1. Good afternoon, everyone and thank you to our speakers for your insights, and to our moderator and panellists for an engaging and original discussion.
Listed Issuers’ sustainability and climate reporting journey to date
2. I was at the REIT Association of Singapore’s (REITAS) annual conference last week where Ernst & Young Singapore (EY) presented on climate risk disclosures in Singapore REITs. The full report is targeted for release soon.
3. One of their key report findings is that 100% of REITs have started climate-related disclosures. Why is this? I attribute this to clarity in four areas:
(i) First, the vision for the real estate sector in Singapore is clear. The Singapore Green Building Masterplan (SGBMP) is wonderfully clear and precise. The masterplan aims to deliver three key targets, which is to have: (i) 80% of buildings by Gross Floor Area (GFA) to be green by 2030, (ii) 80% of new developments by GFA to be Super Low Energy (SLE) buildings from 2030; and (iii) 80% improvement in energy efficiency (from 2005 levels) for best-in-class green buildings by 2030.1
(ii) Second, the transition pathway for S-REITS is also clear. Energy efficiency, water conservation and waste management. So, these translate intuitively to solar panels, low flow plumbing and recycling bins.
(iii) Third, the benchmarks and performance standards are clear. Not only is there the GRESB which is a leading global ESG benchmark for the real assets industry as a whole2, there is also at the individual asset level, green building rating systems with the most widely used being the Leadership in Energy and Environmental Design or LEED.
(iv) Fourth, the value proposition is clear. There is more demand from better quality tenants willing to pay higher rents to lease sustainability-certified buildings.
4. This is an example of how quickly an industry can advance in its sustainability reporting journey, when all the ingredients are present to help it along the way. While it may be more complicated for other industries, we can surely take a leaf from the S-REITs’ recipe of success. With the time constraint, it would not be possible to deep-dive into all these areas this afternoon. So I will just flesh out in more detail one of the ingredients - the value proposition - using concrete examples that we have seen our companies already doing.
Value proposition 1 - cost savings
5. A simple sustainable practice is to increase efficiency in how you use your resources, for example energy. You can implement energy efficiency measures which in turn, will lower energy costs. Issuers have done so by just switching to LED lights. In addition to lower power bills, there is another incentive to adopt energy management solutions, namely Singapore’s progressively higher carbon taxes.
Value proposition 2 – supply chain risks and opportunities
6. This lies within your supply chain. Large companies are now asking their critical suppliers questions about their sustainable business practices.
7. Perhaps the most prominent example is the Singapore government which has launched a GreenGov.SG initiative as part of the Singapore Green Plan 2030. Under this initiative, the public sector has committed to purchasing products that meet high efficiency or sustainability standards. This is to be expected as the government intends to publish an annual sustainability report from FY 2023. In other words, suppliers and participants in government tenders with better sustainability policies and practices may stand a better chance .
Value proposition 3 – new financing
8. The third value proposition is that sustainable businesses can harness new financing opportunities, for example access to green bonds or green loans. Many listed issuers have obtained such green financing solutions from local banks. SGX Group has also launched the SGX Sustainable Fixed Income initiative for green, social and sustainability fixed income securities that meet recognised standards. Currently, there are 120 fixed income securities which are recognised under the initiative.
Value proposition 4 – new business opportunities
9. Finally, I leave you with an example of a company which has found new business opportunities while navigating its sustainability and climate reporting journey. This is a Catalist issuer which traditionally provided total mooring solutions to the offshore oil and gas and marine industries. More recently, the issuer has pivoted to applying its experience and expertise to offshore renewable energy projects.
Conclusion
10. These are but a few examples of benefits our listed issuers have reaped from looking at sustainability. The point I want to make is that it is not as complicated as you think. And it does not matter whether you are a big cap or small cap company.
11. As long as you continue this sustainability journey, SGX RegCo will be your partner in capacity building. Thank you and I wish you all a pleasant day ahead.
- Building and Construction Authority webpage on Green Building Masterplans, https://www1.bca.gov.sg/buildsg/sustainability/green-building-masterplans
- GRESB webpage, https://www.gresb.com/nl-en/the-power-of-gresb-driving-change-in-the-real-assets-industry/