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November 29, 2023

ESG standard setters launch best practice platform in Singapore

Regulatory requirements and sustainability reporting pressures by foreign investors were among the reasons to headquarter SIL in Singapore. The city-state is the finance hub of southeast Asia, a region whose rapid growth has caused an ESG reporting gap (Photo: Ore Huiying/Bloomberg)
Regulatory requirements and sustainability reporting pressures by foreign investors were among the reasons to headquarter SIL in Singapore. The city-state is the finance hub of southeast Asia, a region whose rapid growth has caused an ESG reporting gap (Photo: Ore Huiying/Bloomberg)

The International Sustainability Standards Board and the Global Reporting Initiative have launched a best practice platform in Singapore to help companies prepare for an increasing slew of sustainability requirements

With the alignment of sustainability disclosures now a global concern, two international standard setters are looking to Asia to facilitate this work.

On November 20, the International Sustainability Standards Board and the Global Reporting Initiative launched the Sustainability Innovation Lab in Singapore. The choice of southeast Asia was driven by the desire to fill the ESG reporting gap left by the region’s rapid economic growth, coupled with its growing environmental challenges.

“I think Asia is more adapted to change,” GRI chief executive Eelco van der Enden said at a press briefing held at the SIL launch. “New economies are less traditionally focused, more flexible and more capable of dealing with change.”

Growing regulatory requirements and sustainability reporting pressures by foreign investors were also cited as reasons to headquarter SIL in Singapore. The city-state is the region’s finance hub and is responsible for more than 90 per cent of assets under management in southeast Asia, according to GRI. 

“We noticed that many professionals and suppliers are not fully ready and do not yet understand the transformation that is currently pending in global supply and value chains,” van der Enden said.

SIL Asia aims to help companies with upcoming disclosure requirements that many are unprepared for, say van der Enden and ISSB chair Emmanuel Faber. “For most legal professionals, sustainability reports are a new field,” said van der Enden, who suggested the same is true for “accountants providing assurance, or validating those reports”.

GRI plans to leverage the Singapore government’s strong commitment for sustainability to “support the ambitious goal of SIL” as it grows beyond the region. “We are not here to reinvent new languages,” Faber said at the press briefing. “We are here to make sure we assemble those languages that [already] exist and that are working well into a format that moves the capital allocations into more resilient business models. 

“This is where the cooperation with GRI started 18 months ago,” he added.

SIL is aiming for global reach, with an initial focus on Asia. Plans for representatives in Thailand, Indonesia, Malaysia and Japan are in the works, but there is no timetable yet for when this will happen.

Reducing reporting burdens

Faber listed some of the questions being posed around sustainability reporting requirements: “Here in Asia where GRI is used by many companies. How can you lower the costs for these companies that are using GRI today but may have to use ISSB in the near future because regulators are going to make it mandatory? How can companies best do that together?”  

GRI is the most commonly used framework for sustainability reporting in Asia Pacific, with around 81 per cent of the top 50 listed companies across the region’s 14 major jurisdictions using it as the dominant standard, according to a June 2023 study by consultants PwC. According to Faber: “This is really what started the idea of the SIL – with capacity building, with working on taxonomies and understanding the mapping of the standards.” 

IFRS Foundation and GRI first announced their collaboration agreement in March 2023, under which their respective standard setting boards, the ISSB and the Global Sustainability Standards Board, would seek to streamline their standard-setting activities.

The agreement followed public pleas from reporting entities in the region for a reduction in reporting burdens through better alignment of ISSB and GRI’s work programmes.

“[The establishment of SIL] is a strong signal that first of all, there is no competition between ISSB and GRI – as people have said that one is going to push the other out of the market – we are perfectly complementary,” said van der Enden. “ And if we didn’t like each other, we wouldn’t be working together.”

The ISSB and GRI collaboration provides two pillars of international sustainability reporting – a first pillar representing investor-focused capital market standards, and the second pillar of GRI sustainability reporting requirements designed to meet multi-stakeholder needs.

“We listened to the wishes of investors and the market. That is why we are not only looking at producing a framework to report on, but also trying to enhance basic knowledge and understanding of what it is to report on and how to report on it,” said van der Enden.

A service from the Financial Times