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Elevating ESG reporting in Singapore: the power of intent for SMEs

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By Alex Hong

· 16 min read


In the bustling economic landscape of Singapore, Small and Medium Enterprises (SMEs) are not just the backbone of the nation's growth; they are the driving force behind its evolving commitment to sustainability. As the global spotlight intensifies on Environmental, Social, and Governance (ESG) reporting, these SMEs find themselves at the crossroads of compliance and commitment. "Elevating ESG Reporting in Singapore: The Power of Intent for SMEs" embarks on a journey into the heart of this dynamic nation to explore the transformative power of ESG intent. In a world where mere compliance is no longer enough, discover how Singapore's SMEs are harnessing intent-driven strategies to drive iterative value chain improvements, setting an example for sustainable business practices across the globe.

Introduction

Brief overview of ESG reporting and its global importance

ESG reporting, which includes Environmental, Social, and Governance considerations, has evolved as a critical component in the world of business and finance. It provides a critical lens through which organisations' commitment to sustainability, social responsibility, and ethical governance is evaluated. Over the last decade, ESG reporting has moved beyond corporate responsibility and compliance to become a global necessity. ESG reporting has become the foundation of responsible business practises as investors, consumers, and stakeholders demand greater transparency and responsibility.

The role of intent in ESG reporting

However, ESG reporting is more than just ticking boxes and complying with regulations. Compliance, while vital, is only the first stage in a lengthy process. The true value of ESG reporting is found in the motivation behind these efforts. The motivating reason that motivates firms to move beyond compliance is ESG intent, which is a true commitment to achieving beneficial environmental, social, and governance outcomes. It's the distinction between "doing what's required" and "doing what's right." When used correctly, intent may be a catalyst for dramatic change in the worlds of business and sustainability.

Thesis statement: intent drives greater impact than mere compliance in ESG reporting

This commentary investigates the idea that ESG intent, rather than mere compliance, is the major driver of long-term and significant impact. By studying the environment of Singapore's Small and Medium Enterprises (SMEs), we will demonstrate how these organisations can accelerate their strategies by moving their attention from ESG compliance to intent-driven practises. Singapore's SMEs, typically regarded as the economy's backbone, have a unique opportunity to use ESG intent as a driver for incremental value chain improvements. SMEs may push the bounds of compliance and create a more comprehensive and long-term sustainability agenda by taking a holistic strategy that spans the entire company ecosystem.

We will go deeper into this argument in the following sections by presenting pertinent facts and examples that throw light on how Singapore's SMEs may lead the way in embracing ESG intent for a brighter and more sustainable future.

The power of intent

Understanding intent in ESG reporting

Compliance with norms and laws is unquestionably vital in the field of ESG reporting. However, the fundamental driving factor behind long-term change and influence is intent. The concept of ESG intent reflects a significant shift in how organisations approach their environmental, social, and governance responsibilities.

ESG intent is an organization's sincere and emotional commitment to making a good influence in the world. It transcends regulatory requirements to become a driving factor for change. Companies that adopt ESG purpose see sustainability as an opportunity to integrate their business with societal and environmental well-being rather than a burdensome necessity. In essence, ESG intent is the heart of ESG reporting.

How intent enhances corporate commitment to ESG goals

Intention-driven ESG programmes develop a degree of corporate engagement that compliance cannot. When an organisation has a genuine desire to make a good difference, it causes deeper transformation throughout the organisation. Commitment to ESG goals becomes ingrained, becoming part of the company's culture and values.

Companies with ESG intent are more likely to be proactive, looking for ways to go above and beyond regulatory obligations and apply innovative solutions to challenging sustainability concerns. Their dedication reaches to the very heart of their operations, impacting decisions about sourcing, production, employee well-being, and community involvement.

Singapore's ESG landscape

Overview of Singapore's commitment to ESG principles

Singapore has cemented its status as a global leader in sustainable business practises. The proactive approach to sustainability exemplifies the city-state's dedication to ESG principles. Singapore has become an appealing hub for enterprises that prioritise environmental and social responsibility as a result of government policies, regulatory frameworks, and efforts targeted at encouraging ESG reporting.

The Sustainable Singapore Blueprint and Green Plan 2030 show the city-state's commitment to becoming a more sustainable and resilient city. These strategic roadmaps provide specific sustainability goals in areas such as renewable energy, green transportation, waste reduction, and biodiversity. Furthermore, the Singapore Monetary Authority (MAS) has published recommendations for financial institutions to incorporate ESG factors into risk management and investment choices.

In addition to the Blueprint and ESGenome initiatives announced in late 2022, Singapore has recently announced in June 2023 that The Monetary Authority of Singapore (MAS), in collaboration with the United Nations Development Programme (UNDP), and Global Legal Entity Identifier Foundation (GLEIF), will collaborate to develop digital Environmental, Social, and Governance (ESG) credentials for SMEs. The Project Savannah project would streamline the ESG reporting process for SMEs by leveraging digital initiatives such as MAS' Project Greenprint to provide ESG data credentials that can be stored in the Legal Entity Identifier (LEI) records of SMEs. MAS, UNDP, and GLEIF will assist Project Savannah on three fronts: capacity building, simplified reporting, and data collection and accessible data.

The role of SMEs in Singapore's economy

SMEs constitute the backbone of the Singaporean economy, accounting for roughly half of the country's GDP and employing a sizable share of its workers. Their influence spans across industries, from manufacturing to services, making them significant drivers of Singapore's economic growth.

SMEs are equally important in Singapore's march towards sustainability. Their enormous numbers, along with their ability to adapt fast, position them as potential change agents. The success of Singapore's sustainability programmes, on the other hand, is primarily reliant on the active engagement and dedication of SMEs.

The significance of fostering ESG intent among SMEs

For Singapore to continue on its road towards a sustainable and regenerative future, SMEs must not only comply with ESG norms but also truly embrace ESG intent. The objective goes above and beyond the bare standards, indicating a genuine dedication to environmental, social, and governance concerns.

Fostering ESG intent among SMEs is significant for several reasons:

  1. Economic Resilience: SMEs can improve their long-term viability by recognising sustainability opportunities and risks, which can protect their operations from future shocks.
  2. Competitive Advantage: ESG intent-driven initiatives can lead to innovation, differentiation, and the attraction of environmentally conscientious consumers, providing SMEs with a competitive advantage.
  3. Community Engagement: SMEs are frequently strongly embedded in their communities. They may contribute to social well-being by fostering ESG intent, further strengthening their ties with customers and stakeholders.
  4. Global Reputation: SMEs that actively pursue ESG goals are more likely to achieve international reputation, attracting investors and partners with similar principles. While it is not the sole intent to use ESG as form of PR, it is often easier for SMEs to communicate their vision to the global community if they have a ESG focus to their business. 

In the following sections, we will look at how Singapore's SMEs can use ESG intent to accelerate their business strategies through iterative value chain improvements, thereby contributing to a more sustainable and prosperous future for both Singapore and the global business community.

Public-private collaboration

How government policies support ESG intent in Singapore

A favourable regulatory environment and government regulations have considerably aided Singapore's progress towards promoting ESG intent among its SMEs. The country has recognised the importance of SMEs in determining its sustainable future and has put in place policies to foster ESG intent.

Singapore's government has introduced measures such as the Enterprise Sustainability Programme (ESP) and the Green Finance Action Plan. The ESP offers funds and resources to assist SMEs in incorporating sustainability into their business models. These rules not only make ESG compliance easier, but they also inspire organisations to demonstrate a proactive commitment to environmental, social, and governance goals.

Private sector initiatives promoting ESG intent

While government policies provide a firm basis, Singapore's private sector has also played an important role in encouraging ESG intent among SMEs. To assist businesses in their sustainability initiatives, a number of business alliances, industry groups, and ESG-focused organisations have arisen.

These private sector initiatives cover a wide variety of activities, from knowledge sharing and capacity building to the development of SMEs-specific sustainability assessment tools. They provide mentorship programmes, networking opportunities, and ESG reporting rules to help small and medium-sized businesses embrace ESG intent and drive change inside their organisations.

The symbiotic relationship between intent and compliance

ESG intent and compliance have a symbiotic relationship. ESG purpose is the driving factor that pushes businesses to go above and beyond regulatory obligations. While compliance establishes the starting point, intent raises the bar by encouraging SMEs to be proactive in solving ESG issues. Intention-driven behaviours frequently exceed compliance standards, bolstering a company's resiliency and reputation.

Companies in Singapore who sincerely commit to ESG objectives usually discover that compliance is a natural by-product of their efforts. SMEs that include ESG into their core strategies not only meet regulatory regulations, but also offer new solutions, react to changing market dynamics, and respond to shifting consumer demands. As a result, the symbiotic relationship between intent and compliance is strengthened.

Can philanthropy be part of the PPP coalition?

Indeed, philanthropy can play an essential role in the public-private partnership (PPP) coalition for ESG intent. Philanthropic efforts can further fuel ESG intent by providing resources and support to initiatives that aim to address pressing environmental and social challenges.

SMEs can actively engage in philanthropy by contributing to community development projects, supporting environmental conservation efforts, or funding educational programs. These philanthropic activities not only align with ESG intent but also enhance a company's reputation and create positive social impacts.

By incorporating philanthropy into the PPP coalition, Singaporean SMEs may tap into the resources, skills, and networks of both the public and private sectors to scale up their ESG intent-driven initiatives. This collaboration will help to create a more inclusive and sustainable ecosystem that will benefit not only businesses but society as a whole.

In the sections that follow, we will delve deeper into how this public-private collaboration, enriched by philanthropic efforts, can be leveraged to empower Singapore's SMEs in accelerating their business strategies through ESG intent, ultimately contributing to a brighter and more sustainable future for the nation.

Current initiatives in Singapore

Singapore has made tremendous progress in pushing its SMEs to embrace and incorporate ESG intent into their business strategy. Recognising the importance of SMEs in the national economy, the government has put in place a number of programmes and incentives to help them on their ESG path.

The Enterprise Sustainability Programme (ESP) is one notable programme. The ESP offers SMEs resources, tools, and financial assistance to assist them in developing ESG plans and reporting on their sustainability performance. SMEs can use the ESP to get grants for ESG consulting, training in sustainable business practises, and financial support to cover ESG reporting costs. These efforts enable SMEs to go beyond just compliance and pursue genuine ESG goals.

Future directions

The potential for increased intent-driven ESG reporting in Singapore

The road of Singapore's SMEs towards embracing ESG purpose is far from complete. As these companies continue to recognise the transformative power of intent-driven ESG reporting, the future holds the prospect of even greater progress in sustainability.

SMEs in Singapore are set to take their commitment to the next level, with a foundation of government support, private sector participation, and a rising awareness of the fundamental value of ESG intent. As more firms move their focus from compliance to generating a positive effect, the opportunity for increasing intent-driven ESG reporting is significant.

Upcoming ESG initiatives and trends

Singapore's dedication to ESG principles is expected to strengthen in the coming years. The country is set to establish new ESG programmes and legislation that support intent-driven reporting as part of its Green Plan 2030 and broader sustainability objectives. SMEs can expect increased assistance and resources to help them improve their sustainability initiatives.

Furthermore, ESG reporting trends will continue to shift, favouring organisations that have a true commitment to ESG intent. Sustainability reporting standards, such as those developed by the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD), will become more prevalent. SMEs who implement these standards proactively and convey their ESG objectives publicly will stand out in the market.

Singapore is also the first Asian jurisdiction to require ISSB-aligned climate reporting for non-listed enterprises (such as SMEs). In contrast, the Corporate Sustainability Reporting Directive (CSRD) employs a "double materiality" approach.  In June 2022, the Accounting and Corporate Regulatory Authority (Acra) and SGX RegCo created the Sustainability Reporting Advisory Committee (SRAC). The SRAC suggestions, released on July 6, advocate for ISSB-compliant climate-related disclosures for listed corporations beginning in FY2025, with non-listed businesses with annual revenues over $1 billion adopting the same by FY2027. This consultation round is scheduled to end on 30 September 2023.

The role of technology and innovation in ESG reporting and intent

Technology and innovation will be critical in hastening ESG intent-driven initiatives. Adoption of sophisticated analytics, artificial intelligence, and data-driven decision-making will enable SMEs to better assess, manage, and report on their environmental, social, and governance initiatives.

Emerging technologies will make the collection and analysis of important, modern ESG data more robust, allowing firms to uncover possibilities for improvement throughout the value chain. Innovation-driven intent will be a game changer in everything from supply chain optimisation to increasing energy efficiency.

Furthermore, blockchain technology will improve transparency and traceability, making ESG intent verifiable and trustworthy. This is especially crucial in areas such as responsible sourcing and carbon accounting.

The future looks bright for Singapore's SMEs, as intent-driven ESG reporting takes centre stage. As the country continues to build a supporting ecosystem, SMEs will be able to link their business plans with sustainability goals, driving iterative value chain improvements and contributing to a brighter, more responsible future for both Singapore and the global business community.

Call to action

Encouraging SMEs to embrace ESG intent

It is now time for Singapore's SMEs to fully embrace ESG purpose as a driving factor for transformative change. ESG intent is more than a checklist; it is a deliberate commitment to a sustainable future. To make this a reality, SMEs should actively attempt to incorporate ESG intent into their fundamental business objectives, transforming it into a part of their DNA rather than a mere compliance requirement.

It is past time for SMEs to recognise that ESG intent not only has a beneficial influence on the environment, society, and governance, but it also improves their resilience, competitiveness, and long-term growth potential. To get started, SMEs should educate themselves on ESG best practises, investigate resources available through government programmes and private sector initiatives, and aggressively disseminate their findings to stakeholders.

The importance of transparency and accountability

ESG reporting and intent-driven strategies are built on transparency and accountability. Small and medium-sized enterprises (SMEs) should prioritise accurate and honest reporting on their ESG performance, both to establish confidence with stakeholders and to identify areas where they can improve their intent.

Regular and transparent communication about ESG activities will keep SMEs accountable to their commitments. Setting quantifiable ESG targets, evaluating progress, and reporting on accomplishments and difficulties are all part of this. Transparency and accountability will not only boost credibility, but will also instil trust in investors, consumers, and partners, who are increasingly making decisions based on a company's ESG performance.

Collaborative efforts between the government, private sector, and SMEs

It is not necessary to walk alone on the route to ESG intent-driven success. To speed the ESG journey, Singapore's government, corporate sector, and SMEs should form stronger relationships. The government should continue to provide encouraging policies and resources to assist SMEs in developing ESG intent.

The private sector can help SMEs migrate from ESG compliance to intent-driven excellence by providing mentorship, guidance, and industry-specific expertise. Small and medium-sized enterprises (SMEs) can actively participate in industry groupings and alliances that promote ESG purpose, obtaining significant insights and support.

SME leadership to refocus their corporate intent towards ESG and long-term strategy creation

Leadership will be the driving factor for change as Singapore's SMEs embark on their ESG intended journey. SME leaders should promote ESG intent across their organisations by incorporating it into company culture, values, and decision-making processes.

To truly accelerate business initiatives, SMEs must refocus corporate intent on ESG and long-term strategy development. This entails incorporating ESG into all aspects of their business, from procurement and manufacturing to marketing and customer involvement. Setting ambitious, measurable ESG targets and committing to iterating their value chain to reduce environmental impact, promote social well-being, and strengthen governance practises are all part of it.

The message to Singapore's SMEs is simple: embrace ESG intent, drive openness and accountability, cooperate with stakeholders, and, most importantly, let leadership lead the way. SMEs will not only progress their own businesses, but will also make a vital contribution to Singapore's journey towards a more sustainable and prosperous future. The time to act is now, and there is still time for constructive change.

Conclusion

Recap of the importance of intent in ESG reporting

The significance of ESG purpose cannot be understated. It reflects the fundamental distinction between ticking compliance boxes and making a meaningful commitment to a sustainable future. ESG purpose is the driving force that drives organisations, especially Singapore's SMEs, to go beyond regulatory requirements and strive for revolutionary change.

As mentioned throughout this post, ESG intent has a bigger impact than ESG compliance alone. It promotes innovation, increases competitive advantage, and aligns enterprises with societal and environmental well-being. By embracing ESG purpose, SMEs may direct their efforts towards incremental value chain improvements, catalysing a more sustainable and successful future.

Singapore's journey towards maximizing ESG impact

Singapore's effort to maximise ESG impact demonstrates the country's commitment to sustainability. The government, corporate sector, and small and medium-sized enterprises (SMEs) have all recognised the revolutionary impact of ESG purpose. They have worked together to create an atmosphere in which ESG is not just a mandate, but a strategic goal.

Initiatives like the Sustainable Singapore Blueprint, the Green Plan 2030, and the Enterprise Sustainability Programme demonstrate the country's unwavering commitment to making Singapore a more sustainable and resilient city. Singapore's SMEs are critical players in this journey, contributing to the nation's broader sustainability goals.

The path forward: cultivating ESG intent for a sustainable future

As we move forward, building ESG intent for a sustainable future will require a collaborative effort from SMEs, the government, and the private sector. Small and medium-sized enterprises (SMEs) must actively embrace ESG intent, aiming for intent-driven strategies that go beyond compliance and promote revolutionary change. In addition, they should prioritise transparency and accountability in their ESG reporting so that stakeholders may hold them accountable.

Collaboration is essential for success. The government should maintain favourable policies and resources, while the business sector should provide knowledge and guidance. These joint activities have the potential to increase the effect of SMEs' ESG intent-driven strategy. I would also like to add that collaboration may not be enough to ensure success as Singapore’s future is closely intertwined with our member countries in ASEAN. It is of greater urgency that SMEs understand the power of coordinated collaboration where they form close networks with their business partners and regional contact, to bring about stronger relationships and understanding. 

Singapore as a beacon of sustainable finance and disclosure for ASEAN

Singapore has the potential to become an ASEAN region beacon, a standard bearer of sustainable finance and disclosure. Singapore's SMEs may set the norm for responsible business practises by actively embracing ESG intent and implementing incremental value chain improvements, pushing their regional peers to follow suit.

This ESG intent and transparency leadership will not only enhance Singapore's worldwide reputation but will also position it as a sustainable financial hub, drawing foreign investors and partners dedicated to responsible business practises. Singapore has the opportunity to lead the ASEAN region towards a more resilient and sustainable future.

The journey towards ESG intent-driven strategies is a transformative journey towards sustainability, resilience, and profitability, not just compliance. Singapore and its SMEs can pave the path for a brighter, more responsible future for everybody by establishing ESG intent.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the author

Alex Hong is the Executive Director of Digipulse Data and strategic advisor. He is the Chief Sustainability Coordinator of the Youth Networking Business Committee (YNBC). Alex is LinkedIn’s Top Voices (Green) in Singapore 2022 and represents the Global Blockchain Business Council (GBBC) as the Ambassador of Southeast Asia.

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