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Poll Found Only Few Singapore Firms Recognise Climate Change as Financial Risk

January 4, 2018

Recent report conducted by KPMG on corporate responsibility (CR) revealed that while sustainability reporting among Singapore-listed companies has begun, more measures need to be done to raise awareness to recognise climate change as a financial risk for business.

The survey noted that 84 percent largest companies in the country are now undertaking CR reporting, suggesting better progress than the global average of 72 percent. This is largely attributed to the Singapore Exchange’s mandate last year saying that listed firms are required to include sustainability reporting on a “comply or explain” basis for the financial year ending within on or after Dec 31, 2017.

KPMG Singapore’s head of sustainability advisory and assurance, Ian Hong said that the country’s high percentage in the poll could be caused by the high standards set under its Code of Corporate Governance, as it usually incorporates sustainability considerations, Straits Times reports.

Surprisingly, despite the positive findings, a staggering 75 percent of the top 100 companies in Singapore have yet to see and address the financial risks that might come from climate change in their annual reports. The survey also found that only 17 percent local firms have set carbon reduction targets, faring much lower when compared to 50 percent of global rate.

Globally, KPMG said that there are five economies with most of their top 100 companies acknowledging climate change as a financial risk in annual reports, including Taiwan (88 companies), France (76), South Africa (61), the United States (53) and Canada (52).

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Regarding to this, Mr Hong said that as the business is going forward, disclosures surround climate risk will expand owing to the growing expectations of securities regulators, the investor community and other stakeholders. Therefore, companies are highly encouraged to start the move by doing a full assessment of where climate-related risk lies within the organisation, as well as assessing the current state of their processes and data quality for identifying and reporting on such risks, he said.

Mr Hong added that firm’s CR reports should be used as a tool to present an organisation’s true value beyond its financial performance. Industry experts have pointed out that sustainability reporting will bring several notable benefits, such as cost savings, improved brand equity and better employee retention.

Commenting on what the survey’s findings could mean for businesses, global head of KPMG sustainability services Jose Luis Blasco said that first of all, employers should get ready for more reporting regulation because it is already on the way. It should be clear that reporting integration is the new normal for business. After that, they should keep in mind that such report should be all about presenting the business impacts instead of mere statistics.

The KPMG Survey of Corporate Responsibility Reporting 2017 studied annual financial and CR reports from the 100 largest companies by revenue in 49 economies.

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