4 hours Ago By The Straits Times
Climate-linked remuneration is a disclosure requirement under a new reporting framework for Singapore-listed companies from FY2025. Janice Lim SINGAPORE - Only 38 per cent of Singapore’s largest 100 companies have tied the remuneration of their executives to the achievement of sustainability goals, a survey by KPMG has found. While this was ahead of the global average of 30 per cent, it was lower than the 67 per cent figure in 2022, noted the professional services firm in a statement on Nov 28.
The decline could be a reflection of company boards exercising caution around disclosure, particularly as climate-linked remuneration becomes a disclosure requirement under the new reporting framework developed by the International Sustainability Standards Board (ISSB). This has prompted strategic recalibrations, said Cherine Fok, a partner of ESG Consulting at KPMG in Singapore. The Singapore Exchange has mandated that listed companies report their climate- or sustainability-related disclosures in line with the ISSB framework from financial year 2025, though this requirement excludes Scope 3 emissions.
Such emissions arise from a company’s supply chain, rather than from its operational activities (Scope 1) or its purchase of electricity (Scope 2). Nonetheless, corporates in Singapore still outperformed their global peers in sustainability reporting, KPMG’s survey of sustainability reporting in 2024 has found. Companies here exceeded the global averages in six out of 12 key indicators.
Singapore is also one among only seven markets in which all 100 companies surveyed made sustainability-related disclosures. The global average is 79 per cent. The survey looked at the top 100 companies in 58 markets, making up a sample of 5,800 companies.
Singapore companies made significant improvements in three indicators. Climate change is now being recognised by 76 per cent of those 100 top companies as a financial risk to their business, up from 49 per cent in 2022, which was the last time the survey was done. Singapore companies exceeded the 2024 global average of 55 per cent, which reflects a broader corporate acknowledgment of climate-related risks.
The proportion of companies with a board or leadership representative responsible for sustainability governance rose to 55 per cent in 2024, up from 35 per cent two years ago. This increase highlights an enhanced commitment to embedding sustainability principles within corporate leadership, KPMG noted. About 84 per cent of companies are also integrating environmental, social and governance (ESG) information into their annual reports, an increase from 68 per cent in the previous survey.
This is ahead of the global average of 62 per cent in 2024, emphasising stronger corporate integration of sustainability disclosures. Where Singapore firms outperformed the global average The other three indicators in which Singapore companies did better than the global average were on the reporting of carbon reduction targets (81 per cent vs 80 per cent), identifying material topics (96 per cent vs 79 per cent), and including sustainability within compensation (38 per cent vs 30 per cent). Ms Fok said that the improvements were driven by strong alignment between public- and private-sector initiatives.
“Government-led efforts, such as the impending adoption of ISSB standards in 2025, have set a clear framework for corporate transparency, while the rise in board-level responsibility and the integration of ESG factors into annual reports...
reflects growing accountability at leadership levels,” she added. However, there are areas that Singapore corporates fared less well, in addition to the area of linking sustainability metrics to executive remuneration. Only 37 per cent of Singapore’s top 100 companies have had their ESG or sustainability-related information verified by a third party.
While this was a rise from 26 per cent in 2022, it is below the global average of 54 per cent. The number of companies that have aligned themselves with the United Nations’ Sustainable Development Goals, or included biodiversity, social and governance risks in their reporting are also below the global averages. Ms Fok noted that emerging areas such as biodiversity and social-related risk categories are also gaining traction, with initiatives such as the biodiversity workstream under the Singapore Sustainable Finance Association.
Globally, upcoming reporting standards would likely enhance disclosure requirements on these topics, she added. “While the Sustainable Development Goals serve as an overarching aspirational framework, companies might choose to adopt more specific standards like the Global Reporting Initiative or the Task Force on Climate-related Financial Disclosures for detailed guidance,” explained Ms Fok. “To sustain this momentum, Singapore must pivot challenges into strengths, leveraging innovation, collaboration and cultural transformation to embed sustainability at the core of business strategies.
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