As staff filter back to work over the coming months, the Government is continuing to formulate the details of its 2030 Singapore Green Plan under its commitment to the UN’s 2030 Sustainable Development Agenda and Paris Agreement. To tackle the many environmental issues of climate change which are impacting the local building industry, the Government is formulating the Singapore Green Building Masterplan with an aim of minimising and ultimately neutralising carbon from this sector of the economy. One can speculate that the costs of this are going to be considerable and the question is: Who will fund it and how?

There is no doubt that the Government will phase in new rules and standards with resultant costs spread over a relatively long timeline. They will demonstrate strong leadership both locally and globally, and likely shoulder a portion of the infrastructural and educational burden.

However, in the building industry, significant costs will inevitably need to be carried by both landlords and occupiers (as buildings are upgraded to meet evolving carbon emission and environmental standards) with new technologies, services and, ultimately, power networks. Some buildings will have greater upgrade issues than others, but all will be impacted. Perhaps a future analysis and breakdown of a tenant’s lease cost will still incorporate the current standard base rental and building operating expense components, but also include an additional “ESG or Green” component although it is too early to definitively identify how this will be implemented. It must be noted that under the current office lease template, Landlords have the ability to increase the operating expense component at will.

Climate change and its global impact is at the forefront of the world’s governance agenda. It will be fascinating to see how Singapore tackles an issue exponentially larger and more costly than the currentCOVID-19 experience. As Bob Dylan famously sang “The Times They Are A-Changin’” and just as we are hopeful of extracting ourselves from a viral event that has caused massive behavioural shift in the way people go about their lives, we are entering a new phase that will test all of our abilities to change both our social behaviour and economic thinking at a much deeper level.

* ESG - Environmental, Social, and Corporate Governance refers to the three central factors in measuring sustainability and societal impact.