The pressure is growing worldwide for big companies to disclose how they are addressing sustainability challenges.
Investors are scrutinising green credentials before committing capital to assets, while bourse administrators are mandating regular reporting of environmental, social and governance (ESG) metrics.
While transparency is fundamental to building trust, the demand for information should not become a roadblock for companies’ climate ambitions, according to a Google executive.
Governments should also create interoperable frameworks to help companies wade through the many existing sustainability reporting rules, added Rachel Teo, who leads Google’s government affairs and public policy work in Southeast Asia, and on sustainability across the Asia Pacific.
“I would like to, from a business practicality perspective, encourage policymakers to build interoperable frameworks with the right, pragmatic and proportionate balance of transparency, that informs investments, and not [require] transparency for transparency’s sake, because that becomes an excessive burden for most companies,” Teo said.
There are currently over 600 standards, frameworks and guidelines that companies can reference to report how they are fighting climate change, protecting biodiversity and shielding their stakeholders from sustainability risks.
“Practitioners would already know about the alphabet soup of ISSB [International Sustainability Standards Board], TNFD [Taskforce on Nature-related Financial Disclosures], and others,” Teo said.
Local exemptions for multinational companies already subject to sustainability reporting mandates overseas would help ease such burdens and avoid duplicating data, Teo added.
Teo was speaking at the Greentech Festival conference in Singapore in November 2023 on a panel discussing technology and trust in sustainability.
From left: Tan Xin Hao from Mastercard, Rachel Teo from Google, Chiang Yoke Fun from ST Engineering, and Bhupinder Singh from Vodafone Business. Image: Greentech Festival.
The number of businesses subjected to sustainability reporting duties is growing. While most of the responsibilities are currently on listed companies, governments are also turning their attention to larger privately-held enterprises. Within Asia, Singapore could be among the first to mandate climate-related disclosures for such companies come financial year 2027, with listed companies mandated to provide climate disclosures as early as financial year 2025, pending feedback on recommendations.
There has been some effort at consolidating reporting guidelines – the recent ISSB standard, for instance, references several existing initiatives. However, several Asian governments have also been setting their own criteria on what counts as “green” projects via financial taxonomies, in contrast to shared rules in jurisdictions such as the European Union.
Teo highlighted that disclosure requirements should also not disincentivise companies from setting ambitious climate targets set through transition planning and scenario analysis.
“Transparency [rules] need to hold companies accountable, but also encourage moonshots. I would counsel that balance for all of us,” she said.
Transparency is generally seen as a driver of more ambitious climate action, as it creates competition by ranking businesses on sustainability credentials, and helps companies maintain trust among sceptical consumers. But greater scrutiny in recent years has also led to “greenhushing”, where brands downplay or underreport their green credentials for fear of scrutiny.
In 2022, consultancy South Pole said in a corporate sustainability study that one in four businesses do not publicise their science-aligned climate targets.
“Could it be that increased scrutiny from and critique by the media – alongside non-governmental organisations and consumer and market authorities – has made surveyed leaders wary of publicising their net zero ambitions? Are companies themselves unsure they have what it takes to meet their goals and so are loath to talk about them? Or could it be that many in leadership positions still lack the technical skills and confidence to talk about complex climate efforts?” the report questioned.
“[Greenhushing] makes targets and achievements harder to scrutinise and limits knowledge-sharing, potentially leading to less ambitious targets being set and opportunities being missed for sectors to decarbonise by working together,” the report added.
On Google’s part, Teo shared that the tech company has been voluntarily disclosing sustainability metrics, such as its Scope 3, or indirect supply chain emissions – 7.6 million tonnes of carbon dioxide equivalent in 2022 – on top of its operational emissions of 2.5 million tonnes. Since Scope 3 emissions still rely heavily on estimates and developing methodologies, policymakers should limit liabilities on enterprises should there be inadvertent mistakes, she said.
Google wants to halve its overall emissions by 2030 relative to 2019 levels, and neutralise the remainder through carbon offsets. While it may be a challenging endeavour for the Asia Pacific region across all industries, the company remains optimistic, according to Teo.
ESG data in demand
Industry players speaking alongside Teo at Greentech Festival said there are growing opportunities to leverage data for sustainability initiatives.
For instance, Singapore’s ST Engineering, an aerospace engineering, defense, and technology group, is seeing requests for collaboration from financial institutions over a satellite the company launched this year that can capture multiple high-resolution visuals of equatorial areas each day. Such insights can help to manage waste and deforestation, said Chiang Yoke Fun, a senior vice president at ST Engineering.
“We were quite surprised that there were a lot of expressions of interest,” Chiang said.
Meanwhile, Google has a free mapping tool called Environmental Insights Explorer (EIE) to help governments track emissions and identify the best locations to install rooftop solar panels. The tool, which is used by 42,000 cities around the world, also helps local governments and communities measure and reduce emissions at source, Teo notes.
The tech company has also been using its Active Assist tools, which use artificial intelligence and data, as well as machine learning solutions, to help its data storage clients identify power-intensive workloads that can be moved offline, helping customers save costs.
“It is not a mutually exclusive combination around sustainability and business objectives – it is very much intertwined,” Teo said.
Bhupinder Singh, Asia Pacific and Middle East president at telecommunications company Vodafone Business, said a survey it commissioned showed that 74 per cent of Asia Pacific businesses reporting higher profits last year had a formal ESG programme, “demonstrating a clear link between sustainability and financial success.”
“Businesses that prioritise sustainability are better positioned to meet expectations of customers, investors and regulators,” Singh said.
Chiang said effective internal communications is needed to let every employee know that there are opportunities to support green initiatives within businesses, while Teo added that sustainability needs to be embedded into every company function, including human resources and policy.
