Singapore's sustainable water policy offers a useful model for sustainable development
In January 2016, the Singapore Exchange (SGX) announced that it would introduce sustainability reporting on a “comply or explain” basis for companies listed on the SGX. Sustainability reporting is a complement to financial reporting, and considers environmental, social and governance aspects of business and strategy. It provides investors with a better understanding of the companies, and increases trust and transparency.
According to the SGX Sustainability Reporting Guide, reporting will be on a “comply or explain” basis. This means that listed companies should either produce the report or explain the reasons for not doing so. The Guide is quite comprehensive and requires reporting on material environmental, social and governance factors in the context of the value chain of the business; policies, practices and performance issues that should be implemented; targets for the forthcoming year; selection of a reporting framework to guide reporting and disclosure; and a statement of the Board in the sense that sustainability issues are part of the strategy of the company, that material environmental, social and environmental governance factors have been determined, and that management and monitoring are being overseen. The first sustainability reports should be issued by December 31, 2018.
This move can be considered as part of a global trend through which companies all over the world are expected to become more responsible from the environmental, social and governance viewpoints. One of the most important international initiatives is the Global Compact of the United Nations. To date, 9,531 companies in 162 countries have committed to improving their environmental, social and governance performance. They have produced 47,121 reports where they aim to show the impacts of their operations and of their actions for improvement.
The final goal is for companies to move from compliance to stewardship.
As an example, let’s look at Singapore’s sustainability efforts with a focus on water resources.
In most countries, water use proportions are conventionally divided among domestic, industrial or commercial, and agriculture sectors. In general, agriculture uses the most water, followed by industries and then households in a 7:2:1 proportion. In Singapore, however, agriculture output is not large enough to be listed as its own category for GDP by industry sectors. Most agriculture in Singapore is high-tech agri-businesses and therefore its water use can be considered industrial as well. With agriculture being almost non-existent, industry water use accounts for a significantly higher percentage of total water use.
Singapore’s current water demand proportion stands at 45 percent for domestic and 55 percent for non-domestic purposes, and is projected to go towards 40 percent and 60 percent in 2030 and 30 percent and 70 percent in 2060, respectively. By volume, demand stands at 430 million gallons per day (mgd) today with an anticipate increase by 25 percent for 2030 and more than double current demand by 2060.
If we do a rough translation of the official figures, it means that domestic water consumption is expected to increase from 193.5 mgd today to 215 mgd in 2030, and more than 258 mgd in 2060. Non-domestic water use is estimated to increase from 236.5 to 322.5 and more than 602 for the same period. As can be seen, non-domestic water use is set to increase faster than for household use, and should more than double in this simple illustration of future projections.
PUB, The National Water Agency, is well on track to meet infrastructural targets for continued supply capabilities, with local catchment expanding from two-thirds to a projected 90 percent of the land surface area; five recycling plants and two desalination plants in operation, two desalination plants being built at this time and one in the planning stage. Nevertheless, it is important to reduce water consumption not only in the domestic sector but also in the non-domestic one.
Towards this end, water policies have since 2009 been in line with the Sustainable Singapore Blueprint, a map for sustainable development at the national level. On the domestic front, demand management to reduce per capita consumption per day includes educational programs, and mandatory water appliances and fittings to improve efficiency through the Water Efficiency Labelling Scheme. According to this scheme, water fittings and appliances have to meet minimum water efficiency standards and are graded by ticks.
This June, PUB, National Water Agency, announced the Water Closet Replacement Project. Existing 9-liter water closets are to be replaced with more efficient 4.5-liter models free-of-charge at eligible low-income households, such as those residing in HDB flats built between 1986 and 1992 and currently on community assistance schemes.
Conservation efforts for domestic consumption, while essential, are not enough. As demonstrated from the projections, industrial use will form the majority of future water demand. For the industrial sector, there are stringent measures in place but more needs to be done.
Initiatives underway include the Water Efficiency Management Plan, which is mandatory for large water users with consumption of at least 60,000 cubic meters in the previous year. These users are required to install, monitor and track private water meters, and submit the data to PUB for at least three consecutive years.
Water Efficient Building certification meanwhile encourages the adoption water efficient measures on private commercial and industrial premises.
These measures are complimented by a national standard on water efficiency management systems (Singapore Standard 577:2012), which functions as a guide for best practices. And with the Water Efficiency Fund, eligible projects may be proposed to offset part of the costs for compliance or voluntary certifications.
In addition, the voluntary Active, Beautiful, Clean (ABC) Waters certification scheme for private properties, as well as the water efficiency criteria within Building Construction Authority (BCA)’s mandatory Green Mark certification, map out a comprehensive plan for implementing water saving measures.
These policies are progressive and rely on both top-down regulations and bottom-up initiatives. This is, a hybrid “carrot-with-stick” approach to encourage businesses to go in the right direction.
It is important, however, to remember that firms are rational, profit-seeking entities. Therefore, since voluntary sustainability efforts are optimal only under ideal, optimistic conditions, they have to be made an intrinsic part of the business plan of companies and be incorporated in a coherent manner into day-to-day operations.
Most firms follow the lead of the larger industry players and react to policy and enforcement measures in the face of immediate business concerns. That said, there are industry leaders in each sector that are willing and have indeed rolled out voluntary sustainable efforts within their own processes, above and beyond mandatory requirements. They have shown that sustainability measures contribute to a thriving, competitive business environment.
As we move towards integrating sustainability in all aspects of development, SGX’s “comply or explain” requirement is a step in the right direction, and should contribute to the advancement of an environmental, social and governance-oriented corporate culture in the city-state. Additionally, a detailed documentation of the best practices from the top sustainability corporate leaders in their respective fields may also be able to do the same by better informing the current hybrid carrot-and-stick model. This will be an exemplar of how, in search of better working processes, policy measures may learn from the best of the private sector in a two-way flow. In this case, sustainable water policy as part of a larger roadmap for sustainable development in the effort to create a more livable city.
Cecilia Tortajada is Senior Research Fellow at the Institute of Water Policy, Lee Kuan Yew School of Public Policy, National University of Singapore. Tommy Kevin Lee is Research Assistant at the same Institute.
As Shanghai joins the race to become an excellent global city and scientific innovation center, it invites private and public enterprises to pursue sustainability initiatives, promote China's sustainability targets and showcase the city's achievements.
Shanghai is launching a campaign to encourage Chinese and foreign companies to actively pursue sustainability initiatives, promote China's sustainability targets, and showcase the city's achievements in innovation, business environment, and sustainable development.
Under the title Heading Towards 2040: Corporate Innovation and Urban Sustainability, the three month campaign will accept cases from foreign investors, private investors, and state owned enterprises. Those who wish to join are requested to email relevant materials to the campaign organisers, which include The Shanghai Daily, Shanghai Observer of Jiefang Daily, and Eastday.com. Winners will be decided jointly by a jury panel and public votes, and the final results will be announced at a summit in September. Jointly sponsored by the Information Office of Shanghai Municipality, Shanghai Municipal Commission of Commerce, and Shanghai Environmental Protection Bureau, three awards will be distributed among the winners of this year’s round: the 2017 Sustainability Best Practice Awards, 2017 Sustainability Influencer Awards, and 2017 Sustainability Communications Awards.
The masterplan set out in October 2016 for China’s most populous city tackles population, environment, transport, and public services until 2040. “By 2040, Shanghai aims to become an excellent global city, an international economic, finance, trade, shipping and scientific innovation center, as well as a cultural metropolis,” said Zhuang Shaoqin, director of the city’s planning, land and resources administration in August 2016. “It will become an innovative, humanistic and eco-friendly city.”
However, people are skeptical about the side effects that much of this innovation might have and its possible effect on less fortunate communities. Last December, municipalities responded to complaints filed by residents of the city’s Hongkou district, the densest district in Shanghai, and tore down a number of illegal buildings that have been sheltering both families and businesses for decades. The municipalities replaced this with an “innovative solution” to both beautify the eyesores and create green spaces in the heavily industrial district. Cast out on the streets with nowhere to go in China’s most populous city, disgruntled evictees are still waiting for better compensation to find alternative housing.
Shanghai is not only China’s most populous city; it is also the world’s fifth. Urban planners have planned for the city to house 25 million people by 2040 even though the city was estimated to house a little over 25 million people this year. In 2016, the city’s population was estimated to be 24.15 million, which actually declined 0.4% from 2015. But despite that, experts foresee an overcrowded future for the former “Paris of the Orient.” It is projected that the Chinese city, keeping pace with Beijing, will be home to more than 50 million by 2050 due to the fast-paced rate of urbanization in the region and booming economic growth.
Bangladesh has long been clear that it would prefer to run its own factory inspections and remediations rather than let the foreign-led Accord on Fire and Building Safety in Bangladesh and the Alliance for Bangladesh Worker Safety continue on beyond 2018. Now, it seems, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), will form its own agency to undertake efforts similar to what the Accord and Alliance had been doing in the country.
The new agency, which according to Bangladesh local publication The Daily Star, will be called Shonman, meaning respect. The agency will be run by an ombudsman selected by the Prime Minister and have a steering committee comprised of members of the BGMEA, the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), the International Labour Organization, brands, trade unions and labor ministries.
Any major decisions would have to be consensus based, so neither the government or the BGMEA would have veto power. The government would be responsible for dealing with any technical task forces, case handlers and fire, electrical and safety engineers to coordinate remediations, which a Remediation Coordination Cell would manage.
In Shonman’s first phase from January to June 2018, factories under the National Action Plan, the Accord and the Alliance will be listed and the Remediation Coordination Cell would be designated to ensure these facilities make 85 percent of their remediation targets by the end of next year. In the second half of 2018, signatory buyers will be called on to help Shonman with third-party audit fees so that the organization can continue its independent factory verifications.
“We have not finalized everything yet. But terms and conditions are ready,” BGMEA president Siddiqur Rahman told The Daily Star.
In March, the Accord announced its renewal, and the new agreement—which has already been signed by previous signatories including H&M, Inditex, Primark, C&A and Lidl, among others—will pick up where the first one left off and carry on the work of doing independent factory inspections and supporting remediation efforts. It will remain to be seen how the extended Accord and Shonman will work together.
The Alliance, however, which includes signatory brands like Macy’s, Target, Walmart and Gap, has said it won’t extend its tenure in Bangladesh beyond 2018.
In an email to the BGMEA, uncovered by the Financial Express, Alliance country director James F. Moriarty said, “We expect to complete our program on schedule at the end of five years in country. We may continue to work in country for a short period of time to ensure a smooth transition of our safety responsibilities to a Bangladesh-centered entity, but do not have any plans to stay on beyond the end of 2018.”
In its most recent update on factory progress, the Alliance said 26 more of its factories completed their corrective action plans for remediation, bringing the total to 118.
Moriarty said in a statement about the news earlier this month, “This past month’s success reinforces our confidence that Alliance factories will have substantially completed remediation and be well on the way to developing a sustainable culture of safety before the Alliance sunsets in 2018.”
The Shanghai Stock Exchange announced publicly its commitment to promoting sustainable and transparent capital markets through its voluntary membership with the United Nations Sustainable Stock Exchanges (SSE) initiative. The exchange announced its partnership with the SSE initiative at The World Federation of Exchanges (WFE) Annual General Assembly taking place in Bangkok, Thailand 6-7 September 2017.
“Shanghai Stock Exchange has been playing an active role in establishing China’s green financial system and promoting sustainable development,” said Chairman of the Shanghai Stock Exchange Mr. WU Qing. “Together with other SSE partner exchanges, we will make continuous efforts to further develop our green bond market, diversify green indices, improve listed companies’ sustainability disclosure and nurture socially responsible investors.”
The Shanghai Stock Exchange has also contributed to the SSE’s Green Finance workstream as a member of the Green Finance Advisory Group. There are now 65 stock exchanges worldwide that have committed to sustainable and transparent capital markets and are working with the SSE on various work streams.
“It is a great milestone to welcome the first exchange from China and one of the largest exchanges in the world to the UN Sustainable Stock Exchanges initiative”, said James Zhan, UNCTAD Director of Investment and Enterprise. “China is the world’s largest issuer of green bonds and has been undertaking a number of measures to promote responsible investment and sustainable business practices. We look forward to working with the Shanghai Stock Exchange to promote sharing of best practices between all of the exchanges in China and around the world.”
The Shanghai Stock Exchange is one of the two stock exchanges operating independently in the People’s Republic of China, and is ranked 4th of the world’s stock exchanges in both Market Capitalization and Turnover, with a total of 1124 listed companies, representing approximately $4.1 trillion market capitalization.
The Shanghai Stock Exchange also recently announced the launch of a green bond pilot program, offers guidance on sustainability reporting, and has a series of sustainability related indices. (See the SSE Fact Sheets for information on the sustainability initiatives of all stock exchanges)
Together, the SSE Partner Exchanges list over 36,000 companies representing nearly $54 trillion in market capitalization from 66 countries
The multiplicity of sustainability certification schemes is confusing consumers, according to head of corporate responsibility at one of Hong Kong’s leading hotel operators.
Janice Lao, director of corporate responsibility and sustainability at the Hong Kong and Shanghai Hotels Ltd., which runs big names like the Peninsula Hotel, one of Hong Kong’s grandest addresses, made the comment at Seafood Expo Asia on 7 September.
“There are too many labels…and this is confusing. There is MSC and ASC and then an NGO might tell us there is prison labor in shrimp production and there’s another label to guarantee against that,” Lao said.
Various certification bodies need to “work on the messaging” so that consumers and companies are clear on what the various labels mean, said Lao, who was speaking on a panel discussion at the Seafood Expo Asia.
Sustainability in itself is not a motivator for local consumers, added Lao, and promoters of sustainable products need to add other motivators to engage consumers.
“Hong Kong consumers are not sold on saving the world. People want to know what’s in it for me. That’s the hook. We find health and wellness are ways to draw customers’ attention [to sustainable seafood].”
Added Lao: “We don’t see it [sustainability] being driven by customers, people are not making decisions based on us having sustainable products…Individual customers rarely ask, whereas corporations holding events at the hotels do ask.”
Hong Kong retailers are getting increasingly interested in MSC certification, explained Ka Shing Leung, marketing and sales director at KLG Fine Foods, a local seafood importer. But consumers buying choices are still driven primarily by nutrition and food safety concerns, he stressed.
High per capita levels of seafood consumption in Hong Kong has made the city a priority for the World Wildlife Fund, which has been promoting sustainability among local chefs and traders.
“We need more support from the industry, particularly from supermarkets,” Allen To, of the WWF’s Hong Kong office, said. To said he believes consumers need more sustainable products in order to make sustainable choices.
By Gao Fu Mao
As the Hong Kong Stock Exchange has raised its compliance requirements for the 2016 Annual Environmental, Social and Governance (ESG) Report, most of the HKEx-listed companies have begun to publish their first ESG report. The capital market has shown great interest on the ESG which covers the non-financial information of the companies.
Two third of the HKEx companies have published their ESG report. Most are first timers. It is an encouraging signed as the trends showed more companies being able to attribute revenue to their sustainability activities. From the analyst we did, we found out that more than 30% of companies have published independent ESG reports, while the remaining integrated the ESG report into their annual financial report.
Interestingly, a development we've seen in our findings, many companies have started to disclose in advance of the KPIs, which includes the environmental and social indicators.
In addition, for some experience companies who have published sustainability reports for many years, their recent reports adopt multiple reporting frameworks, such as GRI (Global Reporting Initiatives), the International Integrated Reporting (IR) Framework, the Sustainable Development Accounting Standards SASB) and China Corporate Social Responsibility Report Preparation Guide (CASS-CSR).
Although many companies have started to disclose in advance the environmental and social indicators, we found out that some of our respondents don't feel they have accurate measurement practices in place. Indicators they disclose are partially and doesn't cover all. Companies still struggling to quantify the impacts, especially on the environmental indicators. However, many respondents are confident they able to establish robust metrics and process to cover their operation in 2017.
ESG360 would recommend two items be addressed right away for companies struggling in ESG reporting. First, identify the key goals of your organization – not your sustainability goal, but what it is the company is trying to achieve, be it growth, market share, margin, reputation and so on, and second, identify the sustainability actions that can contribute to that strategy. If your KPIs are aligned, demonstrating the contribution your team makes to the success of the organization will be much more apparent – and provide you a mechanism for course correction, as needed.