Singapore’s small and medium-sized enterprises (SMEs), which account for about 40 per cent of the country’s carbon emissions, could determine whether the nation meets its mid-century net zero target. Yet most smaller businesses in the wealthy city-state have yet to engage meaningfully with sustainability.
Economic uncertainty, geopolitical tensions and delays to policies such as mandatory climate reporting are dampening momentum. For many SMEs already grappling with rising costs and tighter margins, sustainability can feel like a longer-term priority that is difficult to justify in the near term.
As market conditions tighten, sustainability risks slipping down the priority list, said Marc Allen, founder of Unravel Carbon, which helps companies measure and reduce emissions.
“I’ve heard on the grapevine recently that some companies are slowing their efforts or shifting focus to other areas,” he said, without identifying specific companies.
Survey data reflects this inertia. A study published in November by PwC and reporting consultancy Gprnt found that three in four SMEs in Singapore have yet to start any sustainability programme, while 82 per cent have not set aside a budget. Four in five said they do not know what’s in it for them.
Industry observers say adoption is uneven, with only a small group of firms pushing ahead.
Clara Kwan, chief sustainability officer at the Singapore Manufacturing Federation, an industry body, said most SMEs recognise the importance of sustainability but struggle with implementation.
“The question is really how to do it in a way that is pragmatic and makes sense for their business,” she said.
A separate survey by UOB in February pointed to similar constraints. Adoption remains uneven due to cost pressures and capacity gaps, said Eric Lian, the bank’s head of group commercial banking. Many SMEs are taking a phased approach, balancing long-term resilience against immediate business concerns such as profitability, regional expansion and cash flow constraints.
Brewing a competitive edge
For some smaller businesses, however, sustainability is delivering tangible returns.
When Sarika Gourmet Coffee, Singapore’s oldest coffee roastery, won a lucrative contract to supply a major hotel chain with its beans, the business case for sustainability became clearer to staff who were unconvinced of its benefits, said Ariel Tan, the 47-year-old firm’s business development manager.
“As an SME, we were able to show our local teams that sustainability could help us compete with bigger multinationals,” said Tan. Winning the contract helped shift internal perceptions about sustainability, instilling the idea that it could support, rather than hinder, business growth.
In 2023, Tan developed a sustainability framework using Company of Good, a set of environmental, social and governance (ESG) guardrails for businesses developed by the National Volunteer & Philanthropy Centre.
One of Sarika’s early moves was installing solar panels to power its roasting operations – an investment that required upfront capital but has since reduced both emissions and electricity costs. The company has also introduced initiatives to repurpose spent coffee grounds and reduce waste.
These efforts contributed to its EcoVadis bronze rating, which Tan said was instrumental in securing new business opportunities.
Sarika, which sells about 300 tonnes of coffee annually to hotels, offices and airlines under its Suzuki Coffee brand, also relies on certification schemes such as Rainforest Alliance to demonstrate responsible sourcing practices. It publishes an annual sustainability report – despite not being required to do so, largely in response to customer demand for supply chain data.
“We don’t need to do sustainability reporting,” said Tan. “But because our customers do, we do.”
The Suzuki Coffee mural at Sarika Gourmet Coffee’s headquarters in Jurong was painted by one of the brand’s baristas. Image: Robin Hicks / Eco-Business
For bedding company Sojao, which uses certified organic cotton and guarantees ethical working conditions for factory workers in India, sustainability has functioned as a “filter” for business decision-making, said the firm’s co-founder, Jan Tan.
Focusing on higher-quality, more durable materials has reduced return rates and increased customer satisfaction.
“Customers come back because the product performs – not just because of the [sustainability] story,” said Tan.
This approach has also influenced how the company manages inventory and production. By avoiding fast-fashion trends and releasing new products only a few times a year, Sojao has reduced overproduction and minimised waste, which has had both a financial and environmental benefit.
Sustainability has helped the company build trust and differentiation in a crowded market, added depth to the brand and attracted customers who value longevity and intentional consumption, she said.
But do Singaporean consumers really care?
But consumer demand for sustainability in Singapore remains limited, particularly when it comes to paying a premium.
A study by the National University of Singapore in February found that while consumers are generally receptive to sustainable products, only a minority are willing to pay more for them. Businesses say this limits how far sustainability can be used as a growth lever.
“Consumers will only pay more for better taste, not for the farmer’s sustainability efforts,” said Tan of Sarika, noting that sustainable farming practices can directly improve product quality – even if that link is not always recognised by consumers.
At SaladStop!, a healthy-eating chain founded in 2009 and recognised in 2025 as a Company of Good, sustainability messaging has been scaled back after failing to gain traction. Initiatives such as carbon-labelled menus and carbon-neutral claims were removed due to limited customer interest, said co-founder Katherine Desbaillets.
The company also dropped a compulsory bring-your-own-container policy following customer complaints about the lack of disposable options. “It’s really sad – we’ve seen zero interest in sustainability from consumers,” she told Eco-Business.
Desbaillets said she has observed a broader decline in attention to sustainability in Singapore over the past year, with fewer conversations on the topic at industry events and in business settings. “It just died down. Nobody talks about ESG anymore,” she said.
As a result, the company has become more selective about where it invests, spending no more than necessary on sustainability and focusing on partnerships instead. For example, its “Make Your Mark” tree-planting campaign with DBS Bank, which allows customers to plant trees the more salads they buy.
Still, sustainability remains core to the company’s long-term strategy. SaladStop! has invested in net zero restaurant concepts featuring upcycled wood furniture and recycled materials, although these outlets cost about 5 per cent more to build than standard stores.
SaladStop! has invested significantly in building Asia’s first net-zero restaurants, which feature upcycled wood furniture from trimmed highway trees and wall tiles made from recycled plastic. These innovations make the stores about 5 per cent more expensive than standard outlets. Image: SaladStop!
Big barriers for small companies
Besides muted consumer interest, Singapore’s SMEs face a range of practical challenges in implementing sustainability.
Many lack access to reliable data, willing suppliers and clear frameworks, said Sojao’s Tan, making sustainability feel complex and difficult to prioritise. Without clarity on which actions will deliver meaningful impact, businesses struggle to justify investments.
For SaladStop!, obtaining sustainability-related data from suppliers remains a key hurdle, particularly where upstream partners do not see the value in providing it. This creates difficulties for companies trying to measure and report their Scope 3, or full value chain emissions.
Cost is another major barrier. Alternatives to conventional materials can be significantly more expensive, especially in Singapore, where sustainable packaging options can cost several times more than standard plastic equivalents. For businesses operating on thin margins, these price differences can be prohibitive.
Meanwhile, consumer enthusiasm for plant-based foods has waned amid Singapore’s protein craze driven by health consciousness and fitness trends.
“We’ve taken a strong stance on plant-based foods, but we had to put beef back on the menu,” Desbaillets said.
Infrastructure gaps also present obstacles. Sarika has invested in compostable packaging, but Singapore lacks the industrial composting facilities needed to process such materials at scale.
The company also faces difficulties finding viable uses for by-products such as spent coffee grounds. While these can be repurposed into products such as scrubs or fertiliser, scaling these solutions has not been easy.
More broadly, SMEs often operate with limited manpower, making it difficult to dedicate staff to sustainability. Unlike larger corporations, they may not have the resources to hire specialised teams in a difficult jobs market where talent is not readily available.
What makes sustainability stick
For SMEs that continue to invest in sustainability despite these challenges, programmes must align with real business outcomes to go the distance.
SaladStop! has invested significantly to build Asia’s first net-zero restaurants, but Desbaillets said they provide a better customer experience – making the premium worthwhile.
The company plans to expand its net-zero concept to Hong Kong, the Philippines, Thailand, Indonesia and South Korea, with Dubai also under consideration. Its goal is to make all stores net zero within five years.
While consumer enthusiasm may be limited, sustainability resonates strongly with investors, Desbaillets said.
Like Desbaillets, Tan of Sojao insists that sustainability must be driven from the top to endure. For smaller businesses operating on tight margins, it can be difficult to prioritise a value system that doesn’t show immediate financial returns – so, ultimately, it comes down to the founder’s priorities and brand values, she said.
Lee Hsin Chong, managing director of environmental services firm BNL group, insists that sustainability must be financially viable for SMEs – or it won’t work.
The company uses Internet-of-Things (IoT) technology to divert waste from landfills and help corporate clients reduce their waste footprint.
Although BNL’s investment in IoT processing systems was significant, it has yielded returns by improving the accuracy of waste monitoring, eliminating manual processes, and providing clients with real-time data for sustainability reporting.
Increasing investment in research and development will help BNL identify revenue streams for different types of waste. The company has already found a second life for hard-to-recycle styrofoam by turning it into transport-friendly ingots that can be remanufactured.
“With Singapore’s growing population, it’s crucial to find new uses for waste,” Chong said. “But sustainability has to pay for itself.”
