ARTICLE | March 1, 2023 | 5 min read
Effective ESG policies are in high demand worldwide and Singapore’s track record could put it at the front of the pack in 2023
By Donald Low, associate partner, Centennial Asia Advisors
Governments and companies worldwide crave effective environmental, social and governance frameworks. Singapore’s track record could make it a model for emulation in 2023.
In less than 6 decades, Singapore has built a nearly impregnable reputation as a hub for business, lifestyle, and urban efficiency, while also weathering a global pandemic and geopolitical challenges with relative stability. Where has that track record of liveability come from, and what opportunities—or challenges—might it offer the city in coming years?
To find out more, we caught up with Donald Low, Associate Partner of Centennial Asia Advisors and an expert on national and regional public policy.
The term is quite nebulous and often ends up trying to capture everything. I would say that a city is liveable if it can optimise between two sets of competing goals. On one hand, you want the city to be diverse, dynamic, and culturally vibrant; on the other, you want the city to be a healthy space with easy access to nature, green spaces, places to unwind. There’s a certain tension there, and liveability is about finding the sweet spot between those two competing goals.
This country has always been extremely sensitive to space and capacity constraints. We bump up against physical and resource limitations almost all the time. And those limitations have led us to place a premium on urban planning – which in Singapore is undertaken on a long-term basis.
I think Singapore has done a pretty good job at balancing between having sufficient green spaces and urban dynamism. It has optimised its relatively tiny natural resources, made good use of its land, and amplified the use of green spaces. At the same time, it’s established itself as a compact, increasingly exciting city for foreign professionals and enterprises.
What distinguishes Singapore from others is the state’s ability to execute on its plans. Other cities often struggle with local opposition, vested interests, and other political roadblocks – but Singapore’s state capacity for implementation is very strong. The government is not just more powerful in effecting change but is also more autonomous. And, as a result, plans become reality in surprisingly short timeframes.
The way I see it, Singapore has been practising best-practice ESG long before the term was coined in 2006.
In terms of the environment, we’ve had to manage rapid industrialisation and economic development while maintaining a sustainable environment. We developed and keep developing policies that ensure clean air and clean water. The idea of Singapore as a “Garden City” has been around since 1967 – not long after independence. We’ve constantly been grappling with the trade-offs between growth and environment.
In terms of social obligations, Singapore has literally built a history of social policy innovations – like a public housing system in which Singaporeans enjoy one of the world’s highest home ownership rates, with relatively affordable prices and adequate living spaces. We don’t often hear Singapore described as such, but it’s been in many ways a very socially progressive state.
And in terms of governance, Singapore was the first country in all Southeast Asia, if not East Asia, to eradicate corruption. Even now, it remains one of the most transparent countries in the world, with a robust legal system that gives overseas companies confidence to operate and headquarter here.
In other words, Singapore’s successes in ESG are not just on paper. It has a track record of policy successes which can become the basis of a new growth industry.
Yes, and I would say this idea isn’t a new one. Even in the early 2000s, there was talk of Singapore exporting what we called its “governance software”, the systems and processes that enable sound policymaking and effective implementation. What we’ve seen more recently, with the whole ESG movement gathering momentum, is that there’s now not just excitement, but also economic demand for this kind of expertise.
I still hear older policymakers and business leaders talking about ESG in woeful terms, as bringing about all these constraints for the state and private enterprises. Of course, ESG will impose more constraints on Singapore: the additional compliance costs from our Extended Producer Responsibility schemes are one example. But I feel it’s much more productive – and accurate – to focus on the opportunities that ESG will create, like attracting substantial green investment to the country. Singapore is already a thought leader and an exporter of ESG and ESG-related services in areas like green finance and corporate governance; and can become a standards-setter for ESG goals and metrics.
And over time, there’s going to be a great deal of demand for that – because global investors and consumers expect that firms operate with certain obligations and responsibilities to society. We should see this as an export opportunity, rather than a threat.
I would say we need to find a new, more sustainable balance between economic efficiency and social equity. When you get to Singapore’s level of prosperity and per capita income, the focus can shift from growth to equity and stability. It doesn’t mean growth is no longer a priority – it is. But we now need to maintain our standards of living, and just as importantly, try to improve on the distribution of equity and opportunity.
We know from looking at global markets that without the tempering force of government interventions, growth often can be unequal and cause disruption for certain groups. The correct policy response isn’t to hold back that growth. Instead, we should channel some of it to the groups that wouldn’t otherwise benefit as much. Recent moves to address wage inequity amongst certain professions are encouraging in that respect. I would go as far as to say that achieving growth is less challenging than achieving social equity, which is exactly why we ought to face it head-on.
At the same time, we need to shift our thinking away from simply increasing inputs to remain competitive as a nation. Take attracting top talent to our shores as one example. Talent inflows play a big part in our competitiveness, but we can sometimes get fixated on bringing in these talents and, in doing so, forget to capitalise on areas that we’re truly good at, like robust governance and efficient processes. Tapping into demand for sunrise industries like ESG – creating our own niches – is one example.
We have all these great policy successes: great public housing, a well-designed health and education system, a great airport and port, long-term urban planning. It’s logical that we parlay these capabilities into exportable services and economic growth.