Singapore needs common framework for climate-change disclosures: panel
Singapore
WITH the growing urgency and import of climate-change action, it's time for Singapore to adopt a common reporting framework for climate-related financial disclosures, to improve the consistency and comparability of the information put out by companies here.
The call was made by Monetary Authority of Singapore's (MAS) executive director in its corporate finance and consumer department, Abigail Ng, during a sustainability reporting panel discussion on Wednesday.
The discussion, hosted by the Singapore Exchange (SGX), followed the release of the Sustainability Reporting Review 2021, which was jointly prepared by the SGX Regulation (SGX RegCo) and the Centre for Governance and Sustainability at the NUS Business School.
Referencing the review, Ms Ng noted a marked increase in the proportion of listed companies that discussed climate change in their sustainability reports, compared to those that did so in the previous review in 2019.
"But, what we also noted was that there are very few listed issuers that actually adopted a reporting framework specifically adapted to and relevant to climate-change disclosures," she said.
The review found that only 1.9 per cent of the 566 issuers covered in the report used frameworks by the Task Force on Climate-related Financial Disclosures (TCFD), the Carbon Disclosure Project (CDP) or the Science Based Targets initiative (SBTi).
"I think there is a need to coalesce around a common reporting framework; I think that would really help improve the consistency and comparability of climate-related financial information, so that everyone in the market can access that information for the purposes of climate-risk analysis and investment decision-making," Ms Ng said.
Her fellow panellists echoed her belief of the need for a common framework and standardised disclosures.
Lynette Leong, chief sustainability officer at CapitaLand, said: "I think there needs to be proper guidance as to how each of the industries will have to report it. For the real estate sector... there are certain standards in place (that guide us) but, in other industries, it may not be as well defined ... they may not be properly guided in terms of a certain standard or a certain framework in reporting climate-change risk."
Eric Lim, chief sustainability officer at UOB, acknowledged that, as a corporate reporter, the bank finds itself pulled "in a lot of stakeholder directions, across a lot of standards, across a lot of lenses" when it comes to sustainability reporting.
But he also acknowledged that reporting doesn't just need to become more comparable and consistent, it also needs to evolve and stay relevant. "Today, a lot of these assessments are on completeness, on comprehensiveness, on meeting the checklist; but, tomorrow, we need to be shifting some of these assessments to the quality of the exposure and the depth of the disclosures," he added.
The panellists also agreed that the work needed to put forth meaningful disclosures should not be viewed as merely another reporting burden by companies but as a means to create more value.
David Smith, head of corporate governance at Aberdeen Standard Investments, said: "The reporting should be a function of and feed into discussions around strategy and business resilience that the company and the board, one would hope, are already having.
"There's a degree of self interest here... From a capital markets perspective, you're seeing a lot more capital being deployed, looking for companies who have this more resilient business model, and are able to communicate that business resilience through their reporting. And you're seeing capital being moved away from companies that don't have that resilience, or have more risk, or more importantly are not necessarily communicating the way that they're managing these risks. So there's a degree of self interest there that if you want to attract global capital flows, if you want to get access to the trend of green finance, then that better reporting is helpful."
Ms Leong added, "You're future-proofing your assets, future-proofing your company to ensure sustainability."
Their discussion tied in with Minister for Sustainability and the Environment Grace Fu's speech at the same event, which said that a concerted push from everyone - individuals, communities and businesses - would be needed to advance Singapore's national agenda on sustainable development and climate action.
She said the government would take the lead with GreenGov.Sg, which will see shifts including: having the public service, for the first time, set a carbon emissions target of peaking around 2025; and embedding environmental sustainability in core business areas like procurement and education.
She said companies also need to embed sustainable practices in their operations; to this end, Enterprise Singapore is developing the Enterprise Sustainability Programme to support local enterprises in developing new capabilities in sustainability and capture new opportunities in the green economy, more details of which would be announced later this year.
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