Science Based Targets and the Sectoral Decarbonization Approach:

What is a science based target?

The idea behind science based targets is to use climate science to set greenhouse gas (GHG) emission reduction targets. The assumption behind the science based target is that climate change, if not restrained to below 2oC as described by the Intergovernmental Panel on Climate Change (IPCC), will cause irreparable damage to the world’s systems, so much so that our current way of life will be irreversibly and significantly altered. Therefore organisations should set GHG emission reduction targets such that they are in line with the decarbonisation required to realise this goal [1] [2].

The Science Based Target initiative is a collaboration between CDP, World Resources Institute (WRI), World Wide Fund for Nature (WWF) and the United Nations Global Compact (UNGC). [2]

 

Why set a science based target?

The corporate sector, as the largest emitter of emissions has a role to play in the global transition towards decarbonisation. Reducing GHG emissions is both good for business and protects the global community. Science based targets can help companies capitalise on new technologies and operational practices. By setting ambitious targets, you can push your company to transform and lead in innovation.  Creating science based targets can also help you stay one step ahead of future regulations and policies regarding GHG emissions. It can also strengthen investor confidence and the credibility of your company as you take a leading position on climate change mitigation. Most of all, setting ambitious target as part of science based targets can help improve profitability and competitiveness in the future where resources get more scarce and expensive, especially those dependent on fossil fuels. [2]

 

What is the Sectoral Decarbonisation Approach (SDA)?

The SDA is a method designed for companies to help set GHG reduction targets that will allow for the temperature rise trajectory to stay within 2oC of preindustrial levels. This method uses the science based targets approach and the 2oC scenario derived from one of the models from the International Energy Agency’s (IEA) detailed CO2 sector scenarios. [3]

SDA is different from other methods used to generate GHG emission target because of its subsector level approach and global least-cost technology perspective. This means that SDA uses data from IEA’s scenario to determine the mix of the currently available sector methods that would be able to meet final demand.. Therefore, the SDA would be able to help companies especially those in large, homogenous and energy intensive sectors with realistic, low cost measures. These sectors are primarily: electricity generation; iron and steel; chemicals; aluminum; cement; pulp and paper; road, rail, and air transport; and commercial buildings. [3]

 

How does the SDA work?

The SDA breaks down the 2oC carbon budget into the different sectors, taking into account the growth rate of the sector, relative to economic and population growth, in addition to its mitigation potential. This way, companies can derive their emission targets based on their relative contribution to the total sector activity and carbon intensity relative to their sector’s intensity.

In explaining the SDA in greater detail, it is important to know how the intensity pathways are derived. Firstly, the IEA’s models are used to estimate the carbon intensity of the sectors by dividing the total direct emissions from the sector by the total activity of the sector. This gives the sector intensity pathway. Next, an assumption is made of the homogenous sectors: that their carbon intensity would converge with the sector carbon intensity by 2050. This assumption is used in addition to the sector specific indicators (eg. physical activity or value added) to generate the company’s intensity pathway. Finally, to calculate the company’s carbon budget, the intensity pathway at a specific point of time can be multiplied by their projected activity.

Using the freely available Science-Based Target Setting Tool, companies can determine their target trajectory compared to their sector intensity pathway. Whereafter, they can use the SDA method and tools to determine specific scope 1 and/or scope 2 reduction targets. [3]

The Science Based Targets Tool can be found at: http://sciencebasedtargets.org/tools/

 

References:

  1. Science Based Targets (n.d.) Accessed 10 October, 2017. Retrieved from: http://sciencebasedtargets.org/
  2. Science Based Tarfets (n.d.) Accessed 19 October, 2017. Retrieved from: http://sciencebasedtargets.org/faq/
  3. CDP (2015). Sectoral Decarbonisation Approach (SDA): A Method for setting corporate emission reduction targets in line with climate science. Accessed 25 October, 2017. Retrieved from:  https://sciencebasedtargets.org/wp-content/uploads/2015/05/Sectoral-Decarbonization-Approach-Report.pdf

 

World Environment Day 2017 – Growing efforts from the public and private sector, with increased focus on waste reduction

On World Environment Day this year, both the public and private sectors in Singapore upped up their efforts for environmental protection with a series of plans and initiatives. These include:

  • the unveiling of the Public Sector Sustainability Plan 2017-2020 by Deputy Prime Minister Teo Chee Hean,
  • the introduction of mandatory reporting of packaging data and packaging waste reduction plans and the Logo for Products with Reduced Packaging by National Environment Agency,
  • the launch of ReCYCLE, a nationwide electronic waste recycling programme by Singapore Post and Singtel
  • the official opening of the Singapore Sustainable Academy by CDL and Sustainability Energy Association ofSingapore.

Under the Public Sector Sustainability Plan, environmental targets are set with regards to the use of electricity, water, building, waste and solar energy for FY2020 and achieve them through better resource management. Transparency and Disclosure is one of the main components guiding the Plan [1]; we can expect progress against targets to be communicated. The Plan reinforces Singapore’s commitment to the Paris Agreement of reducing emissions intensity by 36 per cent by 2030 from 2005 levels [2].

The Public Sector Sustainability Plan is published by the Ministry of Environment and Water Resources (MEWR), under the Sustainable Singapore campaign.

The National Environment Agency, an agency under MEWR, also introduced initiatives to reduce packaging waste. The launch of the Logo for Products with Reduced Packaging (LPRP) will help inform consumers of products that has reduced packaging and hence generate less waste. Mandatory reporting of packaging data and packaging waste reduction plans will also be introduced by 2021, for businesses that uses packaging on consumer goods [3].

The announcement of mandatory reporting of packaging data and Waste Reduction Plans by 2021 was made by Mr Masagos Zulkifli, Minister for the Environment and Water Resources, during the 10th Anniversary celebrations of the Singapore Packaging Agreement (SPA) [1]. Reduction of packaging waste makes business sense for winners of the 10th SPA awards.  Greenpac for example avoids 4.13 tonnes of packaging material and reaps about $17,200 a year in material cost savings after redesigning a microscope packaging to use lighter polypropylene (PP) corrugated sheets instead of wood [4]. Sunfresh Singapore has estimated annual cost savings of $1,320 with a reduction of 0.28 tonne of plastic packaging waste by eliminating plastic liners in their deliveries of aluminium cups [4].

Given that one-third of about 1.66 million tonnes of waste disposed in 2016 by Singapore was packaging waste [1], these initiatives are appropriate and timely.

Waste reduction was the theme of some initiatives by the private sector as well.

Singapore Post and Singtel for instance launched ReCYCLE, a nationwide electronic waste recycling programme. Consumers can now drop unwanted electronic devices into the ReCYCLE bins at selected Singtel outlets and Post Offices at no charge. Valuable metals and components in the devices would be recovered [5].

At the official opening of the Singapore Sustainable Academy (SSA), winners of the 6th CDL Singapore Sculpture Awards presented artwork that utilised the SSA’s residual building materials, in line with this year’s theme of ‘Towards Zero-Waste!’ [6].

The SSA is a training and networking facility on sustainability jointly created by City Developments Limited (CDL) and the Sustainable Energy Association of Singapore (SEAS), a non-profit organisation. Among other sustainability-related events, the SSA will be a platform for CDL’s Women4Green initiative, the first sustainability network for women in Singapore. The SSA will also partner Eco-Business to set up a Sustainability Studio for the production of sustainability-related films [6].

The ReCYCLE programme and the Singapore Sustainable Academy are great examples of how partnerships between sectors can work together to achieve better environmental outcome. Indeed, that collective effort by all sectors in the economy are required to make progress, and it is heartening to see initiatives by both the public and public sector this World Environment Day.

World Environment Day started in 1974 by the United Nations, and is celebrated on 5 June by over 100 countries every year [7].

 

References

[1] https://www.mewr.gov.sg/news/press-release—singapore-launches-sustainability-plan-to-chart-green-course-for-public-sector

[2] http://www.pmo.gov.sg/newsroom/dpm-teo-chee-hean-opening-ceremony-singapore-sustainability-academy

[3] http://www.nea.gov.sg/corporate-functions/newsroom/news-releases/nea-to-introduce-mandatory-reporting-of-packaging-data-waste-reduction-plans-by-2021

[4] Singapore Packaging Agreement, ‘3R Packaging Awards 2016’

[5] http://recycle.sg/

[6] http://www.cdl.com.sg/images/press_release/20170605.pdf

[7] http://worldenvironmentday.global/en/about/what-is-it

 

 

More Sharing than Caring? The problems and potential of sustainability in the Sharing Economy.

The Sharing Economy could be called the accidental revolution. When Brian Chesky and Joe Gebbia started renting out a spare air-bed in their apartment to make ends meet in early 2007, little did they know that they would go on to create one of the biggest new companies in the world with over 425k guests-per-night and become the example par-excellence of the new ‘alternative economy’. This economy has grown hand in hand with the internet revolution and thrived in the age of hyper-connectivity. Known by a plethora of different names (among others: collaborative consumption, shared ownership, upcycling, the circular/trust/peer-to-peer economy), the ‘Sharing Economy’ is now one of biggest and fastest growing economic trends in modern years and shows no signs of slowing down. In 2013, Forbes estimated rates of growth in this new peer-to-peer economy to be in excess 25% per year.[1] Developed and fed through interactions between consumers, the Sharing Economy can be best described as an economic system grounded in the sharing of human, physical and intellectual resources. The companies riding this wave (Lyft, Snapgoods, TaskRabbit, Feastly, Blabla Car, Spotify, Earbits and Uber to name a few) are changing the world and the way we do business. In particular, the Sharing Economy has been lauded as a key to a sustainable future, and some have even concluded that it is the inherently sustainable characteristic of these services that drives their popularity.[2] In the sharing economy, idle resources—a spare bed, an unused car, or even an unused power tool left in the garage—are re-allocated to those who need them. Defined by the notion that ‘access is the new ownership’ and powered by the connectivity of the Internet age, waste is reinvested and resources are maximised to their full potential. Things that would otherwise be wasted are shared, and the economy becomes a lot more circular. It’s not hard to make the leap of logic that the Sharing Economy is a self-fulling model of sustainability to be celebrated and a bandwagon to be hopped on.

 

However, when we shift our notion of sustainability beyond a limited resource-utilisation definition to one that encompasses all areas of the environmental, social and governance (ESG) spectrum, the yellow brick road of the Sharing Economy loses some of its lustre. True sustainability encompasses far more than the efficient use of resources, but needs to incorporate important considerations of social and economic issues. When we take into account these elements such as human/worker rights or the need to meet regulatory requirements, how does the Sharing Economy hold up as a model of sustainability? It turns out that the Sharing Economy harbors as many problems as it holds potential.

 

Taking Uber—perhaps one of the most successful Sharing Economy ventures—as an example is particularly illuminating. The role Uber plays in moving towards a more resource-friendly future (the limited sense of sustainability) is clear and inherent to their business strategy. The company have made it a major marketing point that in 2015 they have contributed to taking over 1 million cars off the road in New York City as people lose the need for private vehicles.[3] Yet the company has been plagued by scandals that seriously call into question its relationship with the other important aspects of sustainability. Uber has been highly criticised for its treatment of employee drivers after numerous protests were staged when drivers were dismissed with no warning due to low reviews or budget cuts.[4] The drivers are not ‘bona fide employees’, says Uber, and thus do not need be given the same rights and working conditions as regular office employees. Accusations of anti-competitiveness have also been recurrent, with Germany and other countries banning Uber due to the unfair competition they pose to the local taxi industry.[5] Institutions such as the Pennsylvania Public Utility Commission have raised other issues such as lack of safety measures and regulations that are applied to Uber rides.[6] These problems are not unique to Uber either, but occur across the wide spectrum of Sharing Economy companies. The restriction of methods for employees of the company TaskRabbit (the aptly named ‘TaskRabbits’) to contact each other has raised concerns over the denial of collective action amongst workers. In New York, the leftover sharing business Mealku has been subject to complaints by restaurants about the inherent lack of health or safety standards, and Airbnb has been embroiled in a legal battle over their refusal to pay taxes levied on hotels.[7] This cursory list gives only the tip of the iceberg in difficulties being faced by the infant Sharing Economy in terms of their environmental, social and governance issues. What is becoming clear is that these are not random occurrences. These issues are a telling symptom of the inherent problems the Sharing Economy faces in managing the issues most intrinsic and vital to creating a truly sustainable economy.

 

So why are sustainability issues getting left behind as this new economy thrives? While the notion of sustainable business is a component of the sharing economy, it is clearly not its defining factor. In their discussion of the nature of the Sharing Economy, Hamari, Sjöklint and Ukkon have argued that sustainability is only a concern and motivation for a portion of those in the Sharing Economy, instead emphasising that most participants are choosing to participate due to its financial and social benefits, i.e. access to extra cash and new opportunities to meet people.[8] It is also worth recognising that in this new peer-to-peer model, the Sharing Economy is directed by and for people. It is an economy where the consumers are often the decision makers; they make up the vendors, employers and the employees in this new set-up. The normal top-down rules that govern the traditional economy to aid environmental, social and governance risk such as regulations and reporting requirements have not yet gained any real traction. In the simplest terms, the Sharing Economy is only as interested in sustainability as its consumers are. Often—and especially in terms of wider social and governance issues—this is not at all. This is not a huge surprise. People trying to rent out their power tools on weekends or help confused neighbours set up their latest Ikea furniture for a few extra dollars are not generally considering their material issues in the process. Without a structural or regulatory system that has advanced itself to ensure that basic environmental, social and governance requirements are met in this new system, it is easy for companies in the Sharing Economy to remain out of the spotlight. Without these considerations being addressed, the Sharing Economy ends up looking a lot more like an obstacle than a key to a sustainable future.

 

It would be wrong to look at the Sharing Economy as a missed opportunity, a path to a sustainable future that took a wrong turn and ended up going back on itself. The potential for environmental sustainability in the Sharing Economy is a great asset and something that needs to be championed. However it is clear that in this new ecosystem upending aged business models, a guiding hand needs to come in to shape its direction for the better. It is up to sustainability experts and governments as much as the companies themselves to step-up to this new challenge and find ways to make sustainability in its widest sense applicable to the new models and modes of consumption which often leave these considerations as an afterthought. As systems evolve, so does the need to remain aware of their limitations and move to correct them where necessary. If we can do this, the future is bright and perhaps the Sharing Economy can provide an easier road to a sustainable future.

 

Farmer, A. (2012) Making reservations for leftovers. Available at: http://cityroom.blogs.nytimes.com/2012/11/23/leftovers-made-to-share-with-strangers/ (Accessed: 13 October 2016).

Geron, T. (2013) Airbnb and the unstoppable rise of the share economy. Available at: http://www.forbes.com/sites/tomiogeron/2013/01/23/airbnb-and-the-unstoppable-rise-of-the-share-economy/#46ee51506790 (Accessed: 13 October 2016).

Hamari, J., Sjöklint, M. and Ukkonen, A. (2015) ‘The sharing economy: Why people participate in collaborative consumption’, Journal of the Association for Information Science and Technology, , pp. 2047–2059. doi: 10.1002/asi.23552.

Huet, E. (2014) How Uber’s shady firing policy could backfire on the company. Available at: http://www.forbes.com/sites/ellenhuet/2014/10/30/uber-driver-firing-policy/#7ebaa37e8ef7 (Accessed: 13 October 2016).

Lieber, R. (2013) A $2,400 Fine for an Airbnb Host. Available at: http://bucks.blogs.nytimes.com/2013/05/21/a-2400-fine-for-an-airbnb-host/ (Accessed: 13 October 2016).

Nath, J. (2014) PUC issues cease and desist orders for Uber, Lyft. Available at: http://wesa.fm/post/puc-issues-cease-and-desist-orders-uber-lyft#stream/0 (Accessed: 14 October 2016).

Prothero, A., Dobscha, S., Freund, J., Kilbourne, W.E., Luchs, M.G., Ozanne, L.K. and Thøgersen, J. (2011) ‘Sustainable consumption: Opportunities for consumer research and public policy’, Journal of Public Policy & Marketing, 30(1), pp. 31–38. doi: 10.1509/jppm.30.1.31.

Sacks, D. (2015) The Sharing Economy. Available at: https://www.fastcompany.com/1747551/sharing-economy (Accessed: 13 October 2016).

Scott, M. and Eddy, M. (2014) German Court bans Uber service nationwide. Available at: http://bits.blogs.nytimes.com/2014/09/02/uber-banned-across-germany-by-frankfurt-court/? php=true& type=blogs (Accessed: 13 October 2016).

Uber Newsroom (2015) ‘Taking 1 Million cars off the road in New York city’, 10 July. Available at: https://newsroom.uber.com/us-new-york/taking-1-million-cars-off-the-road-in-new-york-city/ (Accessed: 13 October 2016)

[1] (Geron, 2014)

[2] (Prothero et al., 2011), (Sacks 2011).

[3] (Uber Newsroom 2015)

[4] (Huet 2014)

[5] (Scott and Eddy, 2014)

[6] (Nath 2014)

[7] (Farmer 2012); (Lieber 2013)

[8] (Hamari et al. 2015): 2047.

Why would top graduates from Harvard work for a carpet company?

“We have attracted talented people because of our sustainability approach.”
Rob Coombs, President and Chief Executive Officer, Asia Pacific

Interface is the global leader in the manufacture of modular carpets used in offices and homes. In the mid-1990s, the company started to embed sustainability in their business by implementing changes in the way they operate. This shift was driven right from the top, by the Founder and Chairman Ray Anderson.

Thanks to this change, Interface has achieved a great deal since 1996 – waste-to-landfill from carpet factories has gone down by over 91%, Greenhouse gas emissions per unit of product has been reduced by 92% and water intake intensity at manufacturing sites is down by 87%. And it makes business sense, with dramatic cost reductions for the company.

Designers at Interface look through a sustainability lens and come up with innovative and sustainable products. However, customers may not want to pay a premium for sustainability. It is possible to address customer’s apathy towards sustainability by designing a good product that solves the customer’s needs in the best possible way and that is a sustainable product at the same time.

Interface learned this lesson the hard way. They had a leasing service for clients, that turned out unsuccessful. It was a great idea, but the reason it didn’t work was that it didn’t make commercial sense for the customer. How do you value a carpet at the end of its life? It is important to be patient to change behaviour, and engagement is necessary.

How do you generate an economy that is circular? Starting small, Interface engaged with fishing communities in the Philippines, encouraging fishermen to collect discarded nylon fishing nets that are destroying the coastal habitats and selling it as raw material that are used in some of Interface’s products.

Now, Interface is still breaking boundaries, and is changing their mindsets, from reducing the negative to have a positive impact. They are launching a new positive message with Mission Zero®. The aim is to become a restorative enterprise that gives back more than they take. One of the initiatives is to have zero negative impact on carbon, and even going beyond by having a positive impact on carbon. Admittedly, they have no idea how to do that, just as their people had no idea back in the 1990s how to do the things they have achieved for the last 23 years. It’s a challenge many top people are keen to be part of solving, to the benefit of all.

By Kaia Tan, Paia Consulting

Putting gender on the agenda for sustainability reporting: some thoughts

By Supriti Bezbaruah.

Gender equality is not just the right thing to do, it also makes good business sense: gender diversity improves the performance of organisations. For example, a study by McKinsey & Company in 2013 found that companies with higher representation of women on executive committees had 47 percent higher return on equity (ROE) on average.

One of the first steps towards gender equality should be gender reporting, for companies to get a clear picture of where they currently stand. Even for well-meaning companies, gender reporting uncovers unconscious biases in operating practices. Companies increasingly recognise the need for gender reporting, but they struggle to convert this into practice. The main challenge companies face in producing meaningful gender reports is deciding what, and how much, to report.
At present, all companies following the Global Reporting Initiative’s (GRI) G4 guidelines should report the total workforce and total number of employees by gender (G4-10). Other than this, only those gender-related indicators that are most material (or most relevant) to the company need to be reported. The gender composition of the workforce provides only a partial picture of gender equality, so companies should also consider including the following indicators and information:

Ratio of basic salary and remuneration of women to men by employment category, by significant locations of operations (G4-LA13): since many countries, including Singapore, India and China have ratified the International Labour Organization’s (ILO) Equal Remuneration Convention, 1951 (no 100).
Composition of governance bodies and breakdown of employees per employee category by gender (G4-38 and G4-LA12): to indicate whether women are adequately represented at all levels of the company, and are not just clustered at the junior levels.
Total number and rates of new employee hires and employee turnover by gender (G4-LA1): to demonstrate the company’s commitment to recruiting women; and to assess if women drop out of the workforce in greater numbers than men as they face pressures to balance family with work.
Details about parental leave, including number of employees who took parental leave, and the number who returned to work after parental leave ended, by gender (G4-LA3)
Details of company provision of flexi-work arrangements: to display the employer’s commitment to enable employees to balance work and family commitments.
Average hours of training per year per employee, by gender (G4-LA9): as lack of adequate training can prevent women entering senior management levels.
Gender equality issues can also extend beyond the workplace. For instance, for electronics manufacturing companies or financial companies with call centres located in developing countries, the majority of workers at the end of their supply chain are usually women. Companies are encouraged to report on how they promote gender equality in their supply chains, for example, through incorporating gender criteria into their procurement policies.

In presenting this information, companies, especially multinational companies (MNCs) must consider the impact of the context, sectoral and cultural in which they operate. It may be helpful for companies to supplement the numerical indicators with some explanatory context. For example, to explain the gender distribution of their employees, Marquard and Bahls note that the oil and energy sector is male-dominated. To take another example, a company in Japan may have few female employees, because of strong traditional views on women, reflected in the low female participation in the labour force in general. Similarly, in India, research shows that the under-representation of women in sales positions in banking was less due to discriminatory conduct by the bank, but because family constraints on travel and long hours prevented women from taking up such positions. Cultural expectations to prioritise family over career can also be used to explain the under-representation of women in senior management positions in Asia.

But, culture should not be used as an excuse for companies to avoid addressing gender issues in the workplace. As the world becomes increasingly globalised, companies can, through actively endorsing gender equality, change mindsets and challenge biases. Consistent and comprehensive gender reporting will serve as a continual reminder of the progress that still needs to be made.
This article provides a review of the basic elements of gender reporting. In the next article, we will discuss ways in which companies can manage unconscious bias in the workplace.

Gender reporting: a checklist for companies
• Assess how gender may be relevant for each material aspect identified: even if gender is not explicitly mentioned, is there any way by which the company’s policy affects men and women differently, as employees, clients, suppliers or consumers? For example, a real estate company that includes occupational health and safety among its material issues may focus on issues such as work-related injuries and fatalities. However, if the gender aspect is included, work-related safety will also include issues such as: are the factory/construction grounds adequately well-lit at night for female employees or visitors to safely walk around? Are there separate female and male toilets? Another example is when a marketing company may be advertising its products, it needs to consider how this influences its consumers. Does the advertising and marketing consider how women are portrayed? Is this done in a culturally sensitive manner?

• Analyse the context in which the company operates: Is the sector male or female dominated? Are there local cultural biases that hamper women’s career advancement?

• Identify how the company is complying with gender-related national and international legislation: Does the country in which the company operates have legislation on parental leave or discrimination? What international conventions have been ratified by the country in which the company is based?

• For multi-country operations, decide how to report performance: does the company want to provide overall global data on gender, or a breakdown by region/country?

• Make a list of the agreements the company has signed, for example, the Women’s Empowerment Principles, or the Employer’s Pledge for the Tripartite Alliance for Fair & Progressive Employment Practices (TAFEP) in Singapore: what are the obligations under these agreements?

Note: Some of these guidelines are based on the following report: UN Women and UN Global Compact. 2014. Women’s Empowerment Principles: Reporting on Progress. Available online at: http://weprinciples.org/files/attachments/WEPs_Reporting_Guidance_G4_Sept2014pdf.pdf

2015 – The Tipping Point for Meaningful Change?

The Paia team attended the Responsible Business Forum for Sustainable Development 2015 (RBF) held at Marina Bay Sands Convention Centre and Gardens by the Bay, 3 to 4 November 2015. The RBF saw over 600 business leaders, policy makers and NGOs from around the world gather to share innovative solutions for creating sustainable growth and delivering the Sustainable Development Goals.

2015 is indeed being hailed as a historic year for the world. The discussion at the RBF could not have been more timely, focusing on two major events this year. First, this year has seen the launch of the new post-2015 Sustainable Development Goals (SDG) to ensure prosperity and environmental protection for future generations. Second, this year will end with a new treaty to be agreed upon in Paris where the United Nations Climate Change Conference COP 21 will take place. This is where the worlds nation states will decide to limit the greenhouse gas emissions and prevent global warming beyond the two degrees that is expected. In addition, the current haze situation in the region was a hot topic that raised a few questions for the policy makers from around the region. In the opening plenary address, Singapore’s Minister for Foreign Affairs, Vivian Balakrishnan called it a ‘man-made tragedy’ and asserted that growing consumer awareness on sustainable business practices and companies’ supply chains, means that businesses have to be more transparent in their operations and policies.

Day one of the conference saw business leaders, international government officials and sustainability experts across several sectors such as agriculture and forestry, palm oil, consumer goods, building and infrastructure, energy, mining and financial services hold pertinent discussions about how improvements in innovation and technology, mind-set shifts and transparency are necessary for businesses. In the face of an ever increasing population, a consumerist society, strain on the earth’s natural capital coupled with rising carbon levels, businesses must embrace sustainability at all levels and restructure their conventional practices if they want to continue operating in this climate.

This paradigm shift has already occurred for some innovative companies such as Autodesk, April, and DSM – who have embraced transformational sustainability changes such as new closed-loop and circular business models and have become leaders in their own right. The various panels explored the possibility of transitioning to a low carbon economy, and the benefits and challenges of placing a monetary value on natural capital. Almost all agreed on the imperative need to integrate this valuation into future decision making. Organisations present were WWF, Ersnt & Young, South Pole Group, A*STAR, Rolls Royce, Aviva, Trucost, Autodesk, DHL, and NTU, to name a few.

The Sustainable Development Goals were discussed in great detail on day two by policymakers from around the region, business leaders and NGOs. The speakers ranged from businesses such as Levis Strauss & Co, Novartis, INDISKA, Sime Darby, Wilmar, HMP Family, policy makers from the Philippines, Indonesia and Malaysia, and NGO’s such as UN Women Singapore, WWF etc. The SDGs were combined into broad topics and the speakers shared their thoughts on approaches and programmes that will contribute to a transformative, inclusive, low-carbon economy where a dignified standard of living can be achieved by communities. NGOs had a special role to play on this day, as they shared their thoughts on forging effective, multi-stakeholder partnerships which are crucial for successful collaboration.

Look out for more on this page by the Paia team on Green Freight Asia (GFA) Forum: Bringing Green Freight Practices to Scale.

What is the difference between Sustainability Reporting & Integrated Reporting?

With the recent Singapore Exchange (SGX) consultation on its proposed “comply or explain” regulation to Sustainability Reporting, and an increasing number of companies locally producing Sustainability Reports, we felt there’s a need to clarify the difference between Sustainability Reporting and Integrated Reporting.

Sustainability Reporting is about communicating the organisation’s approach to managing its key environmental and social issues.  It is about communicating publicly how the company assesses which environmental and social issues are most significant to the company (“materiality”), how these issues are managed and how the company is performing against each of these key issues (performance data).  At Paia, we approach these issues as business risks, and opportunities.  Climate change, talent retention and employee diversity, for example, can pose both risks and opportunities for companies, so it is about communicating how the organisation is identifying and managing these risks and opportunities.

Integrated reporting is one step further – about communicating, how the company manages its long term value creation by taking an integrated approach to both traditional risks and these wider sustainability risks. Instead of reporting on financial performance and sustainability performance separately, or even within the same AR, Integrated Reporting intends to show how the company integrates environmental & social thinking into its business.

So for example, an integrated report goes beyond financial, employee, environmental and social data, to also demonstrate how the company integrates these broader risks and opportunities into its long term strategy, into its risk management, into operating policies and procedures, and what the trade offs between these issues are.

This means Integrated reporting pulls together information that sits in separate reporting strands to explain how the firm creates value. In the Singapore context, these reporting strands will include the i) Corporate Governance Statement, ii) Operating and Financial Review, iii) Financial Statements and more recently, iv) Sustainability Reporting.

“Sustainability reporting relates to one important aspect of a company’s performance, without which an integrated report would be incomplete.”

– Ian Ball, International Integrated Reporting Council (IIRC) Board member & Principal Advisor and ex-CEO of International Federation of Accountants (IFAC)

In Singapore, and the region, it is often the sustainability reporting which is the weakest link to integrated reporting.  Many companies in this region are only just beginning to develop their sustainability reporting practices.

So should companies just leapfrog to Integrated Reporting, and bypass Sustainability Reporting?  Companies don’t necessarially need to publish sustainability reports, but they do need to put in place the sustainability fundamentals, for which GRI provides clear guidance.  Paia’s experience of having worked with over 25 companies in Southeast Asia on both their sustainability and/or integrated reporting programmes, has taught us that it is fundamental for companies starting out in their reporting journeys to firstly identify what their key environmental and social risks and opportunities are, create management programmes to manage these risks and maximise the opportunities and develop KPIs to track environmental and social performance.  These are the fundamentals of sustainability reporting.

It takes time

To embed these systems takes a couple of years.  It takes time for companies to really grasp the business benefits of sustainability and develop appropriate systems to manage these risks in a way that is appropriate for the individual company.  It is only then that companies are ready to embrace integrated thinking and integrated reporting in a meaningful way.

We are a great supporter of integrated thinking; that has always been our approach.  We’ve had the please of working closely with many clients to integrate environmental and social risks into their ERMs, business strategy, policies, procedures and contract agreements, and this experience has taught us that it takes time to achieve this integration, as it requires some level of change management – for example to include environmental and social risks within business investment decisions.

Conclusion: get the sustainability part right first

Sustainability reporting tends to be the part of Integrated Reporting that Southeast Asian companies are weakest one, hence we recommend companies take time to embed sustainability, before proceeding to Integrated Reporting.

 

Carrie Johnson

Director

Paia Consulting Pte Ltd

 

21 May 2015

50% of Straits Times Index companies produce GRI-level sustainability reports

As of 12 May 2015, 50% of top 30 companies in Singapore by market capitalisation, which forms the Straits Times Index, produce sustainability reports in accordance with Global Reporting Initiative (GRI). GRI is the most established sustainability reporting guideline internationally, and is cited as a recommended guideline in the Guide to Sustainability Reporting issued by Singapore Exchange (SGX).

There has been a steady rise in the number of organisations that produce GRI-level sustainability reports in Singapore, from only 3 in 2008 to 35 by 2014. New GRI reporters in 2014 include ST Engineering, Thai Beverage PLC and CapitaCommercial Trust. Numbers are expected to rise rapidly as SGX takes steps to implement a comply-or-explain sustainability reporting regime.

GRI-Reporting-in-Singapore

SGX is targeting implementation of comply-or-explain sustainability reporting for financial year 2017. SGX will be engaging listed companies, institutional investors, sustainability professionals and the public on legislating a comply-or-explain sustainability reporting regime in 2015 (see details in SGX’s announcement).

Paia Consulting is a specialist sustainability consultancy based in Singapore.

GRI Reports in Singapore and Malaysia

Sustainability reporting

Sustainability reporting, or corporate responsibility reporting, enables organisations to report on their environmental, social and governance information beyond the scope of traditional financial reporting. Parts of it will be familiar to organisations in Singapore and Malaysia already, such as reporting safety statistics, human resource practices and environmental management systems. Community investments are also included, but contrary to what some may think, form a small part of what sustainability or sustainability reporting is about.

Far from being a ‘feel-good’ portion of the report, these extra-financial (or sometimes referred to as non-financial) information are increasingly used by investors to assess externalities which will be reflected in stock performance in the long term. For example, a company which has strong environmental management practices is less likely to incur litigation risk and also continuously improve on operational efficiencies. A company with strong emphasis on safety and talent retention will likely incur lower hiring and training costs from lower turnover rates.

 

Global Reporting Initiative (GRI)

What the Global Reporting Initiative (GRI) aims to do, is to establish a framework such that organisations may report on data which is comparable – much like IFRS equivalent for financial reporting. GRI guidelines are the most established framework used. More than 5000 companies adopt GRI guidelines (GRI, 2012), including 80% of Global Fortune 250 companies (KPMG, 2011). 

 

Singapore and Malaysia

The number of GRI reports in Singapore and Malaysia have grown steadily over the past 5 years, with more than 5 times the number of reports today than in 2008.

In 2008, the Malaysian Stock Exchange Bursa Malaysia made it mandatory for all listed firms to disclose corporate social responsibility (CSR) information.

In 2012, Singapore Exchange (SGX) has announced an intention to move towards a comply-or-explain approach for its listed firms, following its release of a Policy Statement and Guide to Sustainability Reporting in 2010 and 2011 respectively. SGX has also organised various initiatives, including revising the Singapore Code of Corporate Governance to explicitly mention environmental and social considerations for Board and releasing an Investor Guide to Reading Sustainability Reports. Read more about SGX’s recent key initiatives here.

The following graphs aim to give a quick snapshot of the sustainability reporting scene in Singapore and Malaysia.

b2ap3_thumbnail_SG3Oct13.jpg b2ap3_thumbnail_Msia3Oct13.jpg

 

Below are the 23 GRI reports published in Singapore in 2012. 

#

COMPANY

REPORT NAME AND LINK

1

Asia Pacific Breweries Limited (APBL)

2011 Sustainability Report

2

Capitaland

CapitaLand Sustainability Report 2011

3

City Developments Limited

CDL Sustainability Report 2012

4

DyStar Singapore

Sustainability Report 2011

5

First Resources

Towards Sustainability: First Resources Limited Sustainability Report 2011

6

Fuji Xerox Singapore

Fuji Xerox Singapore 2012 Singapore Report

7

Golden Agri-Resources Ltd

Preserving the Present Ensuring the Future: Sustainability Report 2011

8

Keppel Corporation

Sustainability Report 2011

9

KEPPEL LAND LIMITED

KEPPEL LAND LIMITED SUSTAINABILITY REPORT 2011

10

Keppel T&T

Sustainability Report 2011

11

KPMG Singapore

Sustainability Report 2012

12

National Environment Agency

Sustainability Report FY11

13

Olam International Limited

Olam corporate responsibility and sustainabilty report 2012

14

Power Seraya

Corporate Accountability Report 2011

15

Sembcorp Industries Ltd

Sembcorp Industries Annual Report 2011

16

Sembcorp Marine Ltd

Annual Report 2011

17

Siloso Beach Resort, Sentosa

Siloso Beach Resort Sustainabilty Report 2012

18

Singapore Exchange (SGX)

The Asian Gateway: Singapore Exchange Annual Report 2012 July 2011 – June 2012

19

SingTel – Singapore Telecommunications Limited

Connecting People, Touching Lives

20

StarHub

Annual Report 2011 (Hubbing, Achieving and Even More)

21

Swire Pacific Offshore

2011 Annual Report

22

Tuas Power

Sustainability Report 2012

23

Wilmar International

Staying the Course through Challenging Times

 Source: GRI Database & Paia Consulting (3 Oct 2013)

 

Below are the 17 GRI reports published in Malaysia in 2012. 

Paia is the appointed GRI Data Partner for Malaysia. If your report is not reflected here or the GRI Database, please email us at reports@paiaconsulting.com. 

#

COMPANY

REPORT NAME AND LINK

1

Bumi Armada

Corporate Social Responsibility Report 2011

2

CIMB Foundation under CIMB Group

Sustainability Report 2011

3

CSC STEEL HOLDINGS BERHAD

2011 Corporate Sustainability Report

4

Digi.com Berhad

DiGi.Com Berhad Sustainability Report 2011 – Transforming to Deliver Internet fo

5

Guinness Anchor Berhad

Corporate Responsibility Report 2011

6

Keenway Industries Sdn. Bhd.

Sustainability Report 2011

7

Encorp Berhad

Sustainability Report 2011

8

Kulim

Sustainability Report 2010/2011

9

Maxis

Sustainabiltiy Report 2010/2011

10

Media Prima

Media Prima Berhad Sustainability Report 2011

11

Petronas

Sustainability Report 2011

12

Plus Expressways Berhad

PLUS Expressways Sustainability Report 2011

13

Puncak Niaga

Expanding Horizons – Annual Report 2011

14

Sime Darby Berhad

Sustainability Report 2011

15

Sunway

Sunway Sustainability Report 2011

16

Telekom Malaysia

Telekom Malaysia Sustainability Report 2011

17

UEM Environment

UEME Sustainability Report 2011

Source: GRI Database (3 Oct 2013)

 

Paia Consulting is a leading sustainability consultancy established since 2002. We helped produce Singapore’s first GRI report and many award-winning reports. Beyond reporting, many of the companies leading sustainability locally are our clients.

Drop us a note at info@paiaconsulting.com to discuss how we may support your sustainability journey.