Fang Eu-Lin: Making the Case for Sustainability
The pandemic is an opportune time for businesses to adopt a sustainable mindset.
As a Sustainable and Climate Change Leader at professional services firm PricewaterhouseCoopers (PwC), Fang Eu-Lin has no illusions about the magnitude of the global crisis. To put it into context, the world needs a 10 to 15 per cent reduction in carbon emissions to reduce global warming to 1.5 degrees Celsius above pre-industrial levels; the globally identified risk line for climate change.
While this may appear to be a reasonable and achievable global target, the International Energy Agency estimates that, despite the massive impact of the COVID-19 pandemic on energy consumption, global emissions will fall by only 8 per cent in 2020.
However, Ms Fang remains optimistic that, in the long-run, governments and businesses will respond to the urgency of the situation and take the necessary steps to mitigate climate-related risks.
Indeed, the pandemic has provided a timely opportunity for businesses to review their mindsets towards sustainability and reconsider their work processes. “Now is an opportune time to look at your business model and build sustainability into the equation,” she says.
BiZQ speaks to Ms Fang on what business case for prioritising sustainability and how small and medium-sized enterprises (SMEs) can embark on this journey.
How aware is the local business community towards sustainability issues?
The awareness is slowly gaining ground, especially if you are talking about the larger businesses and those that are listed on the Stock Exchange. A few years ago, the Singapore Exchange (SGX) released sustainability reporting regulations that raised awareness of the issues, and what it meant for companies from an ESG (Environmental, Social, Governance) point of view.
Because of this foundation that SGX has set up, larger companies have taken pioneering and proactive steps to build traction in this area.
Which areas within the sustainability space do you think companies need to pay more attention to?
By and large, the governance part of ESG is already well established and documented in Singapore, including the social aspects. Companies have generally done well here, or at least met the minimum requirements for sustainability.
Concurrently, there is also a big push to decarbonise the environment. In fact, the number of companies and countries globally pledging to net zero emissions has doubled from last year, despite the COVID-19 pandemic, which resulted in a boost in this area. China also recently pledged net zero by 2060 as well.
Singapore has also made our own revisions in terms of our national contributions. As a result, more regulations, such as the carbon tax, will be in place as we look to halve emissions by 2050 as part of our country’s long-term low-emission development strategy.
Globally, companies and countries have unearthed significant amounts of carbon into the atmosphere over a very short period of time. Carbon tax has become a determining factor in driving behaviourial changes in such entities as they recognise the growing importance of sustainability.
How do you convince businesses, especially SMEs, to take sustainability seriously?
An example would be when you are managing a real estate company and do not monitor the efficiency levels of the energy consumption, emissions or the types of materials used by your company, which may be susceptible to incur additional and unnecessary costs. This is because people are taking the reduction of carbon emissions very seriously, and one way to monitor it is by taxing these externalities.
Companies must therefore plan well and in advance to mitigate this imminent risk as they would with any type of risk. If companies do not recognise these physical and transitional risks and take appropriate steps to adapt to them, this will become an issue for their businesses.
Furthermore, many SMEs do not only operate in Singapore, and their overseas operations may be adversely affected by the physical and transitional risks of risks faced in other countries. SMEs will therefore need to meticulously strategise and be forward looking, to ensure that their assets and resources are not damaged and to safeguard their financial position.
On the social front, how do companies benefit from being more socially responsible?
I would say that you build trust when you consider not only the well-being of your shareholders, but also other stakeholders, such as the community at large.
So post-COVID you can put your hand to heart and say that apart from trying to help myself, I was supporting other stakeholders such as employees and the community. This will build trust and strengthen relationships with not only your shareholders, but also with your stakeholders, and will definitely augur well for the company in the longer term.
How do you think the pandemic is changing attitudes towards sustainability?
I do think that people will start by looking into their supply chains first, to find out where they can de-risk. On top of that, there will also be more focus on people who are going through a difficult time. In order to resolve this issue, employers can better support their employees by offering them more flexibility in their working hours and, where necessary, by giving them a choice to work from home or from the office.
With regards to the environment, companies can consider using this period to reflect and understand that our resources are finite, and nothing is free of charge. That way, we can take the necessary steps to do better in this area.
How do you propose businesses start on their sustainability journey?
There are a lot of public literature to help businesses carry out their own research and, at the same time, provide them with an introduction on how to start their journey towards sustainability. Some examples would be the Global Compact Network Singapore, a local chapter of the United Nations Global Compact, and the SGX rules on sustainability. Businesses should leverage these platforms or public domain information to kickstart or strengthen their sustainability journey.