More support in ESG, AI for companies, training for boards among recommendations for Budget

SINGAPORE - Companies need more support from the Government to develop their sustainability capabilities and leverage new technologies like artificial intelligence (AI).

These are two of the recommendations for Budget 2025 that professional services firm KPMG and the Singapore Institute of Directors (SID) released on Jan 8.

They also recommended more talent development initiatives, such as board apprenticeship programmes, to help companies with succession planning.

The Budget statement is slated to be delivered on Feb 18.

“Value creation is a significant challenge for Singapore amid a volatile global economy and growing concerns over digital trust, particularly with generative AI’s rapid rise,” said Mr Ajay Kumar Sanganeria, head of tax at KPMG in Singapore.

He noted that the Government has to take the lead in driving transformation.

“Key areas of focus must include accelerating green infrastructure development through diverse green financing instruments, beyond traditional blended finance. Furthermore, a fast-track approach is required to support enterprises in their sustainability and technology transitions,” he said.

To help companies with their sustainability practices, a centralised hub around environmental, social and governance (ESG) concerns can be created to aid firms in navigating reporting requirements.

Given Singapore’s 2050 net-zero emissions target, businesses in hard-to-abate sectors like aviation and maritime can also get long-term financial support through grants and competitively priced loans to help them become more energy-efficient and adopt clean energy.

KPMG and SID called for greater transparency regarding carbon tax and the sorts of green infrastructure that money raised from the tax is used for.

“Detailed disclosures on the use of these funds can enable businesses to align their investments with Singapore’s climate agenda,” they said.

Other incentives like strategic grants can also help enhance the funding landscape for large-scale sustainable projects, they added.

These efforts can complement existing initiatives, such as the platform Gprnt, which helps companies of various sizes automate their ESG reporting process. It was launched by the Monetary Authority of Singapore in November 2023.

There are also grants and programmes to support ESG efforts, such as the Enterprise Sustainability Programme, which is for small and medium-sized enterprises, in particular, to build capabilities.

When it comes to workforce development, KPMG and SID recommended measures to groom future leaders to take over board positions, especially since companies have to refresh their boards with the rule that a director can be considered independent for a tenure of only nine years.

To this end, the Government can create a national leadership competency index to provide a standardised benchmark outlining the essential skills that organisation leaders need.

There can also be apprenticeship programmes for future board directors.

There should be mandatory board evaluations across sectors, conducted regularly by external parties, to enhance corporate governance and transparency, KPMG and SID said.

SID chief executive Terence Quek said: “Board leadership is essential in setting the tone and aligning business models with evolving societal expectations, shaping a future where profitability and positive social impact go hand in hand.”

SID governing council member Neil Parekh added: “Directors play a crucial role in guiding businesses to strategically leverage (public capital) markets, ensuring that investments are channelled towards initiatives that not only deliver financial returns but also contribute to long-term value creation for all stakeholders.”

More can also be done to allow people to gain micro-credentials and get access to SkillsFuture funding, KPMG and SID said.

They added that people should be able to take short-term certifications in high-demand areas like AI, sustainability and cyber security to help address talent gaps in the workforce.

“Micro-credentialling will play a pivotal role in equipping individuals with industry-recognised qualifications, creating leaders who are not only well educated but also professionally competent to deliver value and impact across sectors,” KPMG in Singapore managing partner Lee Sze Yeng said.

Finally, businesses can also get more support in sharpening their technological capabilities so they can make use of cutting-edge tools and innovate.

KPMG and SID called for more funding to develop AI governance and standards, and training for companies to encourage ethical deployment of AI.

Driving innovation will also enable the business landscape in Singapore to be more competitive, they said.

This can be done through initiatives that develop company directors, so they are more capable in navigating ESG issues and exploring new strategies in that area.

Corporate governance can also be strengthened through enhanced tax governance. For companies benefiting from tax incentives or grants, governance of their tax can also be part of their corporate governance requirements, both organisations said.

KPMG’s Mr Sanganeria said: “We believe these steps are critical to ensuring Singapore’s economy, businesses and people are climate-resilient, future-ready and digitally savvy.”