Speech by Singapore's Ambassador for Climate Action at the SID Directors Conference 2025

Climate Change: Why Boards Must Care, What They Must Do

Mr Chee Hong Tat, Minister for National Development,

Mr Yeoh Oon Jin, Chairman, Singapore Institute of Directors,

Ladies and gentlemen, good morning.

I am grateful to SID for the opportunity to speak to this distinguished gathering.

Today, I want to talk about a transformation that will profoundly alter the physical, social, and economic environment that our companies will operate in – climate change.

WHY BOARDS SHOULD CARE ABOUT CLIMATE CHANGE

Why should a company care about climate?  Why invest in reducing carbon emissions if your competitors are not doing it, your shareholders are not demanding it, it is economically expensive, and political support for climate action is weakening in many countries?

The politics of climate change has indeed been generally negative. 

• Federal policies in the United States have taken a sharp turn against renewable energy, clean technologies, and green financing.

• It is having spillover effects on some other countries’ climate commitments.

• Global trade frictions, heightened geopolitical risks, and cost of living concerns have added to the list of reasons for going slow on climate action.

But the country to watch is China.  It is emerging as a leader in clean technology and the green economy.

• It is pressing ahead with its transition, undaunted by the external environment.

• The green economy accounted for one-quarter of China’s GDP growth last year.

  • China is building as much renewable energy capacity as the rest of the world put together.

  • It accounted for 65% of global sales of electric vehicles in 2024.

• China has integrated positive climate action and economic growth. We can learn from China.

The economics of climate change is mixed.

• Renewable energy is now cheaper than fossil fuel energy in many parts of the world.

  • Global investment in clean energy last year was nearly double the amount for fossil fuels.

  • Lithium battery prices have fallen by 90% since 2010, spurring demand for EVs, which are estimated to account for 20% of total car sales in 2024, from 4% in 2020.

• However, green technologies needed for hard-to-abate sectors, like low-carbon hydrogen, sustainable fuels, and carbon capture and storage still require significant cost reductions before they can be widely adopted.

But eventually, more than politics or economics, nature will call the shots.

• Global temperatures are continuing to rise.  In all likelihood, we will not be able to keep temperatures below the 1.5 degrees threshold set by the Paris Agreement.

• Extreme weather events—wildfires, floods, and heatwaves—are becoming more frequent and more severe.

• The worst is yet to come, as ocean currents weaken, the polar ice caps melt, and glaciers recede.

• Political inertia will end when the cost of climate change – in lives and livelihoods – becomes unacceptable.

• Economic decisions will have to price in the need to adapt to climate change and to decarbonise to mitigate further climate change.

We are heading towards a world that is both climate-impaired and carbon-constrained.

What does this mean for businesses?  Let me elaborate on two key capabilities that companies must build: transition planning and sustainability reporting.

TRANSITION PLANNING

Transition planning is about preparing the business for a climate-impaired and carbon-constrained world.  Companies, like countries, have to fight on two fronts:

• adaptation – to build up resilience against the consequences of climate change on their business models and physical assets; and

• mitigation – to reduce their carbon footprint and restructure their businesses so that they can compete in the green economy of the future.

Companies must make transition planning a business priority and start preparing now.

• Companies that act early will be able to mitigate climate risks, capture green economy opportunities, attract capital that prioritises sustainability, and shape strategies on their own terms.

• Those who wait will scramble to adjust amid potentially abrupt regulatory shifts, supply chain disruptions, changes in consumer demand, and dwindling investor confidence. 

Transition planning is not a stand-alone process, it must be integrated into business operations.

• Transition planning cannot be left to the chief sustainability officer, as sustainability cut across all of a company’s businesses. 

• Climate considerations must be embedded within every business line and process.

Transition planning is a strategic tool.  Boards and management must own it.

• Boards must set up appropriate governance structures to oversee cross-cutting sustainability issues and resolve trade-offs with other corporate objectives.

• They must set the right incentive structures at all levels of the company to translate climate objectives into business and investment decisions.

Corporate transition planning seeks to answer three sets of questions:

• What is your carbon footprint, where is it, how do you reduce it, and by when?

• What are your risks and opportunities as the world becomes climate-impaired?

• What are your risks and opportunities as the world becomes carbon-constrained?

Boards typically ask their management whether they have considered various kinds of risks: geopolitical, economic, financial, regulatory, technological.  But what about climate risks?

Have you asked whether your management has assessed the physical risks posed by climate change on your company’s finances and operations?  If I were your consultant, these are the questions I might whisper in your ears:

One, have we identified our exposures? 

• Have we mapped the company’s assets and supply chains against location-specific climate projections? 

• What is our exposure to acute risks like floods, wildfires, and heat waves, and chronic risks such as sea-level rise, water scarcity, and persistent high temperatures?

• Example: How many of our company’s factories will be in flood-prone zones in 2030?

Two, have we assessed our vulnerabilities?  

• What are the vulnerabilities facing our physical assets, supply chains, and workforce?

• Example: What are the critical inputs for our business that come from flood-prone zones?

Three, have we estimated the financial impact?

• What are the direct costs such as asset damage or business interruption and indirect costs such as legal liabilities or reputational harm?

• Example: What is the estimated cost of damages and service recovery from flooding?

Four, have we developed strategies to deal with the risks? 

• Should we take adaptation measures or hedging measures or diversification measures?

• Example: Should we strengthen the flood defences of our vulnerable factories, or expand insurance coverage, or start relocating our factories?

Likewise, have you asked whether your management has assessed the risks and opportunities for your business in a decarbonising world? Again, if I were your consultant, these are some of the areas I might suggest you look into.

First, carbon prices.

• What are the carbon tax scenarios in the countries that your company is exposed to and how might they affect your operating costs, your supply chain partners, and your competitors?

• These questions are not academic:

  • The EU will implement from 1 January 2026 a carbon price (or CBAM) on imports of iron and steel, aluminium, cement, fertilisers, hydrogen, and electricity. 

  • The UK will do so, on a slightly different basket of imports, from January 2027.

  • Australia and Canada are considering a CBAM too.

  • Japan will transition its voluntary emissions trading system to a mandatory one in 2026, and will introduce a carbon surcharge on fossil fuels in 2028.

  • Stress Test: If global carbon prices rise to 100 US dollars per tonne of CO2 emissions by 2035 in major markets, what does it mean for your business?

Second, advances in technology.

• What happens if the price points for the low-carbon technologies you are investing in remain at uneconomical levels?

• Conversely, how much of your company’s carbon-intensive assets are at risk of becoming stranded if alternative low-carbon technologies see sharp cost reductions?

• Stress Test: If you are in the automotive industry, what are the implications for our company if the range of electric vehicles were to increase by four times?

  • By the way, Tianjin University in China has tested a prototype battery pack that can do this.

Third, shifts in consumer preferences.

• What are the revenue implications for our company if consumers move away from carbon-intensive products and services?

• Again, these questions are not academic:

  • We see this most vividly in the surge in global demand for electric vehicles at the expense of the internal combustion engine.

  • Due to consumer demands, companies like Unilever and Nestle are committing to recyclable or reusable packaging, often at higher cost.

  • Consumer campaigns against deforestation-linked brands amplify reputational and demand risks.

In short, climate-related risks and opportunities are as relevant as other business risks and opportunities.

Transition planning is a process to identify, analyse, and act on these risks and opportunities.

SUSTAINABILITY REPORTING

What gets measured gets done and what gets disclosed gets done even better. 

Mandatory sustainability reporting has gathered momentum in recent years. 

• It allows companies to benchmark against their peers and enhances supply chain accountability for carbon emissions. 

• It helps banks and investors make more informed sustainable financing decisions and customers to make better green procurement decisions. 

• The International Sustainability Standards Board (ISSB) has issued a global framework for sustainability reporting.

• Several jurisdictions have implemented or announced plans to implement mandatory reporting based on ISSB standards, including Australia, Hong Kong, and Malaysia.

Singapore introduced last year mandatory climate reporting based on ISSB standards. 

• The original requirement was for all listed companies to do so by FY2025 and large non-listed companies to do the same by FY2027. 

Two weeks ago, the Accounting and Corporate Regulatory Authority and SGX RegCo extended the timelines for implementing these requirements. 

• Some of you may be wondering if this is a sign that Singapore is softening its commitment to sustainability reporting, or even climate ambition more generally.

• This is not at all the case.

Sustainability reporting remains important and is here to stay.

• There is no change in the direction of travel, only the pace.

• Many companies are still in the process of building up the capabilities required to comply with the high reporting standards of ISSB.

• The regulators are giving them more time to do so.

• We do not want reporting for its own sake, we want high-quality reporting that will provide useful information to stakeholders.

The revised requirements take a more differentiated approach by scope of reporting and size of company.

• The previous timelines applied equally to all aspects of the ISSB standards and to all listed companies.

• By taking a more differentiated approach, we are aiming to achieve sustainability reporting in a progressive manner, broadening the scope of reporting and extending to more companies over time.

• Let me give a bit more colour on what has not changed, and what has, and why.

First, the timeline for all categories of reporting remains unchanged for STI constituent companies, which make up 75% of total market capitalisation.

• They operate in global export markets or supply chains and need to account for their carbon intensity and transition plans as soon as possible.

• Their climate-related risks have larger financial implications.

Second, the timeline for reporting Scope 1 and 2 emissions remains the same for all listed companies – this year, FY2025.

• They are generally ready to do so.  Eight out of ten SGX-listed companies disclosed their Scope 1 and 2 emissions in FY2024.

• Scope 1 and 2 emissions are largely within the control of companies.  Maintaining the timeline means that companies will have to account for these emissions and be motivated to take steps to reduce them.

Third, the key difference in reporting timelines applies to other ISSB disclosures, such as how companies manage their climate-related risks and the metrics they use to measure progress.

• The timeline for non-STI constituent companies and large non-listed companies has been extended by 3 to 5 years.

• These other ISSB disclosures are not as easy to do and we are giving these companies time to build up their capabilities.

  • Only 16% of listed companies provided full details on how climate-related factors were integrated into their financial planning.

  • They need a longer runway to develop their planning and reporting capabilities.

• But by FY2030, all listed and large non-listed companies will have to make these other ISSB disclosures.

Fourth, the key difference in reporting requirements applies to Scope 3 emissions, or emissions generated along the supply chain.

• While STI constituent companies will have to report this by FY2026, there is no fixed timeline for non STI-constituent companies.

• In FY2024, only 29% of listed companies disclosed Scope 3 emissions.

• Measuring Scope 3 emissions is very difficult.  Most companies do not have a comprehensive view of all their product components that are manufactured beyond Singapore’s borders.

• One possible solution is to rely on third-party emission factor databases.

  • But many of these databases are from the US and Europe and may not apply well to Singapore.

  • The Singapore Business Federation is working on a Singapore Emission Factors Registry, but it will take time to build the database to cover Scope 3 emissions.

Although not mandatory, sustainability reporting is not irrelevant for SMEs.

• SMEs would need to account for their carbon footprint and climate-related risks as the larger firms that they supply to step up their Scope 3 emissions reporting.

• Measuring and reporting emissions will nudge SMEs to identify ways to be more resource efficient. 

There are many tools available to help SMEs report their Scope 1 and 2 emissions.

• For example, through Gprnt, a sustainability reporting platform, SMEs can use their CorpPass to retrieve their utilities data from PUB and EMA, and convert these into Scope 1 and 2 values within minutes and without charge.

• This facility is the first of its kind in the world – thanks to GovTech’s MyInfo Business, the API connectivity to PUB and EMA, and Gprnt’s innovative solution.

  •  

Let me conclude.

The board of directors of a company sets strategic directions, ensures financial stewardship, and oversees risk management.  It takes the long term view to maximising shareholder value.  Preparing for the climate challenge requires exactly these instincts. 

• I hope boards and management view climate action not necessarily as a constraint on growth but as a source of future resilience and competitive advantage. 

• I hope you see decarbonisation not purely as a cost but as an investment in future success.

So far, I have spoken of why climate action is important from the perspective of value - shareholder value. But there is a difference between value and values.

Value is what we seek to create, values define who we are.

Boards set the purpose of the company, the vision of what it wants to become, the values it stands for. 

• I trust caring for the community and the environment in which you operate is part of that purpose. 

• I trust being a force for good for people and planet is part of that vision.

• I trust doing the right thing to safeguard future generations is part of those values.