Companies have more to do on ESG

Experts on corporate stewardship point out that although Singapore companies are increasingly conscious of the importance of environmental, social and governance (ESG) issues, many are still struggling to change their operations to comply with best practices in this area.

Pressures to “get with it” on ESG come from multiple sources. All listed companies are required to issue an annual sustainability report. Especially after the Covid-19 pandemic, portfolio investors in the region have significantly increased investments in companies with strong ESG scores. Multinational companies are taking greater account of the ESG performance of their suppliers and partners. There are also pressures from government policies. One of Singapore’s biggest trading partners, the European Union, plans to introduce a “carbon border adjustment mechanism”, which is effectively a tax that would penalise imports from companies that have high carbon content. And local companies will face sharply higher carbon taxes over the coming decade, starting with a fivefold increase in 2024, which will add to the urgency to de-carbonise their operations.