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Setting the Course for a Sustainable Future
Budget 2025 themed "Onward Together for a Better Tomorrow," was presented by Prime Minister and Minister for Finance, Mr. Lawrence Wong, on 18 February 2025. Amid global changes, sustainability remains central to the nation’s strategy, with initiatives focused on climate risk mitigation and energy transition to secure the future.
Singapore's Climate Risks
Singapore, a low-lying coastal nation, faces significant threats from rising sea levels due to global warming, endangering infrastructure, properties, and critical resources. In response, the Singapore government is allocating an additional S$5 billion to the Coastal and Flood Protection Fund, underscoring the urgency of safeguarding the nation’s shores.
The real estate sector is already feeling the impact, as rising sea levels, extreme weather, and higher insurance costs highlight the need for resilient and sustainable development. ESG regulations and shifting investor preferences further influence property values and operational strategies.
These challenges extend to finance, insurance, and construction, with banks assessing climate risks, insurers facing higher claims, and builders adopting sustainable practices. Cross-industry collaboration is crucial for long-term sustainability and competitiveness.
Singapore must embrace innovative solutions, such as integrating green and grey infrastructure, to ensure resilient flood protection. Companies have a unique opportunity to collaborate with government agencies, leverage available resources, and contribute to advancing sustainable coastal protection. By doing so, they can drive innovation in climate resilience while strengthening Singapore’s position as a global leader in sustainability.
Building Climate Resilience
Singapore's climate target, submitted to the UN on 10 February 2025, aims to reduce emissions to 45-50 million tonnes by 2035 by focusing on sustainable transportation, in line with its net-zero goal for 2050. To meet these targets and strengthen climate resilience, Singapore aims to accelerate investments in green technologies and sustainable infrastructure.
As part of this effort, the government will introduce the Heavy Vehicle Zero Emissions Scheme (HVZES) and Electric Heavy Charger Grant (EHCG) to encourage the adoption of cleaner heavy vehicles.
Furthermore, a new road tax component known as the Additional Flat Component (AFC) will be implemented in 2026 and fully enforced by 2028 for electric heavy goods vehicles and buses to ensure parity with road usage charges for internal combustion engine heavy vehicles.
These government initiatives offer businesses, especially in logistics and transportation, the chance to adopt greener technologies with financial support. Switching to electric heavy vehicles (e-HGVs) lowers costs and enhances compliance with evolving environmental regulations.
Beyond transportation, Singapore’s future industries, including technology, energy and manufacturing could be highly energy intensive, highlighting the need for secure and sustainable energy. To address this, Singapore will explore low-carbon sources, such as small modular reactors (SMRs) and collaborate internationally on nuclear power feasibility. Additionally, the government will inject S$5 billion into the Future Energy Fund to enhance infrastructure and decarbonisation efforts. These sectors should consider adopting cleaner technologies and improving energy efficiency, while staying ahead in adapting to the evolving sustainability landscape.
Driving Business Success Through Sustainability
As global uncertainties rise, building resilience is key for businesses to stay competitive. The energy transition offers a pathway to strengthen operations and reduce environmental impact, with early adoption of low-carbon technologies helping to mitigate carbon tax exposure. Budget 2025 signals potential government support through green loans, tax incentives, and grants, urging companies to focus on energy transition and decarbonisation. Investing in sustainability provides a competitive edge, ensuring industry leadership and regulatory preparedness in a volatile, climate-driven world.
