ESG Reporting and Harnessing Green Capital

In this video episode of Singapore Budget 2025 Insights by KPMG in Singapore, Genevis Lee, Director, Corporate Tax Consulting, Financial Services, spoke to Cherine Fok, Partner, ESG Consulting and Anton Ruddenklau, Partner, Head of Financial Services, as well as Global Head of Fintech and Innovation, to discuss the role that Singapore can play in advancing ESG reporting and assurance initiatives to strengthen its regional leadership in sustainability.

Read video transcript below.

What are the challenges and benefits of compliance with ESG standards and how would the Budget proposal’s recommendation of an ESG hub help?

Cherine Fok: I am very proud to say that Singapore companies have really been very good in adopting the new practices around ESG reporting. In fact, most of them are looking beyond compliance to think about what is the right thing to do when it comes to reporting – that is, both for the business and for those around them.

By adopting the ISSB standards, Singapore is promoting very transparent and comprehensive ESG reporting practices that puts it in a very competitive stage with the rest of the companies around the world, with companies now required to assess how climate change affects their financial performance over different time horizons.

By reporting against the new guidelines, it would improve the firms' assessments of their supply chains, their carbon footprints and encourage close collaboration with suppliers on decarbonisation efforts. Reporting requirements can be very onerous, though. These challenges often include complexity of data collection, compliance costs and the need to adapt to evolving regulations in Singapore and globally. Would this be consistent? At this point, we would like to check with Anton with what you’re seeing globally around the reporting practices.

Anton Ruddenklau: Yes, absolutely consistent. When I go around the world and speak to different markets, everybody is talking about the ability to use data to make decisions as our Achilles’ heel when it comes to the climate transition.

Cherine Fok: Yes, with the additional efforts that they have invested over a number of years, Singapore companies are now much more well-positioned to rise to the challenge of a green economy transition. Reporting may be onerous, but it brings significant benefits – for example, improved brand reputation, greater access to sustainable finance and a wider pool of interested investors.

So, our recommendation will be really to keep up the good work and create a centralised ESG reporting hub that continues to be very important. This could be in partnership with the Government and the industry, and with strong support from trade associations and enhanced Government backing. Having a reporting hub will give enterprises with cost and capability considerations greater confidence to come on board the sustainability journey.

Could you also share with us how ESG assurance can help businesses meet their sustainability goals? Earlier, you mentioned that Singapore has already done work on this front. What more can Singapore do to help companies navigate these increased compliance requirements?

Cherine Fok: ESG reporting and ESG assurance are very tightly interconnected – in fact, we could say that they are two sides of the same coin. In order to get to ESG assurance, companies first need to have robust reporting processes.

Assurance plays a pivotal role in verifying the accuracy and reliability of ESG data, which in itself is critical for transparency and building stakeholder trust. Listed companies, with their resources and expertise, are well-positioned to implement quality assurance practices. By establishing necessary controls and developing robust strategies, companies can enhance the reliability of ESG information, ensuring that collected data is both comprehensive and credible.

It is recommended to build the talent pipeline for assurance and sustainability. In Singapore, we have started to look at the Jobs Transformation Map for many different professionals, including the accountancy profession as well as the finance profession. It is important to strengthen the talent pipeline for assurance services such as accountants and the adjacencies coming through from the legal and the engineering professions.

For example, helping the profession to attract and recruit young foreign talents, such as through international outreach programmes, will strengthen the talent pipeline for the profession.

When it comes to navigating compliance requirements, our recommendation is to build a corporate governance practice hub as part of the centralised ESG hub. This is particularly key because corporate governance sets the tone from the top around how a company should operate. Centralise information and resources on corporate governance and integrate it with the centralised ESG hub.

How can Singapore leverage its established capital markets and strong financial sector to help companies access the capital required for their green transition?
 

Anton Ruddenklau: Implementing green initiatives often requires significant upfront investment. For these companies, that really impacts their short-term profitability. Obtaining funding for these investments is one of the biggest challenges faced by companies as they seek to augment their resilience against climate change.

But Singapore is already leveraging its established capital markets, its really strong financial sector and drive for innovation to provide necessary support. We have schemes in place, tons of them. We have the Finance for Net Zero Action Plan, we have FAST-P, which is Financing Asia’s Transition Partnership, and others. So, really, they track what our recommendations say, to blend these together and to have different forms of financing available for these projects – concessionary, philanthropic funding, commercial bank funding and long-term patient capital. Put all those together and it will really support those initiatives as well.

Our second recommendation is that we need to assist those industries which have hard to abate, relatively hard to decarbonise business models. For us here in Singapore, that is maritime, airlines and construction. So that assistance is going to be pretty vital.

The Budget proposal also includes the recommendation to leverage adaptation financing to help mitigate the effects of climate change. Could you maybe share with us a little bit more on adaptation financing?
 

Anton Ruddenklau: Adaptation finance is a relatively recent term. What that refers to is the ability to finance business models that actually change with the increased temperature in the world. For us here in Singapore, that means we need to enhance our community’s resilience against the impacts of this change, as well as help our large corporates develop new products and services that mitigate these effects or adapt to the increased temperatures in the world. What we need to consider, really, is how to establish a fund so it can target, specifically, adaptation finance.

How do you think the Budget recommendations cater to this need to build more sustainable supply chains?
 

Cherine Fok: There is definitely a lot of work to be done on the supply chain front, especially because a large part of our economy comprises companies who are part of global supply chains, so we are really not acting in isolation here.

Climate change and adaptation are important elements of supply chains that in previous times have not been looked at sufficiently. While there is much that firms can do to make their supply chains more sustainable, initiatives, certain incentives, for example, would encourage action that is lacking. For example, our recommendations include introducing cash grants that will encourage companies to adopt sustainable supply chain practices.