Reputational Risk or Big Business Reward? It’s Time to Change How Boardrooms in Singapore Think About Sustainability

Boards play a critical role in the sustainability journey, but businesses in Singapore need to rapidly transform their traditional view of corporate social responsibility (CSR) to recognize the remarkable business potential of this vital lever. How and where are these views changing? And what are key implications for boards in Singapore?

Singapore is a unique operating environment—a densely populated state with localized climate and sustainability challenges. The business ecosystem, like much of Southeast Asia, is dominated by large, family-run conglomerates, where board and executive roles and responsibilities are often blurred, creating uniquely challenging dynamics for boards seeking to champion sustainability.

This local reality sits in stark contrast to western peers, where family-owned businesses are largely operated like regular public companies. These boards operate in an ecosystem in which sustainability trends are being amplified by recognition of the growing personal and corporate risks of failing to adhere to responsible sustainable practice.

We recently convened a roundtable with a group of directors at Singaporean companies to discuss routes to prioritize sustainability to seize new opportunities. This fascinating discussion revealed key challenges, and paths forward, for businesses in Singapore.

Challenges in Singapore

Lack of urgency is a persistent challenge in Singapore. Participants agreed that board agendas are packed, and sustainability is not seen as urgent enough to displace other topics, such as governance.

Directors argued that COVID-19 offered an important lens to view this urgency—an unpredictable and complex global challenge with no clear consensus on how companies should respond. While there was a common goal, approaches and time-horizons for response varied substantially.

Sustainability concerns echo this challenge, with directors perceiving a lack of definitive data and guidance on how to proceed. The Task Force on Climate-related Financial Disclosures—which many cited as the top authority on the subject—offers exchange listing requirements and indices, but with valuable information buried in appendixes.

Clearer and more direct access to data and guidance would empower more companies with a concrete set of requirements to refer to.

Moving forward in Singapore

From the roundtable three recommendations surfaced on how boards in Singapore can better capture sustainability as an advantage and respond to the strategic implications and opportunities.

1. Build a team that is aligned on the big picture. Boards have the power to shape executive teams that prioritize sustainability. They cannot expect experts on every issue at the table, but readjusting hiring criteria to incorporate a passion for sustainability puts it firmly in the conversation. Boards can take this a step further by looking within the company for feedback on sustainability goals. Make everyone part of the effort by working with top leadership teams to articulate sustainability strategy as it applies to each division, and focus on how to drive cultural change.
2. Put the data front and center. Knowledge inspires action. First, collect ESG data related to your strategic priorities. Compare this data to the existing strategy, and assess how current plans account for identified challenges. Explore how this insight applies to each branch or operational level, as well as how it pertains to stakeholder and investment interests. Directors agreed that publishing the cost of each company’s response to sustainability—through specific criteria such as carbon emissions—would also force boards to think more urgently about how sustainability factors into strategy. Resources such as the Singapore Green Plan 2030 and the Enterprise Sustainability Programme offer guidance on government priorities for climate change. Once boards have a high-level understanding of the issues, they can assess how their own sustainability goals align.
3. Set ambitious (but realistic) goals. New regulations are imminent. It’s only a matter of time until boards are forced to react. Businesses can lead by example and make bold decisions around sustainability. Those that lead the change will be better positioned to respond to future challenges.

Boards should be wary of a particular pitfall in achieving this vision—setting goals so distant that they fade from the day-to-day. Long-term goals are vital, but leave boards exposed to that very lack of urgency which frames the existing environment. Boards should focus on smaller, more direct and measurable goals alongside a long-term agenda, enabling them to demonstrate ongoing commitment to sustainability.

Singapore’s landscape is already changing. The Monetary Authority of Singapore requires all SGX-listed entities to provide climate reporting on a ‘comply or explain’ basis for financial years starting on or after 1 Jan 2022. Beginning in 2023, companies that are the most impacted by climate-related changes will be required to make more detailed reports on sustainability contributions. Singapore Government’s 2019 carbon tax also represented a trailblazing introduction of carbon taxation for the region.

This is a rapidly evolving ecosystem, and as it evolves, the resources and data available will mature. Boards will need to continuously adapt and respond to the changing role of sustainability in corporate strategy. Those who excel face a bright future ahead—one not only exposed to less regulatory risk, but boosted by exciting new business opportunities.?