Well Done SGX ending monopoly on accredited training!

Other countries and regions are recognising the need for the pushback in the ESG space, and are stepping away from heavy-handed measures on sustainability disclosures. And here I refer to the “E” of the “ESG”.

In the EU, lawmakers announced on 10 February a directive to delay the adoption of standards for companies to provide sector-specific sustainability disclosures and for sustainability reporting from companies outside of the EU under the Corporate Sustainability Reporting Directive (CSRD).

The postponement reduces the reporting burdens for companies and gives them more time to prepare for the increased reporting requirements.

Closer to home, the Singapore Exchange Regulation (SGX) has recently introduced a new training provider, effectively ending the monopoly on accredited training programmes for directors. SGX has also taken the right step to widen the pool of training providers. Allowing any monopoly to exist is bad for any industry.

Why are these moves by the EU and the SGX so important for other markets to consider? Firstly, we are seeing a great deal of resistance in the ESG space, which is no surprise given the complexities surrounding the requirements for disclosure, especially for the environmental pillar.

One example is Exxon Mobil’s lawsuit against two activist investors, who had filed a shareholder proposal calling on Exxon to set targets to reduce carbon emissions.

Shareholder resolutions calling on companies to take steps on ESG issues have drawn increasing attention. In Exxon’s case, the shareholder proposal had called for Exxon to set Scope 3 targets for reducing emissions.

The EU’s decision to delay sustainability reporting standards is recognition that companies need some time and space, not to mention the fact that global standards for disclosure have not even been set.

The answer to the increasing resistance in the ESG space is to create awareness of some of the new changes that will come about. For now, it is sufficient to tweak the existing mandatory training programme to half a day of conversation. Public listed companies should be devoting their resources to sustainable business strategies and not on future potential areas of enforced rules.

There needs to be more clarity regarding enforceable sustainability disclosures; otherwise, what mandatory program are we training directors on?

( Datuk Shireen Ann Zaharah Muhiudeen is an experienced emerging markets fund manager and public board director with regulatory knowledge. She was the first female chair of the Malaysian Stock Exchange and the former CEO of AIG Investment Corporation (Malaysia), an ESG (Environmental, Social, and Governance) and DEI (Diversity, Equity, and Inclusion) trailblazer, encouraging organizations to become ESG sustainable, either as investors or as board members.)