool. It provides SMEs with sector-specific materiality assessments to identify relevant emission sources, and reportedly generates “chief sustainability officer-quality” sector-specific decarbonisation strategies, pathways and targets.
DecarboniSME also includes a chatbot, which will help answer common questions about sustainability and decarbonisation.
Participating SMEs will continue to receive support after the programme in areas like supplier evaluations and cost estimates. According to organisers, check-ins with SMEs are scheduled at two, four and six months after the final workshop.
The launch follows a pilot run involving 21 food manufacturers that was held from July to August. Through the programme, 80% of the participating SMEs established their emissions baseline for the first time.
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Participating SMEs also identified “company-specific levers” to decarbonise, such as improving heating and machinery processes. These could potentially reduce Scope 1 and 2 emissions by between 50% and 70%, increase ebitda margins by 4% to 5% and lower energy cost per unit by 40% to 50%, say SBF and Bain & Company.
Scope 1 emissions are typically generated by an organisation’s operations, while Scope 2 emissions are largely calculated from a firm’s purchased electricity, heat, steam or cooling.
The pilot was supported by Enterprise Singapore (EnterpriseSG) and the Singapore Food Manufacturers’ Association.
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Come next year, the programme could be expanded to “two to three” other sectors, says SBF CEO Kok Ping Soon.
In a media briefing, Kok says the organisers are “working closely with EnterpriseSG” to identify sectors “with substantive operations in Singapore” that require help with decarbonisation.
The pilot programme ran “over eight weeks and three sprints”, says Kok. He adds that the organisers are exploring a larger cohort size of 25 participants per run, up from 20 currently, with a goal to reach 150 to 200 food manufacturing firms in Singapore.
As the programme expands into other sectors, Kok says the organisers are aiming to support between 800 and 1,000 companies “over the next four to five years”.
From left: Gerry Mattios, co-director of the Global Sustainability Innovation Centre at Bain & Company; SBF CEO Kok Ping Soon; and Hu Ching, head of the Net Zero Transition Programme office at SBF
SME study
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The programme is underpinned by a joint study by Bain & Company and SBF, titled “Overcoming Barriers to Singapore SME Decarbonisation”. The study surveyed nearly 500 SMEs across more than 20 sectors in Singapore between May and August, and respondents cited obstacles such as lack of sustainability talent, financial support and green financing.
According to the study, smaller SMEs — or those with annual revenues below $10 million — are finding it more difficult to decarbonise compared to their larger counterparts, which bring in over $50 million in annual revenue.
Additionally, consumer-facing SMEs are progressing at half the rate of business-to-business (B2B) SMEs, primarily due to lower perceived customer demand for sustainable practices, says Bain & Company.
Bain & Company’s consultants say there remain “major gaps” between the challenges faced by SMEs and the support available in the market. “For instance, SMEs struggle to hire sustainability roles, despite a 14% y-o-y increase in green skills in Singapore.”
In addition, Bain & Company claims 87% of the nearly $27 million set aside for Singapore’s Energy Efficiency Fund (E2F) remains untapped — seven years after the launch of the scheme.
Launched in 2017, E2F provides co-funding to SMEs for energy efficiency equipment. Managed by the National Environmental Agency and EnterpriseSG, E2F is subsumed under the expanded Energy Efficiency Grant (EEG).
The EEG provides two tiers of support: a “base tier” to provide support for pre-approved energy-efficient equipment up to $30,000, and an “advanced tier” to support companies for “larger investments that drive greater energy efficiency”, according to EnterpriseSG.
Since April 1, companies in the manufacturing, food services and retail sectors have been able to apply for the EEG. EEG will be further expanded to cover maritime, construction, data centres and their users by end-2024, with more information to be made available in the coming months.
Photo: SBF
