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Good afternoon and welcome to SGX.
1. I spoke last week at an event on “Climate Reporting in ASEAN” and said, among other things, that as a regulator, we are looking at the adoption of the International Sustainability Standards Board reporting standards. These standards could be finalized as early as the end of this year and lead to more complete, consistent and comparable climate disclosures by our listed companies.
2. You can imagine that I received a lot of questions after that speech. One of the most interesting questions, which was posed to me by a director, was whether, given the speed of all these developments, it is sufficient for the board of directors to be ‘climate generalists’, or do we actually need ‘climate specialists’ in the boardroom.
3. Consider the topic of cybersecurity, by way of example, yet another disruptive force. Earlier this month, the Cyber Security Agency of Singapore issued a new Code of Practice for Critical Information Infrastructure. The Code of Practice is explicit about requiring cyber specialists. The board of directors and senior management are to include at least one member each that has sufficient knowledge of and sufficient awareness of specific cybersecurity matters.
4. So perhaps we also need to recognise the increasing complexity in managing climate change. Currently we only require all directors of our listed companies to undergo a one-time sustainability training. Should we start demanding greater expertise in our companies that goes beyond this? These are valid questions. Which is why this event, which will discuss the preconditions of a sustainable financial sector, is very timely.
5. The financial sector has an outsized representation in the global economy, and consequently an outsized responsibility. In fact, unsurprisingly, the Task Force for Climate related Financial Disclosures pays special attention to the financial sector, giving it its own supplemental guidance for reporting. This sector is after all a key user of climate disclosures, whether you are from a risk underwriter or insurer, a lender such as a bank, or an investor, whether asset manager or asset owner. Also, the climate risks financial institutions are exposed to, or have concentration in, have a bearing on the entire financial system.
6. So today, instead of focusing on the ‘what to do’, or ‘how to do’, I would like to speak about the ‘who to do’ – and the skills and talents that they need. I see at least three trends that are critical to our industry:
a. The emergence of a new ‘green collar’ class;
b. The acceleration of capacity building in the financial system; and finally
c. The right-skilling of individuals.
7. Let us consider the first trend, which is on the supply side of the labour force. A 2022 Accenture survey found that four in five young people across Asia-Pacific say they want to work in a green economy.[1] This new class of ‘green collar’ workers wants to help their countries transition to a more sustainable future.
8. At the same time, we must accept that not all these job seekers are going to come armed with the right sustainability qualifications. After all, sustainability is a relatively new field, whether in schools or at the workplace. But whatever they may lack in academic credentials or work experience, I believe the youths of today will make up in passion, drive and resourcefulness, if they are given the opportunity.
9. Now, why do I believe this? Because I’ve seen them in action myself. We have been organising sustainability case competitions with the National University of Singapore Business School for a few years now. Each time, the students impress me with how quickly they grasped the sustainability challenge for that year and with the innovative ideas they bring to the table. And these student participants then join us as interns so we can continue to find new ways to tackle the sustainability problem together.
10. Let us now consider the second trend, on the demand side of the job market. With the rising expectations of stakeholders and regulators, corporates would need to build up internal capability to meet these demands. Indeed, apart from considering whether to add climate expertise to a board of directors’ skills matrix, such expertise could even be required for the next CEO search and there are starting to be calls for climate related executive KPIs or key performance indicators.
11. Another driver of these demands will come from lenders, investors and insurers, all key players in the green finance sector. The estimated green investment needed in ASEAN alone is US$200 billion per year until 2030. Indeed, developing the green finance sector is one of the key pillars of the MAS Green Finance Action Plan. These players will require reliable climate data, and this will in turn create a need for data platforms, tools and services for reporting, processing and interpreting such data.
12. As these two trends gain in prominence, trend No. 3, which is about right-skilling, comes into play. And I’m referring specifically to the appropriate talent and skills for the individual required to meet our sustainability needs.
13. The MAS and the Institute of Banking and Finance (the IBF) have identified 12 Sustainable Finance Technical Skills and Competencies (TSCs), the 12 TSCs, for the financial sector. The TSCs range from broader thematic topics such as Climate Change Policy Development to more functional knowledge topics such as Sustainability Reporting, which is of course an SGX requirement for our listed companies. The training that we recently provided for our companies and directors on climate reporting is just one example of a right-skilling program developed around a TSC.
14. I feel strongly that nowhere else is there more opportunity than in this area right now. Why? Because everything is either new or evolving quickly. Compared with the over 100 years of development in the area of financial accounting and financial disclosures, sustainability reporting is just around 20 years old and involves far more stakeholders and pressing issues. This makes developing the pool of people with the right skills almost like a greenfield project.
15. Simply put, this area is such a fresh one, it’s up for grabs by anyone with the right amount of interest, skills and attitude. And unlike the boardroom where women are still trying to make their presence felt in certain companies and certain markets, the sustainability arena offers possibly less resistance to diversity including gender diversity, because it is a much more uncharted and level playing field.
16. In terms of the size of the opportunity, if we just pick one out of the 12 TSCs, say Carbon Markets and Decarbonisation. In Singapore, the carbon tax is projected to increase five-fold in 2024 and even more after that. Who knows what the price of carbon will be in other parts of the world. Companies need specialists who can lead their organisation’s decarbonisation strategy, including setting internal carbon pricing to assess business and investment decisions and using high quality carbon credits to offset unavoidable emissions. Let’s not forget that carbon markets are also developing in Singapore, including Climate Impact X, the global carbon credit exchange that is a joint venture between SGX, DBS, Standard Chartered and Temasek.
17. So, the 12 TSCs are clear and relevant to the growing sustainable finance landscape. This is an opportunity for men and women in the financial sector to right-skill, make an impact and take on leadership roles.
18. And If I may say so, WISE can play an important role through its mentorship program for young women who are interested in pursuing a career in sustainability and creating awareness through events like the one we have today.
19. In short, the field is wide open and I look forward to meeting many new talent in the sustainability space.
20. On that note, I wish you a fruitful panel discussion ahead. Thank you.
[1] https://www.channelnewsasia.com/climatechange/green-collar-sustainable-development-jobs-employment-1298111?force_isolation=true
