Speech at Virtual Forum on Sustainable Reporting Review 2021 - Ms Grace Fu

SPEECH BY MS GRACE FU, MINISTER FOR SUSTAINABILITY AND THE ENVIRONMENT, AT THE VIRTUAL FORUM ON 'SUSTAINABLE REPORTING REVIEW 2021' ON 19 MAY 2021

Distinguished Professor Andrew Rose, Dean, NUS Business School

Associate Professor Lawrence Loh, Director, NUS Centre for Governance and Sustainability

Mr. Tan Boon Gin, CEO, Singapore Exchange Regulation

Distinguished guests,

Ladies and Gentlemen,

Good morning to all. It is my great pleasure to be here this morning for the launch of a joint review of sustainability reports by Singapore Exchange Regulation (SGX RegCo) and the Centre for Governance and Sustainability (CGS) at the National University of Singapore (NUS) Business School.

Introduction

2 This review comes at a time when there is strong international momentum to advance the sustainability agenda and address climate change. Indeed, climate change is one of the gravest threats facing mankind. As a low-lying island in the tropics, Singapore is particularly vulnerable to its effects, which include sea level rise and potential disruption to the supply of essential resources like food and water. We must therefore build on our sustainability efforts of previous decades, and tackle climate change with renewed urgency. We need a long-term plan to both mitigate and adapt to climate change — a plan that will span generations to protect Singapore and Singaporeans.

Singapore Green Plan 2030

3 The Singapore Green Plan 2030 is the Government's commitment to our present and future generations. Launched in February this year, the Green Plan is a whole-of-nation movement to advance Singapore's national agenda on sustainable development and climate action. The plan charts ambitious and concrete targets over the next ten years, positioning us to achieve our long-term net-zero emissions aspirations as soon as viable.

4 Realising these goals will require a concerted effort from everyone to advance sustainability. Individuals, communities and businesses all have a part to play. The Government will take the lead with GreenGov.Sg which will see four shifts:

1. The public service will, for the first time, set a carbon emissions target of peaking around 2025;

2. The scope of GreenGov.sg will be expanded to include public sector infrastructure and operations;

3. Environmental sustainability will be embedded in its core business areas, like procurement and education;

4. A culture of sustainability amongst public servants will be built.

Impetus for Businesses to Go Green

5 We hope that the direction taken by the public service will catalyse growth and development of sustainable products and services and promote a new growth sector of green economy. In an increasingly carbon- and resource-constrained world, the ability to operate and produce sustainably, and be ahead of the curve, will be a key attribute of successful enterprises. In other words, not only should we operate and produce sustainably, we want to be ahead of the pack so that this will become our competitive edge. Consumers and corporate buyers have become increasingly environmentally-conscious and will place greater value on sustainable goods and services. Companies must embrace Environmental, Social, and Governance (ESG) imperatives in their business practices or run the risk of falling short of stakeholders' expectations.

6 Investors too are paying attention to ESG issues, as climate change presents multi-faceted risks that cannot be ignored. Besides the physical risks of climate change, such as loss of properties to extreme weather events, the transition to a low-carbon economy will impact every sector, and fundamentally change asset values. Some assets, such as those in carbon-intensive sectors, could potentially become stranded. We have read about the shareholders' meetings happening in some of the oil majors in recent days and I think these are clear reminders of the shifts that are going on among the investors. Investors are increasingly taking a more active role when it comes to sustainability. SGX's recent publication revealed that 86 per cent of financial institutions considered sustainability in investment decision making. Today, more than $30 trillion of assets globally are being managed in ESG investments, an increase of 34 per cent from 2016. Global investors plan to further double ESG assets over the next five years.

Sustainability Reporting

7 A company's sustainability report is therefore an increasingly important component of a company's communication. Today, among the world's top 250 companies, a record 96 per cent of them reported on sustainability last year. Increasingly, companies have come to recognise that ESG issues form part of their corporate performance. And when done well, sustainability reporting can inspire confidence among stakeholders and reinforce a company's brand value.

8 SGX-listed companies have made good progress in the space of sustainability reporting. Since 2016, when SGX made sustainability reporting mandatory on a "comply or explain" basis, close to 500 SGX-listed companies are publishing sustainability reports.

9 Today, I note that further progress has been made. The latest review of sustainability reports showed that the quality of reporting has improved. There were overall improvements in sustainability reporting scores since the last review in 2019, and it is especially heartening to note that the smaller companies have made the largest improvements.

10 I congratulate all companies for the progress made in sustainability reporting, and commend the collective effort by the Monetary Authority of Singapore (MAS), SGX and professional bodies such as the Singapore Institute of Directors in raising reporting capabilities. I also thank NUS for the thought leadership provided in this space over the years, by spearheading relevant and high-impact research on governance and sustainability issues, including this round of review. Let us build on the progress made in this space and continue to seek ways to further improve ESG reporting and disclosures together.

Government Support in Companies' Sustainability Journey

11 While good reporting is important, we need companies to embed sustainable practices in its operations. The Government is supporting these efforts. To be more resource-efficient, companies can tap on NEA's grants such as the Energy Efficiency Fund and the 3R Fund. Enterprise Singapore is developing the Enterprise Sustainability Programme to support local enterprises in developing new capabilities in sustainability and capture new opportunities in the green economy. More details of the programme will be shared later this year.

12 The Government is also facilitating the development of green financing. The first-of-its kind Green and Sustainability-Linked Loan Grant Scheme, or GSLS, was launched last year to support companies, including SMEs, to obtain green financing. The Sustainable Bond Grant Scheme, or SBGS, was also enhanced last year, to help companies defray the cost of issuing green, social, sustainability and sustainability-linked bonds that are aligned with international standards.

Conclusion

13 Let me conclude. Sustainability and addressing climate change must be a priority, for businesses to thrive in the long term. Companies need to embed sustainability in their DNA, and recognise that going green is not only good for the environment, but good for business as well. The Government will play our part to support companies' efforts to become more sustainable, including through grants and funding.

14 I commend all companies once again for the progress made on sustainability and sustainability reporting. I urge companies to continue making strides in incorporating sustainability into your businesses, and play your part in the nationwide movement to advance our sustainability agenda. Together, we can make Singapore a global city of sustainability.

Thank you very much.