21 March 2023
Written by Presley Tan
ESG compliance is becoming increasingly important in Singapore. Guided by the Singapore Green Plan 2030, a whole-of-nation movement to advance Singapore’s national agenda on sustainable development, the Singapore government is actively involved in promoting ESG compliance through various measures.
Sustainability Reporting
The Singapore Exchange (SGX) requires listed companies in Singapore to include in their annual reports information about their sustainability practices. The guidelines, which are implemented on a 'comply or explain' basis, have been in effect since the financial year ending on or after 31 December 2017, with reports to be published from 2018 onwards. The guidelines provide a framework for companies to report their ESG performance and encourage the adoption of best practices in sustainability reporting. Companies are expected to cover a range of topics such as climate change, energy consumption, water usage, waste management, labor practices, human rights, and community engagement. This reporting requirement serves to improve transparency and accountability among companies and incentivize them to adopt more sustainable practices.
Practice Note 7.6 Sustainability Reporting Guide
Sustainability reporting
https://www.sgx.com/sustainable-finance/sustainability-reporting
Singapore Exchange Regulation (SGX RegCo) announced in December 2021 that all companies are required to include climate-related disclosures in their sustainability reports for financial years starting from 1 January 2022, on a 'comply or explain' basis. Companies in the finance, agriculture, food and forest products, and energy industries are required to make these disclosures mandatory starting from the financial year (FY) 2023. On the other hand, the materials and buildings, and transportation industries would follow starting from the financial year (FY) 2024.
Sustainability Knowledge Hub
https://www.sgx.com/sustainable-finance/sustainability-knowledge-hub
Regulatory Framework
The regulatory framework that promotes ESG practices in Singapore is established by the Monetary Authority of Singapore (MAS). MAS has introduced various guidelines and initiatives to encourage the adoption of sustainable business practices by financial institutions and listed companies.
Guidelines on Environmental Risk Management:
MAS has issued guidelines on how environmental risks are to be managed by financial institutions. The guidelines recommend the incorporation of environmental factors such as climate change, resource depletion, and pollution in credit risk assessments, lending decisions, and insurance underwriting.
Sustainability Reporting Advisory Committee
Singapore Exchange Regulation (SGX) and the Accounting and Corporate Regulatory Authority (ACRA) have convened the Sustainability Reporting Advisory Committee to advise on a sustainability reporting roadmap for all Singapore-incorporated companies.
Green Finance Industry Taskforce (GFIT)
GFIT is composed of representatives from financial institutions, corporations, non-governmental organizations, and financial industry associations, to accelerate the development of green finance through four main initiatives, which are developing a taxonomy, enhancing environmental risk management practices of financial institutions, improving disclosures, and fostering green finance solutions. One of the key initiatives of GFIT is to develop a taxonomy to aid financial institutions in Singapore to classify their activities based on their environmental impact as sustainable, harmful, or in transition.
Link: https://www.mas.gov.sg/development/sustainable-finance/green-finance-industry-taskforce
Monetary Authority of Singapore’s Project Greenprint
Project Greenprint by MAS is a set of initiatives that seeks to leverage technology-based solutions to improve access to reliable and high-quality ESG data for decision-making. Its goal is to create a transparent, trustworthy, and efficient ESG ecosystem to support green and sustainable finance. Project Greenprint comprises four utility platforms, namely the Common Disclosure Portal, Data Orchestrator, ESG Registry, and Greenprint Marketplace. These platforms will aggregate sustainability data from various sectoral platforms and industry players and facilitate data sharing among different stakeholders. By using technology and data, Project Greenprint aims to enable a more sustainable and environmentally friendly future.
Link: https://www.mas.gov.sg/development/fintech/green-fintech
Infographic: https://www.mas.gov.sg/-/media/MAS/News/Media-Releases/2021/Infographic_MAS-Project-Greenprint.pdf
Climate Action Plan
In 2009, Singapore committed to decreasing emissions by 16% from business-as-usual (BAU) levels by 2020. Building on this commitment, Singapore pledged in 2015 to reduce its Emissions Intensity (EI), which refers to the level of greenhouse gases (GHGs) emitted per dollar GDP, by 36% from 2005 levels by 2030, and to stabilize emissions to reach a peak around 2030. The strategies that Singapore intends to implement to achieve its 2030 pledge are described in the Climate Action Plan entitled "Take Action Today, For a Carbon-Efficient Singapore."
Link: https://www.strategygroup.gov.sg/images/PublicationImages/nccs_mitigation_fa_webview-27-06-16.pdf
Measurement and Reporting Requirements for Greenhouse Gas Emissions
The registered corporation is obligated to create and present an annual Emissions Report for each facility that falls under the scope of the Carbon Pricing Act (CPA). The Emissions Report must consist of data on the facility's activity, computation for each direct greenhouse gas (GHG) emission, and the overall direct GHG emissions for each reporting period.
The Emissions Report is due for submission every June 30th of the year which follows the end of each reporting period. For taxable facilities, the Emissions Report should be based on the approved Monitoring Plan and authenticated by a third-party verifier accredited by the National Environment Agency (NEA) before submission.
Singapore’s Domestic and International Policies and Strategies to Tackle Climate Change
National Climate Change Secretariat (NCCS) was established under the Prime Minister’s Office (PMO) to develop and implement Singapore’s domestic and international policies and strategies to tackle climate change.
To read more about the different initiatives, click here: https://www.nccs.gov.sg/faqs/impact-of-climate-change-and-adaptation-measures/
Incentives & Fundings
The government offers various tax incentives to companies that adopt sustainable practices.
To promote sustainable business practices and encourage investment in sustainable projects and assets, MAS has introduced two grant schemes - the Sustainable Bond Grant Scheme (SBGS) and the Green and Sustainability-Linked Loan Grant Scheme (GSLS). These schemes aim to assist corporates in offsetting the extra costs of conducting external reviews that adhere to internationally-recognized principles. Additionally, the GSLS incentivizes banks to create green and sustainability-linked loan frameworks that make such financing more accessible to small and medium-sized enterprises. Through these initiatives, MAS is working towards creating a more sustainable and environmentally-conscious business environment in Singapore.
Link: https://www.mas.gov.sg/schemes-and-initiatives/green-and-sustainability-linked-loans-grant
Enhanced Industry Energy Efficiency Package provides funding support for companies to adopt more energy-efficient technologies and reduce their carbon footprint:
SG Eco Fund
The government provides grants and funding to companies that undertake ESG-related projects that involve the community and advance environmental sustainability.
To learn more: https://www.mse.gov.sg/sgecofund/about