Professional Accountants in Business Virtual Conference - Ms Grace Fu

Keynote Address by Ms Grace Fu, Minister for Sustainability and the Environment, at Professional Accountants in Business Virtual Conference on 19 August 2021

Good afternoon everyone.

2 I thank ISCA for giving me this opportunity to speak. I am honoured to participate in this conference of the accounting profession as a fellow member of ISCA. And as the Minister for Sustainability and the Environment, I am also extremely happy to speak on sustainability, the theme for this year's conference. Climate action, along with sustainable development, has emerged as a driver of change, in business, politics, science and many facets of our lives. Tackling climate change has risen in priority even as countries manage the COVID-19 pandemic. Being sustainable is essential to a green recovery and the long-term survival of businesses.

Green Economy

3 Earlier this year, we launched the Singapore Green Plan 2030. This is not an MSE plan, or the Government's plan, but a whole-of-nation movement to advance our national agenda on sustainable development. The Green Plan charts ambitious and concrete sectoral targets over the next 10 years, to position Singapore to achieve our long-term net-zero emissions aspiration as soon as viable.

4 One of the key pillars of the Green Plan is to pursue a green economy. We want to create new green jobs, transform our industries and harness sustainability as a competitive advantage. We aspire to be a carbon trading and services hub, with the requisite capabilities and networks across the value chain. We will develop Singapore into a leading centre for green finance. The Monetary Authority of Singapore (MAS) has in place a Green Finance Action Plan, that focuses on

• building up the finance sector's resilience to environmental risks,

• developing green finance solutions,

• building knowledge and capabilities,

• enhancing sustainability-related disclosures, and

• harnessing technology to enable trusted and efficient flows of sustainability finance.

Supporting a Green Transition

5 Our transition to a low-carbon future involves careful balancing of trade-offs. To enable this green transition, we will provide resources to support our companies and employees. Let me share three examples.

6 First, Enterprise Singapore will be introducing the Enterprise Sustainability Programme later this year to support local enterprises to develop capabilities in sustainability. The Programme will help companies capture new opportunities by supporting the development of sustainable products and services, as well as strengthen the sustainability business ecosystem.

7 Second, we are promoting the issuance of green financing instruments, such as green bonds and green loans. This will enable corporates to raise financing to pursue green projects, invest in green assets, and move towards sustainable business practices. MAS introduced the Sustainable Bond Grant Scheme in 2017 to help corporates defray the costs of issuing green, social, sustainability and sustainability-linked bonds. Last year, MAS introduced a Green & Sustainability-Linked Loan Grant Scheme to help the banks develop green and sustainability-linked loan frameworks to make such financing more accessible to SMEs.

8 Third, we will equip the workforce with the relevant skillsets. We are anchoring centres of excellence, think tanks and research networks to contribute to Asia-focused climate research, green finance and training. For instance, MAS supported the launch of the Singapore Green Finance Centre last year. The Centre, a collaboration between Singapore Management University and Imperial College Business School, will undertake research on public policies and business strategies on low carbon transition with an Asian focus. It will build competency by offering courses from undergraduate to the executive education levels. I understand that ISCA is also actively exploring initiatives to prepare accountants in their role to drive sustainability efforts. I commend ISCA's initiative to keep accountants relevant and future-ready.

Role of Accountants

9 Such partnerships between People, Public and Private sectors are essential in Singapore's pursuit of sustainability. How can accountants play a part? Being stewards of capital and corporate reporting, accountants play a crucial role in accelerating business practices in sustainability. Let me suggest four ways that you can do so.

10 First, as more stakeholders and investors adopt the triple bottom line performance metrics (environmental, social and financial performance), accountants must be equipped to measure, compile and verify sustainability reporting. In 2016, Singapore Exchange (SGX) introduced mandatory sustainability reporting for SGX-listed companies and their recent review showed an improvement in the quality of the reports over the years. A record 96 per cent of the world's top 250 companies reported on sustainability last year. Accountants are expected to communicate a much broader set of performance metrics than a purely financial one.

11 Second, accountants must increasingly consider risks brought on by climate change, including new regulatory requirements as a result of climate policies, on their companies. In the World Economic Forum Global Risks Report 2021, the highest risks of the next 10 years are extreme weather, climate action failure and human-led environmental damage. Accountants must help their companies understand and mitigate these risks.

12 Third, accountants play a pivotal role in assessing the Environmental, Social and Governance (or ESG) costs or benefits in all major business decisions. This could be in the form of putting an explicit cost on CO2 emission through an internal carbon price, or in projecting future costs of climate impact such as flooding or extreme heat.

13 Finally, accountants are well-positioned to drive transformation, by identifying areas where companies can reduce their carbon footprint, for example in optimising water and electricity usage, and reduction of waste generated.

Conclusion

14 Let me conclude. The accounting profession supports all segments of our economy. And as every sector has the potential to drive sustainability within their network of organisations, the demand for accountants who understand sustainability is on the rise. I encourage members to

• keep up with the developments in climate change and environment sustainability,

• identify opportunities to make your organisations more sustainable,

• and tap on resources provided by the Government and ISCA to upskill and keep your relevance.

15 The pandemic has forced us to adapt to the new normal, but also gives us the opportunity to emerge stronger and position ourselves better for a low-carbon world. Together, we can realise the Green Plan and build a more sustainable Singapore for the future.

Thank you.