By Lee Sze Yeng, Managing Partner, KPMG in Singapore
AS CLIMATE reporting becomes increasingly critical, Singapore’s businesses are acutely aware of its ramifications. Historically, sustainability reporting has often been a reaction to stakeholder demands. However, with the growing focus on environmental, social, and governance (ESG) disclosures, the landscape is set for a transformation. The Singapore Exchange Regulation (SGX RegCo) will mandate Scope 1 and Scope 2 emissions reporting for listed companies starting from the 2025 financial year, marking a pivotal advancement in corporate accountability and sustainability. This regulatory shift not only reflects a growing recognition for comprehensive and transparent reporting, but also the need for an industry-wide move to align with global trends.
This regulatory requirement presents not only a challenge, but also a strategic evolution for businesses. Listed companies, with their substantial resources, expertise, and extensive networks, are uniquely positioned to spearhead this transition. Their leadership is crucial, as they can play a leading role in establishing sustainability benchmarks for the entire market, guiding small and medium-sized enterprises (SMEs) that may struggle with the complexities of ESG disclosures. With their prior engagement in voluntary reporting efforts, listed firms are set to lead beyond mere compliance, inspiring a market-wide elevation of sustainability standards.
While businesses in Singapore are increasingly focused on ESG reporting, ESG assurance needs to be prioritised alongside it as these aspects are interconnected. This assurance is pivotal in verifying the accuracy and reliability of ESG data, which is essential for transparency and stakeholder trust. Listed companies are well-placed to establish quality assurance practices due to their resources and expertise. They can define necessary controls and develop robust strategies to enhance the reliability of ESG information, ensuring that data collected is both comprehensive and credible.
The strategic importance of listed companies in this shift cannot be overstated. Their credibility and influence are vital in shaping the best practices that will drive an industry-wide move towards sustainable development. By leading on ESG assurance, they provide a framework that SMEs can adopt, thereby elevating the overall standards across the business community.
A pressing challenge remains: the reporting and verification of Scope 3 emissions, which can complicate decarbonisation if executed poorly. SGX RegCo plans to assess corporate readiness before rolling out a roadmap for Scope 3 emissions reporting. Here, listed companies with international experience in jurisdictions where Scope 3 reporting is mandatory can provide invaluable guidance and shape the local reporting landscape. Their role as mentors can help smaller firms, including those in the supply chain, navigate the reporting intricacies, thereby strengthening the overall reporting framework within Singapore.
Listed companies also play a critical role in steering innovation and technology within the ESG shift. Their substantial resources allow them to invest in cutting-edge technologies, such as advanced data analytics and emissions tracking systems. For example, in large companies, data collection tools such as smart meters may be directly integrated into the company’s operating systems to enhance the accuracy of data reporting. The use of blockchain can also help to encrypt such data and at the same time offers a proper trail for added transparency and data integrity. Companies need to be aware that collecting ESG data does not only include tracking carbon emissions, but also comprises other metrics such as how companies are contributing to employee welfare or managing supply chains. In this regard, listed companies, across the various aspects of the firm, may also have implemented the necessary policies and technological tools, such as via internal portals or platforms, to effectively support and measure these outcomes. This technological leadership sets the stage for more accurate and comprehensive data collection, ultimately improving the credibility of ESG disclosures.
Moreover, listed companies foster innovation ecosystems that support the adoption and integration of new technologies. Through collaborative labs and platforms, they facilitate partnerships among companies, suppliers, and capital providers. These ecosystems not only promote the co-creation of sustainability initiatives but also support SMEs in adopting innovative solutions, ensuring they remain competitive in an evolving market. With their facilitation, listed companies can help to increase the accessibility that the industry has to important stakeholders and talent needed to drive the ESG transition.
With their exposure to international markets and access to diverse resources, listed companies in Singapore are uniquely positioned to inspire a new era of sustainable growth. By harnessing technology and fostering innovation, they are building a resilient, sustainable economy that harmonises prosperity with environmental stewardship. Their leadership ensures that Singapore continues to lead in establishing a competitive, forward-thinking market aligned with global sustainability standards. As we journey, let us prioritise progress over perfection.
