Environmental, Social and Governance (“ESG”) in Singapore: An Overview of Recent Initiatives

JTJB Law Bites Nov 21


With the rising importance of environmental, social and governance (“ESG”), businesses are actively committing to maximising the triple bottom line (i.e. People, Planet, and Profit). A proper management of ESG risks is vital for Singapore businesses to be a successful player in both the Asian and international markets.

Recent ESG Related Initiatives

Energy intensive companies are one of the earliest groups targeted in Singapore’s efforts to tackle environmental issues. Since 2013, these companies have been required to abide by the Energy Conservation Act and meet requirements for mandatory energy management practices, including to appoint an energy manager, submit an energy efficiency improvement plan and implement an energy management system.

Sustainability reporting is mandatory for companies listed under the Singapore Exchange and was introduced on a “comply or explain” basis in June 2016. This requires the Board to consider sustainability issues as part of its strategic formulation and also to oversee the management and monitoring of material ESG factors. Shareholders are demanding that companies do more than maximising shareholder value, they require companies to account for their ESG performance by way of sustainability reporting. Consumers are becoming more environmentally aware and would consider a company’s ESG standards when making purchasing decisions. Gradually, more investors are taking into account ESG factors as they go beyond financial goals and are concerned about the nonfinancial outcomes of their investments.

The increasing focus by governments, investors, customers and stakeholders to ensure that sustainability is a key consideration for companies has resulted in a strong demand for companies to furnish information that addresses ESG related concerns. On 3 November 2021, the International Financial Reporting Standards (“IFRS”) Foundation (which issues the accounting standards used in more than 140 global financial markets, including Singapore), announced the publication of prototype climate and general disclosure requirements. A new International Sustainability Standards Board will also develop a set of sustainable disclosure standards. Although the requirements and standards have not been formalised, this provides companies a glimpse of what may potentially be a global ESG reporting standard.

Earlier this year, the Singapore government rolled out the Singapore Green Plan 2030 as part of the nation’s efforts at sustainable development. As part of the plan, a Green and Sustainability-Linked Loan Grant Scheme is made available to support companies that wish to obtain sustainable financing. In addition, the public sector will factor the sustainability-related policies and practices of companies that participate in government tenders. To ensure that they are well placed to compete, companies that intend to tender for government projects should assess the ESG factors relevant to their business and implement the necessary ESG policies and practices.

Financial institutions are also playing their part in addressing environmental risk. In December 2020, the Monetary Authority of Singapore issued the Guidelines on Environmental Risk Management which provides asset managers, banks and insurers until June 2022 to make the necessary implementations and demonstrate evidence of the same. The aim of the guidelines is to enhance the financial institutions’ resilience to environmental risk and sets out the regulator’s expectations on the environmental risk management practices by the financial institutions.

The Road Ahead

In addition to staying updated on the regulatory developments, it is also important that Singapore businesses manage their ESG risks to remain competitive and avoid potential liability. This includes carrying out a risk assessment to identify relevant risks, developing policies to mitigate the risks identified and integrating the policies into everyday business practices.

JTJB has an established presence in Asia through our network of offices. We are also part of ADVOC, a leading international network of independent law firms, and have connections to law firms in over 70 countries worldwide. With our capabilities and connections, we are able to offer you comprehensive advice that your business needs on ESG matters.

For more details contact:

Nicola Loh


JTJB Singapore Office
E : nicolaloh@jtjb.com
T : 6223 3477 / 9170 7925