Firms must prepare for climate change, those who wait will scramble to adjust: Ravi Menon

Singapore’s ambassador for climate action Ravi Menon warned about risks that climate change will pose to businesses. ST PHOTO: DESMOND WEE

Chin Hui Shan

UPDATED Mar 17, 2025, 07:52 PM

Thanks for sharing!

SINGAPORE - As the climate crisis intensifies, governments and markets will be forced to act. Businesses must prepare for this transition despite current geopolitics, Singapore’s ambassador for climate action Ravi Menon warned on March 17.

Speaking to business leaders at an event organised by Singapore Business Federation, Mr Menon warned about risks that climate change will pose to businesses.

This includes extreme weather affecting supply chains and carbon pricing schemes taking off around the world that will increase costs for firms that do not cut emissions.

Companies that fail to account for their climate-related vulnerabilities could also face higher borrowing or financing costs, Mr Menon said, citing how the real estate sector in the Asia Pacific is already experiencing higher insurance premiums for properties exposed to extreme weather and flooding.

“Companies that act early will be able to shape their strategies on their own terms, secure market leadership and attract capital that increasingly prioritises sustainability,” said the former chief of the country’s central bank, the Monetary Authority of Singapore.

“Those who wait will scramble to adjust amid abrupt regulatory shifts, supply chain disruptions and dwindling investor confidence.”

He acknowledged that there are political headwinds confronting climate action today , with the US set to expand oil and gas exploration, for example . But Mr Menon urged businesses to implement their own transition plans despite the inertia.

“The question is not whether the transition will happen, but how prepared we are for it. The choice is not whether to start transition planning but whether you do it on your own terms or are forced to react later,” Mr Menon said.

Transition planning involves businesses coming up with a road map to reducing their emissions, adapting to climate change impacts and aligning their activities with a net-zero economy.

A good transition plan should answer where the business now stands, where it needs to go and how it will reach there, said Mr Menon.

“Politics, economics and nature will diverge from time to time, but they will ultimately converge. Eventually, nature will call the shots, regardless of electoral or business cycles,” he said, pointing to escalating climate impacts from increasingly frequent extreme weather events.

“Political inertia will end when extreme weather and resource shortages disrupt lives and livelihoods on a scale that is too big to ignore,” he added.

Mr Menon said Singapore is staying the course on climate action, having committed to reduce emissions to between 45 million and 50 million tonnes by 2035, down from the 60 million tonnes it expects to emit in 2030, and steadily implementing climate-friendly policies.

The 2035 target puts the country on track to achieving net-zero emissions by 2050.

Singapore’s carbon tax rate was increased from $5 per tonne of emissions to $25 per tonne in 2024. It will be raised to $45 per tonne in 2026 and 2027, with plans for the rate to hit between $50 and $80 by 2030.

More on this Topic

Meanwhile, the European Union’s carbon price is €80 (S$116) per tonne of emissions, and is projected to rise to between €135 and €160 per tonne by 2030, he said.

“We stay the course not because it is easy but because it is necessary for Singapore, so that we can be resilient in a climate-impaired world and competitive in a carbon-constrained world,” Mr Menon said.

As part of this transition, firms in highly emissive sectors – such as manufacturing, energy and heavy transport – may need to restructure their core business activities, diversify product lines and invest in new infrastructure and technologies, he said.

For example, the collaboration between Swedish commercial vehicle manufacturer Volvo and local bus maker SC Auto Industries to make the first electric bus in Singapore had put SC Auto in a good position to seize market opportunities as the region shifts towards sustainable transportation, he said. Volvo provided the core technology, while SC Auto manufactured the bus.

But it is not just emissions-intensive companies that need to plan for the green transition.

Firms in less emissive sectors can consider capitalising new growth opportunities driven by increasing demand for decarbonisation across sectors, Mr Menon said.

For example, information and communication technology companies can develop tools like carbon tracking software and smart energy management systems to optimise energy use in emissions-intensive sectors.

Tracking emissions across operations is vital for firms to identify ways to reduce their carbon footprint, he said.

While he noted that transition planning is difficult and will incur costs, such as for businesses who must invest in new technologies, processes and skills, it must be a priority.

Help will be given to firms in Singapore who wish to do so, he added, citing initiatives by Enterprise Singapore to support small and medium enterprises (SMEs) in their efforts to measure emissions, understand climate risks and identify opportunities to reduce them.

Business associations and large corporations are also stepping up to help SMEs.

For example, the Singapore Business Federation and consulting firm Bain & Company recently launched an initiative to provide SMEs with resources, such as funding and access to experts, to help them cut their emissions.

The programme’s pilot run with 21 food manufacturers saw 80 per cent of the participants establish their emissions baseline for the first time and set targets to reduce their emissions by 50 per cent by 2030.

“We will not be able to eliminate all climate risks but that is not a reason for inaction. The aim of transition planning is to understand our exposures and act where we can,” he said.

More on this Topic

During the event, business leaders gave a glimpse of how they were planning for the green transition in a separate dialogue with Minister for Sustainability and the Environment Grace Fu.

Recognising that the power generation sector is a big carbon emitter, Mr John Ng, chief executive of local power generation company YTL PowerSeraya said the industry has been upgrading their plants to increase their efficiency and reduce their carbon footprint.

The power sector in Singapore generates about 40 per cent of the country’s total carbon emissions.

He said the industry is investing in new technologies that are not available in Singapore, such as a hydrogen-ready plant – which can help to reduce carbon emissions when hydrogen, considered a cleaner fuel than fossil fuels, is available.

Since 2024, all new and repowered natural gas power plants must be at least 30 per cent hydrogen-compatible.

Mr Ng added that the industry is also exploring how to capture carbon and store it , although such carbon capture technology is still nascent .

At the dialogue, Ms Fu urged Singapore businesses to embark on the journey of decarbonisation as early as possible, noting that there is no single silver bullet.

Citing how there are now more wildfires and droughts and people are now feeling the effects of climate change, she said: “Climate change is happening already, it’s not something that we can ignore.”

“All of us, businesses, people, we’re going to pay a price for it. The question is do we pay a price now to change how we are doing business, or do we want to pay a much higher price later on when we have to suffer the great consequences of this doing of human beings?”

Chin Hui Shan is a journalist covering the environment beat at The Straits Times.

More on this Topic

Find out more about climate change and how it could affect you on the  .

Thanks for sharing!