Benjamin Soh, founder of ESGpedia argues that rising fuel costs, carbon taxes, and stricter efficiency expectations are turning sustainability from a reporting exercise into a hard commercial reality for landlords and tenants alike.
A few weeks ago, the phrase “Let’s Save Energy Together” sat quietly in a ministerial speech. Today, it sits in service charge letters going out to tenants across the CBD. That development, from policy abstraction to operating cost, is what makes the current Middle East fuel situation different from previous shocks.
As a small, resource-constrained country, Singapore is a high net importer of energy. Around 95 percent of our electricity comes from natural gas. When piped supply from our neighbours is stable and LNG prices are benign, nobody notices. When they aren’t, everyone does, and commercial property is one of the first places the numbers show up.
Landlords know this. The maths is simple. Cooling accounts for the largest slice of a Grade A building’s energy bill, and in a tropical climate, that slice doesn’t get smaller because fuel is expensive. It just gets more expensive. When wholesale electricity prices rise by ten percent, a 50,000-square-feet office tenant does not pay ten percent more in rent. They pay ten per cent more in service charges, and the landlord pays the gap on anything they’ve baked into a gross lease.
The government’s “Let’s Save Energy Together” campaign, which sets guidelines for commercial and public-sector buildings to use energy more efficiently, is not entirely a new policy. In that sense, it is a stress test of measures that have been advocated for several years. Here is what that stress test looks like from where I sit, which is behind the data.
We run a platform that serves more than 1,000 companies on achieving ESG excellence and various sustainability outcomes. We empower companies in the built environment and construction sector with digital solutions for carbon accounting including Embodied Carbon Life Cycle Assessment (LCA), Environmental Product Declarations (EPDs), and sustainability reporting, to help contractors and developers build competitiveness and win more tenders.
In ordinary times, a building’s energy use intensity, measured in kilowatt-hours per square metre per year, is a line on a sustainability report. Tenants glance at it. Banks ask about it for green loan tagging. Insurers increasingly factor it in. But operating decisions rarely turn on it. In a fuel crisis, that number stops being a number on a report. It becomes the difference between a building whose tenants renew without a fight, and a building whose tenants quietly start shortlisting replacements.
Consider two office towers of identical size. One is a recent BCA Green Mark Platinum or Super Low Energy asset with district cooling, predictive HVAC controls, and sub-metering down to the tenant floor. The other is a 1990s building with a central chiller plant, no granular metering, and no smart equipment or technology. At $0.25 per kWh, they look broadly similar. At slightly more than $0.30 per kWh, which is where spot tariffs drifted during previous supply shocks, the gap in monthly operating cost can exceed six figures.
This is where the ESG conversation stops being ideological and starts being commercial. A lot of companies have learned to produce sustainability disclosures over the past few years. However, translating those disclosures into consistent action and improvements remains an ongoing area of development. The buildings that invested in energy efficiency technology and integrated energy efficiency practices into their operations, are the ones whose owners can walk into a tenant meeting this month with a credible plan to cut consumption by eight or ten percent within a quarter.
The fact is, that the supply situation and climate risks are going to stay. There are three practical consequences landlords and occupiers should think about now.
First, the green premium is no longer just a branding question. For the last decade, Green Mark or SLE certification commanded a modest rental uplift that some owners found hard to justify against retrofit costs. In an extended high-fuel-price environment, that premium widens because the gross occupancy cost gap widens. Such buildings will not only attract tenants with ESG-focused leasing policies, but also those seeking to factor energy consumption price differences into their location decisions.
Second, the carbon tax and the fuel bill now point in the same direction. Singapore’s carbon tax is on a published upward path. For years, asset owners treated carbon liability and electricity cost as separate line items affecting different people. They aren’t. Both penalise the same behaviour: burning more fuel than a comparable efficient building would. A fuel shock simply compresses the timeline on which that inefficiency becomes financially visible.
Third, the reporting burden turns into a procurement tool. Tenants who used to ask about a building’s GRESB score or Scope 2 emissions as a compliance box-tick are, in the current environment, asking what the number actually means for their bill. Owners who can answer that question with confidence because their data is verifiable, will move to the shortlist.
None of this suggests that the fuel crisis is a good thing. It is not. Rather, the policy response, from the “Let’s Save Energy Together” campaign to the tighter operating posture it implies, is less a standalone intervention than an acceleration of where the market was already heading.
For commercial landlords, the practical question is not whether to act, but whether the data they rely on is good enough to act quickly. For occupiers, the question is whether their real estate strategy has now delivered cost savings via energy efficiencies. And for everyone in this industry, it is worth sitting with the fact that the energy situation we are navigating is not a one-off. Buildings are long-lived assets. The decisions made in the next two quarters, from retrofits to leases, what to ask for and how to manage energy consumption, will shape the operating economics of this city’s commercial property for a lot longer than the crisis itself.
About Benjamin Soh
Benjamin Soh is a serial entrepreneur who previously founded a multinational, regulated B2B FinTech serving the needs of more than 100 financial services firms worldwide. He is the Vice Chairman of the ESBN Task Force on Innovation. Ben also served as the Chairman of the Green and Sustainable FinTech Sub-Committee of the Singapore FinTech Association (SFA) where he is currently still serving as a member, as well as in the Singapore Computer Society (SCS) Sustainable Tech Special Interest Group.
