Investors can check Singapore companies' climate disclosures with new ESG portal

The ESGenome disclosure portal will also have features that will help issuers. BT PHOTO: YEN MENG JIN

SINGAPORE - The Singapore Exchange Regulation (SGX RegCo) will focus on closing the gap in sustainability reporting and helping more companies get up to speed in the coming year, its chief executive said on Tuesday (July 19).

To do so, SGX RegCo is setting up the ESGenome disclosure portal, which will make companies' climate disclosures available to investors, CEO Tan Boon Gin said at a seminar on climate reporting in Asean.

It has been estimated that countries in Asean need green investments of US$200 billion (S$279.6 billion) a year till 2030.

The ESGenome disclosure portal will also have features that will help companies. For instance, it may be able to guide firms to enter the necessary information to meet disclosure requirements and autogenerate sustainability reports.

SGX RegCo is also looking at whether it should order all listed firms to prepare their sustainability reports using a common digital format, perhaps through ESGenome.

A study by the Centre for Governance and Sustainability at the National University of Singapore found that many companies lack a short- to medium-term strategy on environmental, social and governance (ESG) reporting.

"Not having a coherent plan lends itself to careless action and perhaps even the inadvertent greenwashing," Mr Tan said.

Greenwashing refers to false or misleading claims that a company is green when it is not.

This is especially damaging as the accuracy of data determines how effective the market is in the pricing and allocation of capital.

If left unchecked, companies that greenwash will get to enjoy climate incentives, avoid penalties and better compete against firms that incur costs to be green, Mr Tan cautioned.

"In the long run, the genuinely green companies and products may end up failing, because if the market cannot tell the difference, it may choose the lower-cost greenwashed companies," he said.

Last year, SGX RegCo required climate reporting to be done in line with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). This will be rolled out in phases.

The TCFD was created by the Financial Stability Board, a global body, to develop suggestions on the types of information that companies should disclose to help the market assess and price climate change risks.

This year, following TCFD recommendations, firms already listed or on the way to listing have to file climate reporting on a "comply or explain" basis. This means they have to commit themselves to producing an annual sustainability report, or explain why they are not doing so.

Next year, climate reporting will be compulsory for those in financial, agriculture, food and forest products, as well as energy - the most carbon-intensive industries.

The International Sustainability Standards Board (ISSB), under the International Financial Reporting Standards Foundation, is expected to issue global guidelines on sustainability and climate disclosures by the end of the year, at which point SGX RegCo will start to incorporate these standards into listing rules.

But the pace and cadence at which the ISSB standards are adopted will be carefully considered, said Mr Tan.

He added that SGX RegCo now requires issuers to minimally subject their climate reporting process to an internal review by their internal audit functions.

There are also guidelines for those who want to conduct external assurance.

A sustainability reporting advisory committee was set up by SGX RegCo and the Accounting and Corporate Regulatory Authority in June to advise on the suitability of international sustainability reporting standards for Singapore companies, including non-listed ones.

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