Environmental, social and corporate governance (ESG) reporting has become a hot topic for investors these days. Unsustainable practices and questionable management practices have seen shares and confidence in companies plunge, leaving many nursing losses.
Investors are also grow increasingly concerned about their assets’ climate change disclosures and board diversity policies, underscoring the importance of good corporate governance in capital markets.
In Singapore, the "G" of governance is a top priority. Governance covers a broad range of corporate activities, including board and management structures, company policies, standards and information disclosure. As a key global and regional financial centre, the city-state recognises that strengthening trust in its markets is key to maintaining a competitive edge.
In August last year, the Singapore Exchange (SGX) launched a consultation paper on climate change and diversity disclosures. The paper sets out a roadmap for climate-related disclosures to be mandatory in issuers’ sustainability reports amid urgent demand for such information from lenders, investors and other key stakeholders.
The disclosures will be based on the internationally recognised recommendations of the Task Force on Climate-related Financial Disclosures, which aim to guide companies in providing consistent and decision-useful information for market participants.
SGX Regulation is also proposing to step up efforts in enhancing board diversity by requiring issuers to have a board diversity policy and provide disclosures on related targets, plans and timelines in annual reports.
The introduction of these changes comes ahead of expected mandatory climate change disclosure rules, which are being developed by the new International Sustainability Standards Board (ISSB). Created in November last year, the ISSB was set up to deliver a comprehensive, global baseline of sustainability-related disclosure standards to provide investors and capital market participants with information about companies’ risks and opportunities to help them make informed decisions.
In an interview with IR magazine, Cherine Fok, Director of Sustainability Services and KPMG IMPACT at KPMG in Singapore, weighs in on how markets can assure quality in their reporting standards, alongside other industry experts.
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