New portal for investors to check local firms' sustainability disclosures

The Singapore Exchange Regulation (SGX RegCo) will focus on helping more companies get up to speed with their sustainability reporting processes in the coming year, its chief executive said yesterday.

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

It has been estimated that Asean countries need green investments of US$200 billion (S$278.4 billion) a year till 2030.

The portal may be able to help companies by guiding them to enter information needed to meet disclosure requirements and auto-generate sustainability reports. SGX RegCo is also looking at whether it should order all listed companies to prepare their sustainability reports using a common digital format.

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 inadvertent greenwashing," Mr Tan said.

Greenwashing refers to false or misleading claims that a company is green when it is not. It is especially damaging as the accuracy of data determines how effective the market is in the pricing and allocation of capital.

If left unchecked, greenwashing companies will get to enjoy climate incentives, avoid penalties and compete better against companies 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."

Last year, SGX RegCo said it would require climate reporting to be done as recommended by the Task Force on Climate-related Financial Disclosures. The requirements will be rolled out in phases.

This year, listed companies and those on the way to listing must carry out climate reporting on a "comply or explain" basis, meaning that 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 the most carbon-intensive industries: finance, agriculture, food, forest products and energy.

The International Sustainability Standards Board, 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 the standards into listing rules.

But the pace at which those standards are adopted will be carefully considered, said Mr Tan, adding that SGX RegCo now requires issuers to minimally subject their climate reporting process to an internal review.

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