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Sustainability Reporting: A Conversation with Mr Sadashiv of Ernst & Young

March 14, 2016

Starting from Financial Year 2017, firms listed on the Singapore Exchange (SGX) will be expected to publish sustainability reports. The Climate Fellows had the opportunity to meet and chat with Mr. Sadashiv of Ernst & Young (E&Y Singapore), who heads the Climate Change and Sustainability Services Department (CCaSS ‘see-cass’). We talked about what sustainability reporting means for companies as well as other environmental issues in the Singapore context.

CCaSS works with companies on their climate change and sustainability strategies, with a range of services including advisory, verification of carbon emissions and the carbon footprint of companies. They help companies create a sustainability framework, advise companies on their risk management systems and implement programs. These help a company with sustainability reporting.

The hope is that compulsory sustainability reporting will drive companies to start, or continue to improve on their business’s sustainability. However, companies may feel that sustainability reports are just one more overhead for the company to bear, making it a burden instead. Mr Sadashiv rebuts this perspective, saying that sustainability is part and parcel of running the business. He gives the example of General Electric’s Ecomagination, which produces cars, and products with green technology that are higher priced than their regular products. Innovation will breed competitiveness, which is a good thing. Companies can show their customers they are environmentally conscious while also making profits.

Singapore could take cues from the Scandinavian countries that are driving the trend towards exhibiting responsible behavior, whether toward climate change or other environmental issues. Mr Sadashiv believes ASEAN is at the starting block as there is evidence of positive commitments happening at the governmental level (such as the INDCs), but the speed at which these regulations are implemented is much slower. With compulsory sustainability reporting it will happen in fits and starts, depending on whether companies see it as a reporting burden or an asset.

Ideally, there should be a push toward sustainable behavior before pushing sustainability reports. Singapore is a society which over consumes. For example, a handphone contains rare Earth material that constitutes tons of earth dug up to make it, yet the pricing system for handphones is designed to drive the consumer to replace it every 18 months. Many people don’t recycle their handphones and have 3-4 in a drawer somewhere that they don’t use. Other problems Singapore faces:

  • Waste Separation is an issue for us due to the way HDBs have been built.
  • We are addicted to air conditioning. How do we encourage people to convert to fans, which are actually healthier for us?
  • Prices for repairing dryers (and other household appliances) make buying a brand new model more worthwhile than repairing it, and this is done on purpose because that’s the company’s strategy.
  • Pulau Semakau may run out of space to put our waste but no one seems to be worried about this.

So what exactly is lacking in Singapore culture?

Mr Sadashiv says, “An appreciation of how what we do in everyday existence links to the wider world or bigger problem of waste.”

This sounds very much like what companies should consider when it comes to climate change and sustainability: “What, due to my operations, are the externalities I should consider? What is the impact I’m having?”

What should SGX sustainability reporting include?

  1. Material matters/issues–expecting the company to declare the framework they’re using for reporting their energy, waste, water, etc.
  2. Stakeholder engagement (verified by the stakeholders). Global Reporting Initiative (GRI) defines stakeholders as those who have an impact on the company, and vice versa.
  3. Need to have policies and procedures in place.
  4. Set targets for the material matters that have been identified.
  5. Most importantly, the board of directors sign off to endorse the sustainability report.

Setting targets is tricky because companies worry about whether it is practical to have an annual target to meet. From a sustainability perspective, a long-term ambitious target makes more sense than a short-term target, as you may have to wait for technology to catch up.

Overall, it seems to boil down to people and companies living in a way that involves taking responsibility for the consequences of their actions. Sustainability reporting is one measure to motivate companies, but there needs to be a fundamental push on the individual in society to practice sustainable behavior as well.

Further Reading:

E&Y Analysis of the Top 50 SGX companies and their state of sustainability reporting at present

 

 

 

 

 

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