Keeping up with ESG regulations in Singapore

The journey for a business does not stop at sharing regular financial reports with their investors. These reports, need to be supplemented by descriptive and quantitative information to assess financial/non-financial risks and sustainable opportunities for future operations of your business.[1] As a listed company (issuer[2]) in Singapore, you are required to prepare an annual sustainability report describing your sustainability practices (ESG) on a ‘comply or explain’ basis, since 2016.[3] Industries in Financial, Agriculture, Food and Forest Products and Energy sectors were mandated to provide climate-related disclosures, consistent with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations in 2023. Materials & Buildings and Transportation industry, is also added to this mandate from January 2024.[4]

‘Comply or explain’- DECODED[5]

The sustainability report must include the primary components and if the same cannot be reported, the listed company must explain what it does instead and the reason for doing so. However, the primary components are mandatory for industries in Financial, Agriculture, Food and Forest Products, Energy, Materials & Buildings and Transportation sectors.

Primary components of the sustainability report[6]:

• Material ESG factors*
• Climate-related disclosures, in line with the TCFD recommendations
• Policies, practices and performance
• Targets for forthcoming year
• Sustainability reporting framework (appropriate for your industry/business model)
• Board statement

* Material ESG Factors (an indicative list as per the SASB Standards[7])

ENVIRONMENTAL	SOCIAL	GOVERNANCE
Green House Gas (GHG) Emissions   Air Quality   Energy Management   Effluent and waste management	Human Rights and Community Relations   Employee Health and Safety   Labour Practices, Employee Engagement, Diversity & Inclusion   Data Security and Customer Welfare	Business Ethics   Management of the Legal & Regulatory Environment   Critical Incident Risk Management   Systemic Risk Management

Roadmap to a comprehensive sustainability reporting

• The Code of Corporate Governance underlines the importance of good governance along with accountability and transparency. The Board is responsible for the sustainability reporting. The Board must identify and manage material ESG factors while the management should ensure that these factors are continuously monitored and managed. Both have to work closely to ensure effective sustainability governance. [8]
  
  
• The company should identify the material ESG factors, taking into consideration risks and opportunities. Well-managed risks can become strengths that enhance and directly impact the company’s performance, strategies, and operations. The risks and opportunities have to be reported and explained in a concise manner. [9]
  
  
• A balanced approach should be taken in preparing the sustainability report. Accurate reporting of both favourable and negative events and the inclusion of issuers response in the event of underperformance “ensures confidence in the company’s long term sustainability objectives”. [10]
  
  
• The global nature of businesses means that it is advantageous to adopt global best practices, and this is holds true for sustainability reporting. The use of frameworks like Task Force on Climate-related Financial Disclosures (“TCFD”) for climate related financial information is acceptable globally. A general description of the framework applied, and the extent of its application must be provided in the report.[11]
  
  
• The company’s primary reporting responsibility is to current and potential shareholders. They will also be interested in the views of other stakeholders of the company as this would be relevant to sustainability across the value chain and in identifying material ESG factors. Hence, the sustainability report should include material outcomes of a regular and sustained engagement with stakeholders.[12]
  
  

Easier sustainability reporting method- Initiative of Monetary Authority of Singapore (MAS)[13]

To ensure that financial institutions and businesses have the tools available to achieve their ESG goals, MAS implemented Project Greenprint which aims to leverage technology, data, and innovation to promote Green Finance. Project Greenprint culminated in the launch of a digital platform for collection of ESG data called Gprnt. Gprnt is currently undergoing live testing and is at a stage where it is collaborating with financial institutions and SME’s. Gprnt aims to enhance the availability and accessibility of sustainability-related data to improve and automate reporting of ESG. A visualization of how the Gprnt platform can help connect the various players in the economy to promote a sustainable financial ecosystem is provided here. The aim is to foster a more sustainable financial ecosystem in Singapore and beyond.

---

[1] Para 2, Practice Note 7.6 Sustainability Reporting Guide, SGX Mainboard Rules

[2] “Issuer” as per the SGX Mainboard Rules means, a company or other legal person or undertaking some or all of whose securities are the subject of an application for listing, or have been admitted to listing.

[3] Listing Rule 711A of the SGX Mainboard Rules: An issuer must issue a sustainability report for its financial year, no later than 4 months after the end of the financial year, or where the issuer has conducted external assurance on the sustainability report, no later than 5 months after the end of the financial year.

[4] Para 4.9 of Practice Note 7.6 Sustainability Reporting Guide, SGX Mainboard Rules

[5] Para 3.2 of Practice Note 7.6 Sustainability Reporting Guide, SGX Mainboard Rules

[6] Para 4 of Practice Note 7.6 Sustainability Reporting Guide, SGX Mainboard Rules

[7] SASB Standards (ESG Factors)

[8] Para 3.1 of Practice Note 7.6 Sustainability Reporting Guide, SGX Mainboard Rules

[9] Para 3.3 of Practice Note 7.6 Sustainability Reporting Guide, SGX Mainboard Rules

[10] Para 3.4 of Practice Note 7.6 Sustainability Reporting Guide, SGX Mainboard Rules

[11] Para 3.5 of Practice Note 7.6 Sustainability Reporting Guide, SGX Mainboard Rules

[12] Para 3.6 of Practice Note 7.6 Sustainability Reporting Guide, SGX Mainboard Rules

[13] Press Release by Monetary Authority of Singapore; Gprnt AI; Gprnt FAQs

Written by: Bitasta Ganguly

Co-authored by: Swapna Umakanth