An increasing number of companies are embracing sustainability goals and seeking to reduce their carbon footprints. This growing interest in Environment, Social and Governance (ESG) issues globally has led to a call to provide greater transparency in business financial reporting.
In recent years, the International Financial Reporting Standards (IFRS) Foundation proposed an International Sustainability Standards Board (ISSB) with G7 Finance Ministers and Central Bank Governors expressing support for it.
Singapore: Wheels are in motion
Closer to home, companies in Singapore may soon have a clearer picture of how to carry out sustainability reporting.
On 21st June 2022, the Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo) formed a sustainability reporting advisory committee to provide guidance on a road map for companies incorporated here.
Together, they are developing a road map for wider implementation of sustainability reporting for Singapore companies beyond those listed on the local bourse.
This important progress made towards establishing sustainability standards means that we are likely to see some of the most significant innovations in corporate accounting and reporting.
Three basic considerations to start preparing for these changes:
1. Don’t wait for sustainability reporting to be mandated
Companies have a great opportunity now to prepare for new regulations around sustainability reporting, and commit to transparency and accountability.
This means setting out to gather information, in order to inform company strategies, manage risks and achieve a stronger, more sustainable performance over the long term.
2. Put ESG reporting on the board’s agenda
Your board must understand how ESG investing and stewardship trends are impacting access to capital and relationships with investors. They should assess which ESG areas are most relevant to their company and monitor developments in sustainability reporting. These will then need to be integrated into the company’s broader strategy and enterprise risk management.
3. Integrate finance function
Finance departments can play a key role in preparing for sustainability reporting. They will need to understand what the public and investors need to know about sustainability, and translate that into the most relevant metrics and disclosures.
Companies can show that they contribute to making the place a better place to live, work and do business. This means focusing on sustainability efforts and communicating them to the public and investors. The planet won’t wait – and neither should we.
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