Strategic Analysis

Defining and disclosing a sustainability strategy and measuring its progress over time starts with a good understanding of the relevant voluntary and mandatory frameworks, and with a materiality analysis. Engage with stakeholders to understand their needs and expectations. Then, assessing the impact, risks and opportunities that ESG factors present to your business is a key step in future-proofing your business strategy.

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Align with relevant frameworks & standards - BASIC
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Sustainability accounting is about capturing meaningful non-financial information for both internal decision-making and external reporting. Reliable and comparable data is the basis for accountability and it is fundamental to align the sustainability accounting with established frameworks and standards. It is important to follow reporting principles and conceptual foundations to build trust and comparability over time and within the industry.

Sustainability reporting is moving from a fragmented landscape of voluntary frameworks and standards (GRI, SASB, TCFD, CDP, IR, etc.) to mandatory reporting enforceable by law in the respective jurisdictions. To understand the current evolution and the role of the voluntary reporting frameworks in the emerging mandatory reporting landscape, we start with an overview of the most commonly used frameworks. For reference:

  • GRI (Global Reporting Initiative) is one of the most applied and holistic ESG reporting frameworks. GRI provides good guidance on how to consider stakeholders and identify materiality topics (GRI 2: General Disclosures 2021, Section 5 - Stakeholder Engagement).
  • SASB (Sustainability Accounting Standards Board) is now integrated under the International Sustainability Standards Board (ISSB). Their standards are also useful to start with, as they provide specific materiality maps by industry sector. Find your industry here.
  • TCFD (Task Force on Climate-related Financial Disclosures) is now integrated under the International Sustainability Standards Board (ISSB). TCFD focuses on environmental topics with a financial materiality perspective. Their framework has been widely adopted in many jurisdictions and is based on 4 main pillars 1) Governance 2) Strategy 3) Risk Management 4) Metrics and Targets.
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Comply with mandatory requirements - BASIC
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As sustainability reporting becomes mandatory in many parts of the world, preparing for compliance is critical for listed companies and SMEs alike as the latter are part of the scope 3 emissions of listed companies. Risks and opportunities identified by listed companies in relation to their value chain partners will need to be addressed.  

The new regulations outlined below build on the voluntary frameworks previously outlined and will be implemented with local adaptations in terms of effective dates, reporting relief, third party assurance requirements etc.

INTERNATIONAL: The International Sustainability Standards Board (ISSB) aims to meet investors' need for reliable and comparable information on financial materiality. It was established by International Financial Reporting Standards (IFRS) 2021, which creates a globally binding baseline that integrates non-financial information into financial reporting and standardises sustainability information. They published their sustainability standards IFRS S1 - General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures in July 2023. Many jurisdictions around the world have already committed to aligning their reporting requirements for listed companies and large private companies. Other standards are in development.

SINGAPORE: The Monetary Authority of Singapore (MAS), ACRA and SGx have announced that they will align with IFRS S1 and S2 for data, definitions and disclosures. At the beginning of 2024, the Singapore Exchange metrics consist of 27 core sustainability metrics based on GRI and TCFD, which listed companies are expected to report on a comply-or-explain basis. The communicated effective date for listed companies is FY2025 and for large private companies with a turnover > SGD1 billion, FY2027.

EUROPEAN UNION: The Corporate Sustainability Reporting Directive (CSRD) requires companies to disclose their material impacts, risks and opportunities in relation to certain ESG issues. EFRAG was appointed as a technical advisor to the European Commission in developing the European Sustainability Reporting Standards (ESRS), which outline the reporting requirements in 12 standards. The standards cover 'double materiality' and draw heavily on the principles and framework of the Global Reporting Initiative (GRI). For effective dates and applicability thresholds, please consult the European Commission.

UNITED STATES: The US Security and Exchange Commission develops sustainability reporting requirements similar to ISSB. In the State of California, SB-253—Climate Corporate Data Accountability Act and SB-261—Greenhouse Gases: Climate-Related Financial Risk, will establish the first industry-agnostic US regulations requiring the corporate reporting of greenhouse gas (GHG) emissions and climate risk.

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Conduct a materiality assessment - BASIC
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Materiality assessment is the basis for the company's sustainability strategy. A solid materiality analysis will help you understand the importance of different sustainability issues in your business.

The purpose of the exercise is to include the most relevant ESG (environmental, social and governance) aspects of your business. You may choose to start with a purely environmental materiality assessment, but social aspects related to employees, human rights, and community relations should not be overlooked. Some industries are characterised by strong governance (e.g. anti-corruption, anti-bribery, data protection, etc.), which should also be covered.

The materiality assessment is commonly visualised in a materiality matrix, which shows the importance of sustainability impacts to your business (profit) on one axis and the importance of your business impacts to stakeholders (people & planet) on the other. Here are some examples of materiality matrices.

  • Approach the analysis with an open mind:

- FINANCIAL MATERIALITY (OUTSIDE IN) - Identify topics that will impact your business' ability to create value over time, which may depend on natural resources, a reliable supply chain or other issues relevant to the industry, region, and business context.

- IMPACT MATERIALITY (INSIDE OUT) -  Consider the impact that your business activities have on the environment and society, and their importance to your stakeholders.

  • Identify best practices:

Understand from reporting companies with similar activities what is most material in your industry, and consider SASB's recommended topics for your industry.

  • Start small:

Not all topics can be covered when you're first beginning your sustainability journey. With the right focus and simplified methodology, you can actually capture the small essence of the issues that are most material to the business. However, it is important to document the non-prioritised issues and the reasons for not including them, to justify your decisions and use them for future reassessment. SMEs need to narrow the scope and prioritise a smaller set of materiality issues in order to measure, manage and communicate their sustainability efforts.

Suppose you are a subsidiary of a multinational company. In this case, you should understand the group's sustainability strategy and objectives, and clarify the scope of influence and control that corresponds to your region.

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Engage with stakeholders - INTERMEDIATE
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The first step is to identify the key stakeholders that have the most direct relationship with your business activities. Common stakeholder categories for organisations include business partners, customers, shareholders and other investors, policy makers, governments, suppliers, employees and trade unions, local communities and NGOs.

Engage with them to find out what is important to them and to understand their expectations. This can be done through structured interviews. For companies with limited resources, focus on insightful discussions with a few key stakeholders in different categories, rather than questionnaires and superficial input.

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Identify risks & opportunities - INTERMEDIATE
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Sustainability risk arises from an uncertain social or environmental event or condition that, if it occurs, could have a material adverse effect on the company. At the same time, these changes and uncertainties can create opportunities. Risks and opportunities create the pressure points that prompt boards/management teams to develop and invest in sustainability strategies. Adopting a sustainable approach not only demonstrates resilience and long-term value creation for the business, but is also a source of competitive advantage.

Failure to address climate change and its consequences, including extreme weather events, environmental damage and loss of biodiversity, is widely recognised as the most urgent potential systemic risk, leading to an unprecedented focus by companies and investors.

There are three main climate-related risks to business:

  • Physical risks are the risks of losses due to environmental events such as floods or storms (which can be acute or chronic).
  • Transitional risks (transition to a low-carbon economy) arise from changes in policy and new technologies, such as the growth of renewable energy.
  • Litigation risks, where those affected by climate change seek compensation from those responsible.

There are also climate-related business opportunities in resource efficiency, energy sources, products and services, markets and resilience.

Follow these three initial steps to identify the specific and material risks/opportunities for your business:

STEP 1: Create a sustainability profile

- From the list of industry-specific sustainability issues, identify the list of risks that have a material impact on the business and specify the list of opportunities that have the potential to capture the market and/or create value for the business.

- Do the same with the list of stakeholder engagement and analysis topics derived from your materiality assessment.

STEP 2: Characterise these issues based on internal operations, and external operating environment.

- Internal operations: a) key revenue streams and b) key inputs to value creation.

- External operating environment: a) Geographical footprint b) Business climate c) Regulatory climate d) Political climate e) Economic climate

STEP 3: Define time horizons

The timing of the risks and opportunities may exceed the typical short-term horizon although preparation for these risks takes time and should start now. Therefore companies should assess the risks and opportunities in short-, medium- and long term, as relevant.

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Assess the risks and opportunities & define a risk response plan - INTERMEDIATE
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Many organisations are already familiar with the Enterprise Risk Management (ERM) frameworks, like the COSO or ISO 31000 (links provided below). They identify new risks and opportunities and manage them through the Risk Register. To assess the risks and opportunities, they typically use the Risk Matrix Approach, whereby the likelihood of occurrence and intensity (severity) of financial impact within a given time horizon (usually short-term) are assessed. Following the generic risk formula: risk = likelihood x intensity (severity), hotspots can be identified and prioritised for a risk response plan.

Because of the uncertainty around the exact timing and severity of climate change impacts, and the challenges and complexities associated with the transition to a low-carbon economy, the Task force on Climate-related Financial Disclosure (TCFD) recommends the use of forward-looking climate scenario analysis. Companies can use some of the pre-defined scenarios, like IPCC's RCPs and SSPs for physical risks, or IEA's scenarios for transition risks.

A response strategy is a mapping of actions to priority topics.  

Threat response actions can be:

a) Avoid the risk

b) Mitigate the risk

c) Transfer the risk

d) Accept a risk that occurs periodically

e) Escalate the risk.

Opportunity response actions can be:

a) Exploit the opportunity

b) Enhance the opportunity

c) Share the opportunity

d) Accept the opportunity

Organisations use their Enterprise Risk Management structures and processes to identify, assess, manage, monitor and communicate risks. Climate-related risks should be integrated into the traditional ERM function/tool.

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Buddies - Experience sharing

The « sustainability journey » may feel overwhelming sometimes, but you are not alone.

Our Buddies have tried, succeeded, failed to implement change in their companies. They share their experience so you can learn, take shortcuts, get inspired and ask questions.

Everybody can become a Buddy and give back to the community; if you are keen, get in touch with us.

Ivona Balint-Kowalczyk
Sustainability consultant, Founder - Sustainao

With a background in sustainability consulting and audit, Ivona supports businesses in their sustainability journey by building an impactful strategy, embedding sustainable practices across operations, and reporting performance to stakeholders.

She is the founder of Sustainao, a Singapore-based company specialized in sustainability consulting. Previously, Ivona worked as a sustainability auditor at KPMG France. She holds an MBA in CSR & Sustainability and a Master’s degree in Environmental Management.

Radhika Chavan
Co-Founder - Tulya

Radhika is the Co-founder of Tulyā, A Sustainability Management Accounting (SMA) Services company. Her work includes measurement and understanding of the impact environmental and social factors will have on the value creation for SMEs. She develops tailored tools and practices that integrate material topics (ESG & Business) with accounting statements line items to demonstrate financial impact of action vs inaction.

She has worked with Lehman Brothers, Barclays and IT services companies before starting her entrepreneurial journey in sustainability.

She is a graduate in Chemical Engineering and has been certified in SASB , PMP, CSM &  Design Thinking-MIT.

Anna Håkansson
Co-founder - Tulya

I enjoy improving processes and creating data-driven insights. My background is in process development and operations as Quality Manager and COO. A few years back, I decided to re-purpose my career and have since then studied different aspects of Sustainable Business Development at the University in Sweden as well as the Sustainability Reporting Standards (GRI, SASB, TCFD and ISSB work in progress).

Now, I am here to help SMEs integrate sustainability into their business strategy and operations, focusing on the impact that environmental and social aspects will have on the organisation's ability to create value. By reducing the scope to the most relevant materiality topics, even SMEs with limited resources have a chance to start their transition to more sustainable practices.

Mun Wei Chan
Founder & Principal Consultant - SustainableSG

Mun Wei is the founder and principal consultant of SustainableSG, which provides advisory and training services in sustainability, strategy, risk and entrepreneurship.

He has worked with corporate, government and non-profit clients on strategy and implementation, reviewing organizational programmes and targets related to the UN Sustainable Development Goals, benchmarking and communicating sustainability and other corporate programmes and achievements, promoting inclusive hiring, developing compliance policies and reports, and formulating innovative business models.

He is also an Adjunct Lecturer at the Singapore University of Social Sciences.

Lucile Batut
Sustainable Finance Transformation

Wearing the double hat of finance and sustainability, I support finance departments in their transformation towards sustainability. With a management degree from a top business school in France, I have a multi-faceted experience from complementary positions I have held in business finance: from auditor to consolidation accountant, project manager, management controller and finance director.

In addition to my background in financial business partnering, I am passionate about enabling change in companies, always looking after my teams and colleagues to create the conditions for collective success.

Zuzana Dzurillova
Founder and Director - Tamotsu Institute

Zuzana is experienced risk management consultant, project manager and trainer. She is Director at Tamotsu Institute, a sustainability consulting firm, and Programme Lead for corporate trainings at The Matcha Initiative. She views sustainability from the risk management perspective, making companies aware of the financial risks and opportunities involved.

She has studied Sustainability Leadership at the Imperial College of London and is certified in Sustainability and Climate Risk by the Global Association of Risk Professionals (GARP) and in Recommendations of the Task force for Climate-related Financial Disclosure by the TCFD.

Ching Hu
Climate Regulations Specialist – Terrascope

I work at Terrascope, which offers an end-to-end decarbonisation SaaS platform that enables enterprises to measure and manage their Scope-1, Scope-2 and Scope-3 emissions across operations, supply chains, and portfolios. As Climate Regulations Specialist, I help ensure that our product stays ahead of the regulatory curve and advise clients to navigate the dynamic and complex climate regulatory landscape.

Prior to joining Terrascope, I worked at EcoVadis - a global ESG ratings company - where I launched its Singapore office which served more than 800 companies within its first year of operations. The ratings include environmental, social, ethics and sustainable procurement metrics.

I started my career with the Singapore Government, spanning portfolios including manpower, education, transport and decarbonisation. I also helped spearhead the government's measures to fight Covid-19.

I graduated from the London School of Economics, SciencesPo Paris, and Oxford University. As an undergraduate at Oxford, I helped launch the inaugural Oxford Climate Forum - the UK's largest student-run climate change event.

Quentin Fouesnant
VP Sales – Zuno Carbon

Passionate about sustainability and technology, I have spent the last 10 years working in the energy, tech and sustainability sectors. I am VP of Sales at Zuno Carbon, a climate-tech providing end to end carbon management and ESG reporting solutions.

Mei Yee Chan
Senior Programme Manager - TÜV SÜD

As the Senior Programme Manager for Sustainability Validation and Verification at TÜV SÜD, Mei Yee helps organisations add credibility and assurance to their greenhouse gases (GHG) emission assertations and GRI reports by providing third-party verification reports to support organizational claims.

She has six years of experience in the standards development of ISO 30500 and ISO 31800, testing, and certification for non-sewered sanitation systems. Prior to that, Mei Yee spearheaded  World Toilet Organization's Rainbow School Toilet projects in China and Sanishop in Cambodia. She is passionate about driving corporate social responsibility and sustainability and has spent more than 18 years in various fields working internationally across teams and cultural boundaries before turning her focus on Singapore to helping companies with their carbon reduction journey. She holds a Masters in Community Water and Sanitation and a Science Degree in Earth Science, majoring in geology and physical geography.

She is a certified WSQ Advanced Certificate in Learning and Performance (ACLP) Train-The-Trainer (TTT). Since then, she has facilitated many companies in the training for Green Compass – An environmental assessment framework targeted at SME/ manufacturing industries.

Samuel Chauffaille
Managing Director AsiaPacific (excl. China) - Ecocert

In 2003, I joined International SOS, world leader of medical and security assistance services and relocated to Singapore in 2008 where I have spent my life since. I held different regional leadership roles and I was a founding member of the Sustainability Committee and initially led the S (Social) part. I was also leading the Environment pillar, with a special focus on the Ecovadis certification.

I enrolled at SMU back in Sept 2020 and graduated from the Sustainability and Sustainable Business executive masterclass in Dec 2020. In July 2021, I joined a local singaporean startup H3Dynamics with the ambition to decarbonize the aviation industry! And since May 2023, I am now the managing director AsiaPacific for Ecocert, world leader in certification for organic products. I am also the Singapore Ambassador (volunteer) for Ecomatcher to help brands fight climate change, one tree at a time.

Finally, I am a French Trade Advisor and part of the Sustainability Committee to strengthen bridges between France and Singapore on this crucial agenda.

Chris Wei
Business Development Manager - Asia - South Pole

At South Pole, Chris supports Asian clients in their climate leadership and circular economy journey. The scope of services includes both carbon credits & sustainability consultancy. Chris currently manages clients from more than 10 Asian countries in categories such as conglomerate, agriculture, property development, asset management, retailing, information technology, and energy.

Vincent Desclaux
Managing Director - Palo IT

I have been working in Asia for the past 12 years (Shanghai, Hong Kong and Singapore since 2014) within the digital and technology space.

I have founded and run several companies in different sectors such as IT Consulting, Education, and the F&B business.

I am passionate about how to use technology as a force for good.