Digitalisation top focus of sustainability investment for Singapore companies

Singapore, 16 October 2024 – A new report by Schneider Electric, the global leader in the digital transformation of energy management and automation, reveals that digitalisation is playing an increasingly pivotal role in accelerating sustainability efforts, while economic challenges and concerns about greenwashing continue to hinder momentum.

Titled “Schneider Electric Green IMPACT Gap Survey 2024”, the report is based on a survey of 500 business leaders in Singapore from a range of industries and was conducted between April and May 2024.

Digitalisation prioritised for sustainable transition investments

The study finds that more than 1 in 2 (53%) Singapore companies plan to invest S$700k or more in sustainable transitions over the next two years.

Digitalisation ranks as the top focus area for investment, and includes areas such as reporting platforms, systems optimisation, Artificial Intelligence (AI)-driven process automation, and carbon management platforms to improve office processes, monitoring of resource usages, and for risk and opportunity management to streamline sustainability initiatives.

This ranks in priority ahead of supply chain sustainability, which involves working with suppliers on sustainability sourcing, as well as green solutions, which cover product design and circularity.

The carrot and the stick now working in equal measure to drive green action

A significantly positive finding from the study is compliance and commercial value considerations being seen as equal drivers for sustainability initiatives. While 37% of companies cite regulatory compliance as a primary motivator, the same proportion (37%) are motivated to increase business opportunities for long-term profitability. Other motivators include addressing brand perception and reputation (33%) and climate risk management (32%).

Technology playing a key role in easing the burden of sustainability reporting

Over half (52%) of Singapore business leaders say that it has become easier to report on sustainability strategies and goals in the past year.

The top reasons cited by these respondents for this are enhanced corporate strategies with clearer targets (44%), technological advancements (36%), and a better understanding of regulatory requirements (36%).

Affirming the real-world impact, 57% of those with comprehensive sustainability strategies and targets in place indicated that sustainability reporting had become easier, while 55% of those prioritising digitalisation as their top investment reported the same.

Conversely, 35% of companies find reporting more challenging, particularly within healthcare, heavy machinery, retail, and real estate sectors. This contrast highlights the uneven pace of progress, suggesting that while clearer strategies and digitalisation are reducing barriers for some, others may face industry-specific hurdles that require more tailored incentives and fit-for-purpose solutions.

Greater access to data and information in an increasingly digital environment is helping to accelerate target setting

Singapore businesses are increasingly setting short-term sustainability goals. While 94% of companies have set sustainability goals, 63% of companies are focused on meeting targets within the next five years. This is up from 59% reported in last year’s survey.  

Additionally, 62% of those prioritising digitalisation as a key investment for sustainable transition are similarly focused on near-term targets within the next five years.  Companies with advanced digital capabilities appear more inclined to set shorter-term goals, as their ability to track progress enables quicker returns on sustainability initiatives, reinforcing a focus on tangible outcomes and fostering a sustainability-driven culture.

Encouragingly, 88% of companies report that their environmental sustainability goals are at least somewhat aligned with the Singapore Green Plan 2030, with 29% saying their goals are highly aligned. This alignment, coupled with the emphasis on digitalisation and near-term targets, highlights Singapore businesses’ drive to achieve measurable progress that supports both business and sustainability ambitions.

Financial constraints and greenwashing key concerns

Despite digitalisation’s positive impact, businesses continue to face some barriers to further sustainability investment.

Singapore business leaders cite a range of reasons for why the private sector is holding back from investing more in sustainability-related initiatives, including economic uncertainty (45%), budget constraints (41%), and poor incentives (40%). 

Additionally, greenwashing remains a concern for many Singapore businesses, with 73% of leaders apprehensive about being accused of greenwashing in the future, and almost half (49%) having already faced criticism.

This is prompting 90% to take concrete steps to prevent greenwashing. These steps include regular risk assessments, employee training and education on greenwashing, and regular auditing of activities.

Yoon Young Kim, Cluster President, Schneider Electric Singapore and Brunei, said,

“Digitalisation is unlocking new opportunities for Singapore businesses to accelerate sustainability efforts. From streamlining reporting processes to enhancing supply chain transparency and optimising operations, digital tools are critical enablers of long-term success. AI-driven solutions, in particular, are transforming sustainability strategies by automating data collection, improving accuracy, and delivering real-time insights that make reporting more efficient and actionable.

As businesses increasingly adopt AI-powered platforms, they gain the ability to monitor progress in real-time, manage risks proactively, and substantiate their environmental commitments with credible data. This not only boosts transparency but also builds confidence in the sustainability actions being taken. Looking ahead, AI and digital technologies will continue to be central in driving impactful, measurable climate action and helping businesses meet their sustainability goals more effectively.”