Green City: What Your SME Gains From Sustainability

In June, the Singapore Exchange (SGX) announced its new Sustainability Reporting mandate. The regulation makes it compulsory for listed companies to report their environmental, social and governance performance. Although this ruling takes effect at the end of 2017, affected SMEs should plan and implement these practices as soon as possible to prevent unexpected setbacks.

Regardless of whether your business is affected by this regulation, going eco-friendly still provides numerous benefits for small businesses. Here are a few:

Funding and Increased cashflow

SMEs who want to implement greener solutions can get financial help from the government. Companies intending to measure their energy performance can receive up to 70% in funding from the iSprint Grant. Small businesses can also use the Innovation and Capability Voucher (ICV) to enlist the help of an Energy Service Company. This company audits the business’s energy consumption and offers sustainable options that not only make your organisation more eco-friendly but could help you lower costs.

"Small businesses in particular stand to save between 18-25% on energy bills with greener solutions."

Tax relief from ADAS

Compound your boosted cashflow with tax relief benefits for a less constricted budget. Initiatives like the Accelerated Depreciation Allowance for Energy Efficient Equipment and Technology (ADAS) are set up to encourage business sustainability among local businesses. For companies who switch from old, energy wasting equipment to eco-friendly options, ADAS waives or depreciates capital expenditure on qualifying eco projects in one year instead of three.

This table demonstrates how much your company can save on a $100,000 project with a 17% tax rate:

	Normal 3-Year Depreciation	Accelerated 1-Year Depreciation
Year 1	33 1/3% × $100,000 × 17% =	$5,667	$100,000 × 17% =	$17,000
Year 2	(33 1/3% × $100,000 × 17%) / 1.1 =	$5,152	-	-
Year 3	(33 1/3% × $100,000 × 17%) / 1.21 =	$4,683	-	-
Total Tax Offset	-	$15,502	-	$17,000
Net Benefit = $17,000 - $15,502 = $1,498
Source: Energy Efficient Singapore For more information, visit the E2Singapore Website.

Boosting brand credentials

Sustainable practices boost your brand and reputationamong increasingly eco conscious consumers. 45% of consumers say they are willing to pay more for products from an environmentally-friendly brand. This explains the rise of brands such as Body Shop and Lush, which sell eco and vegan products.

Grace Faraj, Nielson’s Sustainability SVP advises: “Brands that establish a reputation for environmental stewardship among today’s youngest consumers have an opportunity to not only grow market share but build loyalty among the power-spending Millennials”. And consumers are not the only ones who look into a brand’s sustainability profile.

An SGX survey found that 90% of surveyed investors consider environmental factors when investing¹.

Investing in eco-friendly solutions not only boosts your finances but your brand reputation as well.

A new start with Renewable Energy

One of the most effective ways to become eco-friendly is to switch to renewable energy sources. “Renewable energy is energy generated from natural resources” including sunlight and wind, “which are renewable (naturally replenished). Renewable energy technologies range from solar power and biofuels for transportation”.

In a country with sunshine all year round, solar energy could be a viable option for local organisations. Home to the world’s largest floating photovoltaic (solar power generating) system, Singapore is dedicated to finding the most cost-effective, efficient way to convert solar power into energy². These efforts are showing positive results so far.

Last year, the cost of solar electricity dipped below prevailing electricity tariffs, making it a more affordable option³.

On the other hand, non-renewable energy sources like crude oil are expected to double in price by 2020⁴.

Regardless of the potential advantages, companies should ensure that their green projects are feasible in the long run. Business Professor Ilian Mihov cautions that “sustainability and [Corporate Social Responsibility] are important things but they have to be … sustainable financially. They have to be viable in the long run and not just (companies) trying to tick the box" of being socially responsible.

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¹ http://www.todayonline.com/business/sustainability-reporting-all-listed-companies-mandatory-fy2017
² http://www.eco-business.com/news/singapore-unveils-worlds-largest-floating-pv-system-test-bed/
³ https://www.nccs.gov.sg/docs/default-source/publications/take-action-today-for-a-carbon-efficient-singapore.pdf
⁴ http://www.seas.org.sg/SME3/index.php/learn/what/