Singapore firms making steady headway on sustainability front: HSBC

Businesses in Singapore recognise the importance of sustainability as a driver of reputation, growth and profitability, yet have not fully converted sentiment into meaningful action, a HSBC report has found. Not having a stronger approach to Environmental, Social and Governance (ESG) is also simultaneously impacting corporates’ financing opportunities as well as presenting supply chain risks. 

The views come from a HSBC survey, “Navigator: Now, next and how for business,” which involved seeking the views of more than 8,500 companies in 34 markets including 100 Singapore businesses. The survey sought to explore business understanding of ESG practices within their own business and their supply chain, as well as green finance. 

HSBC’s Navigator survey reveals that Singapore businesses see the importance of ESG, but adoption is lagging intent. The findings show that amongst Singapore firms – 88% agree that sustainable practices will enhance growth and profitability in the near term (87% globally). Yet only 64% have environmental policies in place (compared to global average of 74%). 71% have social policies in place (74% global average) and 79% have governance policies in place (79% globally).

The findings around governance within ESG – which is focused on the monitoring and reporting of a business’ sustainability measures – show that corporates in Singapore are responding positively to the Republic’s efforts to raise sustainability on the corporate agenda. 

Measures include the Singapore Exchange mandating listed companies to produce sustainability reports on a “comply or explain” basis. Since its 2016 inception, there has been a 76% year-on-year increase in corporates reporting their sustainability practices.

Alan Turner, Managing Director and Head of Commercial Banking, HSBC Singapore, said: 
“The HSBC survey shows that Singapore firms are making steady headway on the sustainability front, and should be applauded for their high level of disclosure. Having increased their transparency through reporting, now comes the pressure for businesses to up their game in developing meaningful environmental and social policies so to enjoy the business benefits.”

Whilst businesses in Singapore are monitoring their supply chains for environmental and ethical standards to some extent, only 8% monitor it fully, compared to the global average of 15%. This reveals an emerging risk for Singapore businesses.

As sustainability moves up the agenda in Singapore, the region’s supply chains will need to react to retain their competiveness. More than 4,500 companies base their head office in Singapore and draw upon suppliers from other neighbouring markets. Changing weather patterns have meant that 50% of all natural disasters across the world are happening in developing Asia. 

The need of the hour is for businesses to adopt ESG practices.