SMEs anchor Singapore’s shift to long-term carbon management

SMEs are embedding carbon management into daily operations.

Small and medium-sized enterprises (SMEs) are taking centre stage in Singapore’s low-carbon transition, with the majority now embedding carbon management into long-term business strategy rather than treating it as a compliance exercise.

According to the 4th Singapore Business Carbon Report, 74% of businesses—mainly SMEs—cut their emissions through the LowCarbonSG programme. The findings mark a clear departure from earlier editions, where firms were largely in the experimentation phase.

“Companies are no longer experimenting. More and more are becoming serious about embedding carbon management across their businesses,” said Terence Tan, Director, Carbon Management, UN Global Compact Network Singapore.

The report found that 74% of LowCarbonSG companies reduced emissions in either absolute terms or intensity, with 41% achieving reductions in both categories. Of those, 82% delivered at least a 5% year-on-year improvement. “They prove two things. Firstly, business growth and decarb can go hand in hand. Secondly, with the right frameworks and support, real change is achievable,” Tan said.

Tan stressed that carbon management is now tied to competitiveness as well as compliance. While regulation remains important to prod companies into action, he cautioned that “too much regulation might also induce a tick in the box mindset that we all want to avoid.”

With SMEs making up 99% of enterprises in Singapore and contributing nearly half of economic value, their role in meeting national net zero targets is critical. Tan pointed to practical measures such as energy efficiency upgrades, reduced refrigerant losses, and better waste management. “SMEs are proving that small steps, when multiplied across the economy, create significant results,” he said.

Associate Professor Zhang Weina, Department of Finance at NUS Business School and Deputy Director of the Sustainable and Green Finance Institute, noted that sharper insights are helping companies act more effectively. “In terms of the scope two emission, we observe that some of the increase in the manufacturing sector, this is largely because of a higher electricity use compared to the direct view. So having this kind of insight would empower companies to take focus and effective steps towards decarbonisation going forward,” she said.

Zhang added that technology is becoming a powerful enabler. “We find that the use of digital technology has empowered the companies to manage their emissions more effectively, some even leveraging the data collected to uncover inefficiencies, thereby supporting their investment in opportunities that lead to cost savings and product innovations,” she said.

While many SMEs remain unaware of the resources available to support decarbonisation, Zhang pointed to the importance of capacity building and training. “Strong corporate cultures where both management and staff are actively engaged is going to make a very central role in driving decarbonisation initiatives forward,” she said, adding that cross-sector collaboration, financing, and human capital development are crucial to sustaining progress.