Yahoo Finance Sustainability reporting ‘not a trivial exercise’: EnterpriseSG executive chairman
All statutory boards will begin mandatory sustainability reporting this financial year, EnterpriseSG included.
The Singapore government has three big roles in helping companies — particularly small- and medium-sized enterprises (SMEs) — decarbonise their operations, says Lee Chuan Teck, chairman of Enterprise Singapore.
It starts with providing the “right macro-environment” to “incentivise the right behaviour”, says Lee at the UOB Sustainability Compass Forum on July 2.
Speaking at Pan Pacific Singapore, Lee raises the example of Singapore’s carbon tax rate hike, unveiled at Budget 2022. The carbon tax was raised to $25/tonne of carbon dioxide equivalent (tCO2e) on Jan 1, and it will be raised again to $45/tCO2e in 2026 and 2027, eventually reaching between $50 and $80 per tCO2e by 2030.
“We have gone a step further to not just tell you what the carbon tax is, but tell you what the carbon tax will likely become in the years ahead, and I think that’s very useful because it helps companies to do their forward planning,” says Lee, who was Permanent Secretary (Development) at the Ministry of Trade and Industry (MTI) between 2018 and 2023. “It also means, okay, when we start to price carbon correctly, companies that take action sooner… will not be disadvantaged compared to companies who decide to postpone their abatement programmes; we’ve levelled the playing field.”
After a year as CEO of EnterpriseSG, Lee became executive chairman of the MTI statutory board in April, replacing non-executive chairman Peter Ong, who retired after five years in his role.
The government’s second role is to provide “enablers” for SMEs to decarbonise, says Lee. According to him, the bulk of emissions at SMEs comes from electricity use, which contributes to Scope 2 emissions. “There’s only so much [energy] efficiency you can push [for], right? So, the rest of the abatement must come from the Energy Market Authority providing you with green electrons.”
This will involve greening Singapore’s power mix. According to the EMA, natural gas accounts for 94.3% of Singapore’s fuel mix as at June 2023. About 4.4% of Singapore’s energy comes from other sources, such as solar and municipal energy waste.
SMEs also need a simpler way of compiling sustainability reports, says Lee. He praises the upcoming Singapore Emissions Factors Registry (SEFR), which will have a database of emissions factors reflective of local conditions. This will help businesses report on their emissions more precisely.
Announced in April, the SEFR is a collaboration among the Singapore Business Federation, the Agency for Science, Technology and Research (A*STAR), PwC and Singtel.
Finally, the government has a role in providing support, says Lee, through “nudging” companies to begin their sustainability journeys.
Multinational companies (MNCs) are “a little bit more advanced” in their climate journeys, he adds. “They have the resources; they have the know-how. So really, what we want to encourage them to do is to pass on that knowledge to their suppliers.”
SATS, for example, introduced in 2023 supplier engagement workshops to increase understanding on sustainability and better track sustainability practices with its supply chain partners. The first workshop in April 2023 was conducted with the support of United Nations Global Compact Network Singapore (GCNS) and EnterpriseSG to upskill more than 85 suppliers.
The Mainboard-listed provider of ground handling, air cargo and food solutions also announced in February a collaboration with United Overseas Bank U11 (UOB) to conduct similar workshops for its suppliers, including one on transitioning to electric vehicles.
Lee says there are plans to emulate such projects in the semiconductor and petrochemical sectors in Singapore. Banks, too, have a role in providing loans tied to sustainability efforts, he adds.
“We can’t do this alone; we are all in this. We all need to see how we can help each other move forward one step at a time,” says Lee.
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In conversation with Eric Lian, UOB’s head of group commercial banking, Lee reiterates the important but daunting work behind sustainability reporting. “I want to not trivialise the effort required… [It is] not a trivial exercise; it requires effort.”
All statutory boards will begin mandatory sustainability reporting this financial year, EnterpriseSG included. “I thought I knew a lot,” says Lee, “but actually, there’s nothing quite like just actually getting started and doing it.”
Since FY2023, the Singapore Exchange S68 (SGX) has required listed issuers in the financial, energy and agriculture, food and forestry products industries to provide climate-related disclosures aligned with the Task Force on Climate-Related Financial Disclosures’ (TCFD) recommendations.
By FY2025, Singapore’s listed issuers will be required to use the International Sustainability Standards Board’s (ISSB) standards for climate-related disclosures. Some non-listed companies — those with annual revenue of at least $1 billion and with total assets of at least $500 million — will be required to do the same starting FY2027.
To help these firms, EnterpriseSG and the Singapore Economic Development Board (EDB) will launch a Sustainability Reporting Grant in 4Q2024. The grant will provide funding support for large companies with annual revenue of at least $100 million to cover a portion of their costs in producing their first sustainability report in Singapore. The grant defrays up to 30% of qualifying costs, or $150,000, whichever lower.
To enable SMEs to do sustainability reporting, EnterpriseSG is calling for proposals to appoint sustainability service providers to offer “affordable” sustainability reporting packages to SMEs and internships to students and mid-career working professionals.
The SME Sustainability Reporting Support Programme, also targeted for 4Q2024, will be available for three years. EnterpriseSG will defray 70% of eligible costs for SMEs participating in the first year of the programme, and 50% of costs for the next two years.
“We really need you to be on this journey,” says Lee to SME leaders in the ballroom. “So, if you’re thinking hard about this, I strongly encourage you to approach your banker, to approach SBF, the other TACs [Trade Associations and Chambers], and also to approach us, Enterprise Singapore; we are more than keen to help you on this journey.”
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