Businesses must reassess their entire value chain and move away from the usual way of conducting themselves in the battle against climate change, said Minister for the Environment and Water Resources Masagos Zulkifli yesterday.
He said financial institutions also play a pivotal role in enabling action against climate change.
"Companies must factor both the risks and the opportunities of climate change into their long-term growth strategies. This means holistically reassessing the entire value chain, from production to consumption, disposal and recovery," he said.
"Although effective government policies are key to enabling and accelerating efforts to tackle climate change, the private sector must do its part as a responsible driver of economic growth."
Mr Masagos was speaking at the fourth edition of the BNP Paribas Sustainable Future Forum. The forum is a platform for leaders in the region to discuss solutions and inspire meaningful action to tackle climate change.
He said the first step for businesses is to be clear-eyed about the impact that climate change will have on them.
For instance, a study by international non-profit organisation CDP showed that the world's largest companies face almost US$1 trillion (S$1.4 trillion) in climate risks, with a quarter of this figure stemming from write-offs of stranded assets.
"We need to rethink our business models and processes, and early movers will have the advantage," said Mr Masagos.
He said companies can adopt an internal carbon price, which can be used as a planning tool to identify revenue opportunities and risks, while also being an incentive to be more energy-efficient to reduce cost and guide investment decisions.
Besides companies, the financial sector is vital in ensuring that capital is directed to sustainable projects and meets the demand for sustainable solutions.
Mr Masagos said: "Financial institutions can leverage their vast capital networks to spur climate-friendly investments and lending, and as a result, drive future growth."
He added that financial institutions can also adopt environmental, social and governance principles in their investment frameworks.
"(By doing so), financial institutions send a strong signal that stakeholders across the value chain must take climate change seriously," he said.
Earlier this year, Singapore banks decided to stop financing new coal plants in the region. Mr Masagos said: "This shows that we do not support investments which generate short-term profits but harm future generations in the long run."
He cited BNP Paribas as an example of a firm that works with clients to encourage sustainable business practices. Last year, the company issued the first green loan in the Asia-Pacific to a Singapore-based shipping company.
"We need to muster the collective efforts of the public and private sectors, to move decisively towards a sustainable future."
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