Understanding the various Environmental, Social, and Governance (ESG) reporting frameworks and their applicability across different jurisdictions and industries can be complex. ESG reporting has become a requirement of corporate transparency, driven by increasing stakeholder demands and regulatory requirements.

Below is an overview of major ESG reporting systems, their relevance, and examples of Singaporean companies that have effectively implemented ESG practices, yielding tangible benefits.

1. Major ESG Reporting Frameworks

i. Global Reporting Initiative (GRI) Standards

GRI provides comprehensive guidelines for sustainability reporting, covering environmental, social, and governance aspects. Widely adopted globally, including in Singapore, GRI is used across various industries. For example, City Developments Limited (CDL) utilizes GRI standards for its sustainability reporting, demonstrating transparency in its ESG initiatives.

Website: www.globalreporting.org  (BIRI 7) 

‍ii. Sustainability Accounting Standards Board (SASB)

SASB offers industry-specific standards focusing on financially material ESG factors. Primarily used in the U.S., it is gaining traction globally among investors seeking comparable ESG data. While specific Singaporean examples are limited, companies in sectors like technology and health care are increasingly considering SASB standards )

Website: https://sasb.ifrs.org/ (BIRI 7)

‍iii. Task Force on Climate-related Financial Disclosures (TCFD)

TCFD provided a framework for disclosing climate-related financial risks and opportunities. Supported by regulators in jurisdictions such as the UK, Japan, and Singapore, it is particularly relevant for climate-sensitive industries. For instance, DBS Bank had committed to implementing TCFD recommendations, enhancing its climate risk disclosures.  The Task force was disbanded in October 2023 and transferred monitoring to IFRS as part of a wider rationalization.

Website: https://www.ifrs.org/sustainability/tcfd/ (BIRI 7)

iv. International Integrated Reporting Council (IIRC)

IIRC promoted integrated reporting, combining financial and non-financial information to provide a holistic view of value creation. Singapore Telecommunications Limited (Singtel) employed integrated reporting to communicate its performance and strategy effectively. The Integrated Reporting Framework was transferred to the IFRS Foundation with the IASB and ISSB encouraging businesses to continue using the Framework.

Website: https://integratedreporting.ifrs.org/ (BIRI 7)

v. European Union Corporate Sustainability Reporting Directive (CSRD)

CSRD mandates detailed ESG disclosures for large companies operating within the EU. This is relevant for Singapore-based companies with European operations, which are preparing to comply with these standards.  CSRD builds on the foundation of GRI, TCFD and SASB.  

Website: www.globalreporting.org (BIRI 7)  

‍

2. Barriers to Adoption and Implementation

Directors of Singaporean companies may exhibit resistance to sustainability initiatives due to several factors. Here’s an overview of the common reasons for resistance, along with responses that highlight the benefits of engaging with external advisory support and other strategies to overcome these challenges:

Perceived High Implementation Costs - Integrating sustainability practices often requires significant investment in new technologies, processes, and training, which can be viewed as a financial burden impacting short-term profitability.

While initial costs can be substantial, sustainability initiatives frequently lead to long-term savings through improved efficiency and resource management. Companies can also gain access to new markets and investment opportunities that help offset initial expenses. Engaging with external experts can assist in developing a tailored roadmap that optimizes spending and focuses on high-impact areas, making the investment more manageable.

3. Lack of Expertise and Resources
Some directors may feel that their organizations lack the internal knowledge or resources to effectively implement and manage sustainability programs, which can create hesitation.

Investing in internal training and development can build capabilities within the company. However, partnering with external advisors who specialize in sustainability can provide immediate access to the expertise needed to build effective, scalable programs. External consultants can offer industry insights, support compliance, and deliver guidance on best practices tailored to the company’s goals.

‍

4. Unclear Regulatory Requirements
Uncertainty about regulatory expectations can lead to hesitation in adopting sustainability measures, as directors may fear potential legal repercussions and be unsure about compliance obligations.

Staying informed about both local and international regulations is crucial. External advisors experienced in regulatory landscapes can provide clarity, ensure compliance, and offer strategies to align with evolving standards. They can help anticipate upcoming regulations and prepare the organization, reducing potential regulatory risks.

‍

5. Short-Term Focus on Financial Performance
Directors may prioritize immediate financial results over long-term sustainability goals, viewing the latter as less essential to short-term profitability.

Emphasizing the long-term financial benefits of sustainability—such as risk mitigation, enhanced brand reputation, and customer loyalty—can align sustainability with financial performance. External advisors can present case studies and financial projections that demonstrate the value of sustainability initiatives over time, aligning these with the company’s financial objectives.

6. Perception of Sustainability as Non-Essential
Some directors may perceive sustainability initiatives as peripheral to the core business, especially if they believe their industry has minimal environmental impact.

Highlighting the increasing importance of ESG factors in investor decision-making and consumer expectations can demonstrate that sustainability is integral to business strategy across all sectors. External advisors can provide data on industry trends and help communicate the broader relevance of sustainability to stakeholders, aligning the board’s vision with evolving market expectations.

7. Challenge of Change Management
Resistance to change can make it challenging to shift from traditional practices to a more sustainable approach.

External advisors can help develop and manage a change strategy, aligning sustainability initiatives with existing organizational structures and facilitating smoother transitions. They bring experience in change management, which can address employee and leadership concerns, streamline the integration process, and ensure long-term success.

Incorporating external advisory support from sustainability experts provides companies with a strategic advantage, enabling them to overcome initial hurdles, streamline implementation, and maximize the impact of their sustainability efforts.

‍

8. Conclusion

National regulators will continue to decide which of the sustainability reporting models are to be reported to.  In the absence of regulatory advice, corporations will be free to choose a model suited to their needs. Whilst these models lack quantitative measures, they are part of a transition by Corporations and large organizations to understand their impact.

ESG is receiving a great of criticism internationally.  This criticism is mostly ideological. What is missing is the use of quantitative data measures to show the impact against the planet's boundaries.

Companies seeking to build value can consider measuring their impacts, and that of their suppliers and customers, on planetary resources and boundaries. Translating this into cost saving, energy reducing, waste reducing, more efficient and sleeker supply chains is the best way to start. Building resiliience to global shocks, enhancement of local resource use and most of all value for your customers will inform these business improvement.

Please feel free to contact us, if you would like to know more about planetary.blue can assist you.

‍