We tried to explain the lack of appeal of sustainability stories. Some suggested that audiences have become “desensitised” to such issues, while others felt the topics were too technical or abstract. Another view was that sustainability is simply not top of mind for readers facing more immediate concerns, such as the cost of living. There are likely other explanations.
It is often challenging to find a suitable angle for sustainability stories that resonates with readers of The Edge Singapore. Much of this stems from the difficulty of quantifying sustainability’s impact on business in terms of the bottom line and investment returns.
From the perspective of the average investor, the focus is on returns and what affects them. Sustainability is likely not on the radar, with issues such as decarbonisation far from their concerns.
This is not to say that the average investor is indifferent to sustainability. Rather, while the idea of integrating sustainability into business has gained acceptance, its impact is still rarely expressed in terms of dollars, cents and returns — making it less compelling to investors.
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Certain aspects of sustainability can be readily translated into the language of business and finance. A clear example would be businesses offering sustainable products and services, where the impact is directly reflected in financial metrics such as pricing, costs and profits — while also delivering the satisfaction of contributing to environmental goals.
Another area where sustainability can be translated into financial terms is energy. What cost savings can be derived from renewables and energy efficiency? Too often, however, the impact is framed only in terms of energy savings and GHG emissions, which do little to help investors assess potential returns.
For instance, when SIA notes in its FY2024/2025 annual report that operating a “younger, fuel-efficient fleet” is central to its long-term carbon emissions reduction strategy, would it be more useful for investors to see the dollar value of fuel and regulatory savings, rather than just the amount of fuel saved?
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Businesses have been encouraged and mandated to embed sustainability into their strategies, which ultimately shape earnings. If sustainability is already part of business strategy, should its financial impact not also be reflected in the accounts?
We can also see the relevance of dollars and cents to sustainability in reports of accelerating electric vehicle sales across Asia, as oil prices rise amid disruptions at the Strait of Hormuz. This has fuelled interest in coal, renewables and other alternative energy sources, as governments grapple with energy security and fiscal pressures. These developments suggest that the economics of sustainability may be a greater concern than sustainability itself.
Other areas within sustainability face a similar issue — reporting that omits the financial dimension. These require a separate article.
Another observation is the challenge of convincing companies, particularly SMEs and smaller listed firms, to integrate sustainability into their operations. Barriers to participation in the green transition include knowledge and resource constraints, and perhaps more significantly, cost pressures that affect competitiveness.
The government has acknowledged these concerns by establishing the Council for a Competitive Climate Transition (C3T). Co-chaired by Ravi Menon, the Republic’s Ambassador for Climate Action, and Singapore Business Federation CEO Kok Ping Soon, C3T aims to strengthen businesses’ climate resilience and competitiveness.
Again, I believe that while business owners accept the broad principle of the green transition, the business case for embracing it remains insufficiently compelling. While firms recognise the need to integrate issues such as climate resilience and adaptation, many remain uncertain whether the tangible benefits outweigh the costs.
Part of this uncertainty stems from the difficulty of quantifying the costs and benefits of transitioning versus those of inaction. C3T appears to recognise this challenge and will focus on practical, scalable solutions to help businesses “better quantify” and manage the impact of climate risks, SBF CEO Kok said.
Anecdotal evidence suggests that the average investor pays scant attention to sustainability, despite its relevance to business, while smaller businesses remain hesitant to adopt it due to difficulties in quantifying and evaluating costs and benefits. Both point to the inadequacy of translating sustainability into clear, easily understood business outcomes — cost, profit and return.
Perhaps sustainability needs to be expressed more in dollars and cents to appeal to investors, businesses and the general public, because it ultimately affects them all.
