These are challenging times for startups and small businesses, especially those committed to long-term sustainability goals. Geopolitical uncertainties — including fluctuating tariffs, ongoing conflicts, and disrupted global supply chains — continue to cast a shadow over already volatile markets.

While it’s encouraging that Singapore is emerging as a global leader in sustainability, building a green business remains a complex endeavour. Government initiatives like the Enterprise Sustainability Programme, which provides training and consultancy support, and the recently launched Carbon Development Grant offer crucial help.

However, these efforts often fall short of fully bridging the financial and operational gaps that sustainability-driven startups face.

Balancing profit and purpose

Sustainability is undeniably vital for the environment and future generations. But at the end of the day, businesses are primarily driven by the need to achieve profitability. The adoption of sustainable practices often involves significant upfront investment, and without clear, near-term returns, many companies view them as cost centres rather than value drivers.

That said, the landscape is shifting. More financial incentives are becoming available, such as green loans offering preferential interest rates, provided companies meet ESG reporting requirements. This creates a tangible business case for embedding ESG not just as a compliance checkbox, but as a tool for unlocking new capital and strategic growth opportunities.

In Singapore, all listed companies will be required to provide climate-related disclosures aligned with international standards starting from FY2025. However, most of these firms prefer to work with established providers — such as the Big Four accounting firms — for sustainability and reporting services. This makes it harder for newer, smaller sustainability consultancies to gain market share.

Meanwhile, SMEs are unlikely to face the same reporting requirements in the near future, due to concerns about added financial strain. Consequently, the market for sustainability services remains concentrated among larger enterprises. Startups that want to break in must offer specialised, enterprise-grade solutions — and that requires both capital and talent.

Also Read: Investing in a better future: Why sustainable investment matters

Funding challenges and emerging alternatives

Perhaps the biggest roadblock is funding. Traditional venture capital models emphasise high and fast returns, which often don’t align with the long timelines and capital-intensive nature of carbon and sustainability projects.

A promising but still-evolving alternative is tokenisation — a blockchain-based model that allows startups to raise capital from a broad investor base, somewhat akin to crowdfunding. Supported in part by Singapore’s Monetary Authority (MAS), this method offers greater access to funds but still inherits the same investor expectation for rapid ROI.

Reality, however, rarely matches these timelines. Take a reforestation project in Mongolia, for instance. Due to the harsh climate, tree saplings are first cultivated in greenhouses — a process that can take two to three years before planting even begins. Such projects require patient capital and mission-aligned investors.

Surviving and thriving through collaboration

In this environment, startups must be prudent and resourceful. One of the most effective ways to extend runway and accelerate progress is through strategic partnerships. By teaming up with like-minded businesses and leveraging shared services, startups can reduce costs while gaining access to complementary networks, technologies, and markets.

Collaboration can be a force multiplier. Whether through formal consortiums, incubators, or informal partnerships, collective action allows sustainability-minded businesses to scale impact faster and more efficiently.

But perhaps most importantly, green startups must cultivate endurance. Building a truly impactful, sustainable business isn’t a sprint — it’s a marathon. It demands flexibility, commitment, and a long-term mindset.

A long-term commitment to impact

Despite the many obstacles, the mission remains deeply worthwhile. Building a sustainable business is not just about regulatory compliance or generating carbon credits — it’s about creating lasting impact in the fight against climate change and improving the lives of communities around the world.

The journey is tough, especially in today’s financial climate. But by staying committed to our purpose, embracing innovation, and building strategic partnerships, we can not only survive the current challenges — we can emerge as resilient, future-ready leaders in the green economy.

—

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.

Join us on Instagram, Facebook, X, LinkedIn, and our WA community to stay connected.

Image courtesy: Canva Pro

The post Why building a green startup in Singapore is still an uphill battle appeared first on e27.