Sias is Advocating for More Transparent ESG Reporting Standards

The corporate and financial communities are embracing ESG principles, yet greenwashing of ESG investment products has become a matter of concern. More disclosure regulations are required to safeguard investors from false claims.

David Gerald, founder, president, and CEO of the Securities Investors Association of Singapore, said: 

"Given the prevalence of greenwashing in the finance sector, the various initiatives by Singapore regulators are a key step forward."

Back in June, Deputy Prime Minister Heng Swee Keat warned that the spread of greenwashing is becoming a scourge on global financial systems, potentially jeopardising financial stability.

He mentioned how Morningstar recently removed ESG labels from nearly one in every five funds—over 1,200 funds with over $1 trillion in assets. Major companies have also been scrutinised. Following an examination, the Dutch authority ordered H&M and Decathlon to remove sustainability-related labelling from their products and websites.

According to Gerald, SIAS intends to expand its annual report Q&A to include more questions about sustainability.

“While SIAS has already begun including questions on the companies’ sustainability disclosures, there will be an increased effort moving forward. Eventually, we intend to expand to review all listed companies’ sustainability reports and ask questions to raise accountability and improve investor protection,” he said.

“Fundamentally, companies should be aware of the pressure posed by both shareholders and stakeholders regarding sustainability practices, as well as the increased gender diversity may have an intermediate role between corporate governance, sustainability, and financial performance,” adds Gerald.

However, this is never a simple matter. Implementing a sustainability strategy is not without difficulties.

For example, Gerald asks how businesses and investors should reconcile their views on sustainability or the bifurcation of investment horizons between market short-termism and the long gestation period of real sustainability activities.

Other issues are beginning to emerge and manifest as part of the larger and expanding shift toward ESG principles.

“The issue of inequality, though longstanding, has been exacerbated on many fronts and is now brought to the attention of governments and leaders globally.

“Income inequality between citizens and/or countries, while an issue by itself, is further complicated by other forms of inequalities, such as the unequal distribution of vaccines worldwide and the asymmetrical social pressures placed on working-from-home mothers,” Gerald said.

Source: The Edge Singapore

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