Singapore is seeing rising adoption of environmental, social and governance (ESG) with the government and stock exchange highlighting sustainability in recent moves, notes RHB Group Research in its inaugural ESG conference.
From June 22 to 24, RHB hosted ESG practitioners and industry experts who presented the latest regulatory requirements, the current operating environment, challenges and future goals.
The government, Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) have been taking steps to formulate long term sustainability policies, enhance scrutiny and compliance by companies, and offer ESG-related products.
SGX has implemented sustainability reporting on a “comply or explain” basis since 2017. Today, its iEdge SG ESG Leaders Index includes more than 80 companies.
In February 2021, the government unveiled the Singapore Green Plan 2030, a “whole-of-nation movement” to advance the country towards sustainable development. In June 2021, MAS released its inaugural sustainability report, and its plan to green the city-state’s finance sector and lead the energy transition in Asia and announced plans to test the climate resilience of its official reserve investments. Singapore companies are rapidly adapting ESG practices and incorporating them into their business strategies.
Sembcorp Industries
Sembcorp Industries (SCI) was among the speakers at the corporate breakout sessions.
By focusing on growing its renewables and integrated urban solutions businesses, it aims to transform its portfolio towards a greener future and be a leading provider of sustainable solutions, says Ng Lay San, senior vice-president, group strategic communications and sustainability.
The company has a balanced energy portfolio of over 12,800 megawatts (MW), with more than 3,300MW of renewable energy capacity comprising solar, wind, and energy storage globally.
SCI is a component stock of the Straits Times Index, as well as sustainability indices that include the FTSE4Good Index and iEdge SG ESG indices. “SCI has set its vision to be a leading provider of sustainable solutions, supporting development and creating value for its stakeholders and communities,” says Ng.
SCI has identified the growing trends towards decarbonisation, electrification, and urbanisation as an opportunity to not only advance its sustainability initiatives, but also incorporate them into the company’s renewed business strategy. “SCI plans to transform its portfolio from brown to green as it looks to grow the percentage share of net profits from sustainable solutions to 70% in 2025 from 40% in 2020,” says Ng.
To transform its business from brown to green, SCI plans to quadruple its grow renewables installed capacity of 2.6 gigawatts (GW) to 10GW by 2025 through organic growth and selective mergers and acquisitions or partnerships; and reduce its greenhouse gas emission (GHG) intensity by 25% by committing to halve GHG emissions by 2030 from the 2010 baseline of 5.4 million tonnes of CO2 equivalent (tCO2e) and deliver net zero emissions by 2050.
The company also intends to triple its land sales in the urban business to 500 hectares by 2025 while offering synergistic platforms for sustainable growth.
“SCI expects profits for its renewables business to grow at a compound annual growth rate (CAGR) of 30% while its integrated urban solutions business is likely to grow at a CAGR of 10% during 2020- 2025,” says Ng.
As a commitment towards climate action, SCI will not make any new investments in coal-fired energy assets and could even consider divesting some of its fossil fuel-fired energy assets, if deemed necessary to meet its emissions-reduction target.
SCI plans to invest $5.5 billion towards sustainable solutions and has also identified the need to focus on new and green sources of capital to fund its transition from brown to green solutions. The company recently launched its inaugural $400 million green bond offering in June, and was the first certified green bond under the Climate Bond Standards by a Singapore-based energy company.
ComfortDelGro
Meanwhile, ComfortDelGro (CD) group chief risk and sustainability officer Jackson Chia highlighted the company’s sustainability journey, which began 14 years ago with the introduction of the group’s Green Statement.
In 2016, CD was one of the earliest firms to publish a sustainability report before it was made mandatory for SGX-listed companies the following year. However, its real concerted effort towards building a sustainability strategy began in 2018 when it set up a group-level sustainability office with a focus towards driving the ESG agenda, says Chia.
CD’s global sustainability strategy focuses on three key areas: enabling an energy-efficient transport system, enhancing the safety and well-being of the community and its people and engraining a culture of innovation and strong governance.
It has mapped its sustainability framework to 10 of the 17 United Nations Sustainable Development Goals.
At group level, CD has identified four initiatives to enhance its efforts towards a sustainable business model. Firstly, CD commits to the Science-Based Target Initiative (SBTi), an international project to limit global warming to less than 2 degrees Celsius of pre-industrial levels, that requires the group to reduce GHG by 50% from 2015 levels by 2030 and ready CD for net zero GHG emissions by 2050.
Secondly, CD is starting work on Taskforce on Climate Change Financial Disclosures or TCFD. Next, CD is working to level up knowledge on Carbon Offsets and Renewable Energy Certificates.
Finally, CD is integrating sustainability considerations into its business strategies.
In order to work towards SBTi, CD is looking to transition to a greener operating fleet and working with various stakeholders like electric vehicle-charging infrastructure providers and regulators to speed up the process. It also plans to expand solar panels installation at bus and train depots and interchanges with an aim to increase the capacity from 2MWp to about 9MWp, says Chia.
CD is looking to improve fuel efficiency through the adoption of eco-driving habits and better network planning to reduce dead mileage. For its rail business, where most of its operations are underground, it plans to reduce energy use through air-conditioning optimisation and improving chiller plant efficiency.
CD is already operating hybrid vehicles across its land transport operations in Singapore, Australia, UK, and China. It has been testing fully electric taxis in Singapore since 2019 and recently launched a hydrogen bus service in London.
“CD plans to eventually integrate sustainability in its businesses and growth strategies as it looks towards exploring other green verticals in which it can expand and build a compelling ESG narrative and proposition when it submits applications for future tenders,” says Chia. “It will also take the ESG evaluation criterion into consideration for all future inorganic growth opportunities.”
