THE Singapore Exchange (SGX) is investing S$20 million to expand sustainability capabilities and initiatives as environmental, social and governance (ESG) considerations come into greater focus even as the Covid-19 pandemic takes a toll on the economy.

Loh Boon Chye, chief executive officer of SGX, said in a media briefing on Tuesday that the challenge of driving economic growth and reversing climate change should be seen as an "undeniable need"; and collective effort is required to seek solutions.

While economic recovery will be uneven across sectors, there are still opportunities for companies to seek sustainable growth, he said.

To ramp up ESG solutions for customers as they build sustainable businesses and to encourage greater adoption of sustainable business practices, half of the investment will be allocated to new ESG-focused products services and platforms. The other half will be channelled into capacity building for the financial ecosystem, strengthening internal capabilities and increasing corporate social responsiblity (CSR) commitments.

These initiatives will be housed under the newly launched platform SGX First (Future in Reshaping Sustainability Together) - Asia's only multi-partner, multi-asset exchange-led sustainability platform.

"These initiatives capitalise on our assets, expertise and capabilities, and span across asset classes including fixed income, equities, commodities and indices," said Mr Loh.

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On the fixed income front, SGX plans to increase accessibility and transparency of sustainable bonds data in the Asia-Pacific by bringing more regional issuers on board the Nasdaq Sustainable Bond Network Initiative, with which SGX is in an exclusive partnership.

The network currently covers over 4,500 bonds predominantly from the United States and Europe.

"This network aims to be the leading source of information on green, social and sustainability bonds - both listed and unlisted - to help global investors conduct due diligence, selection and monitoring of these bonds," said SGX in its press statement on Tuesday.

Similarly, for equities, the local bourse plans to give investors access to a more comprehensive view of companies' ESG efforts and to encourage companies to incorporate sustainability as an integral part of their business.

Against this backdrop, SGX has expanded its existing indexing partnership with FTSE Russell, Morningstar Sustainalytics and MSCI. It also plans to expand its coverage beyond the current 30 most recognisable SGX-listed companies in 2021.

By January 2021, subject to regulatory approvals, SGX will also launch four futures contracts in partnership with FTSE Russell, based on the FTSE Emerging Markets, FTSE Asia ex-Japan, FTSE Emerging Markets Asia and FTSE Blossom Japan ESG-themed indices.

These indices have risk-return characteristics similar to benchmark market-cap weighted indexes with the added benefit of improved ESG metrics. These will help facilitate ESG integration into investment strategies and provide a hedging instrument for ESG-tracking investments.

New sustainability benchmarks and ESG-related indices will also be layered alongside existing flagship multi-factor indices offered by the SGX Group including Scientific Beta and Index Edge products.

Currently, over 30 per cent of assets tracking Scientific Beta's indices already have ESG options; and all its indices have advanced ESG and climate risk reporting.

In the next 12 months, Scientific Beta will develop new climate change risk solutions that align with the Paris agreement climate change goals for institutional investors.

Asked if retail investors will stand a chance to benefit from SGX's initiatives, Mr Loh said: "Retail investors will have the opportunity to participate in this global trend in terms of focus on sustainability."

He added that SGX will look towards working with the ecosystem, issue mangers, companies to explore options to issue retail tranches of sustainable and green bonds or exchange-traded funds (ETFs) to gain exposure to ESG investments.

Meanwhile, SGX will continue to boost internal sustainability efforts. It will be appointing its first head of sustainability and sustainable finance, and has embarked on a corporate carbon profiling exercise across all its offices and subsidiaries worldwide.

Shares of SGX ended Tuesday before the announcement at S$9.29, down S$0.06 or 0.64 per cent.