Opening speech by Tan Boon Gin, CEO of SGX RegCo, at ISCA-SIAS Corporate Governance Conference 2025

Introduction1. I just celebrated 10 years at SGX, and I still recall when I first started talking about sustainability, or ESG or climate reporting, I would always cite the seminal report by the United Nations Global Compact entitled "Who Cares Wins". It's not about doing the right thing. It's about winning. The sardonic response was, well, if the market doesn't care, everybody loses.Climate reporting – why markets matter2. You know what, they are right. Driving climate reporting through regulation alone is an uphill battle. In the absence of price signals from the market, companies see reporting as a compliance cost, rather than a competitive advantage. I need the market to care which is why I was so heartened to read Chuah Bee Kim's recent article in BT.3. Bee Kim wrote about climate reporting, and how the largest listed companies were requiring climate data from small companies up and down their supply chain. This effectively created an unofficial compliance regime for these small companies. This is driven by the market power of large buyers who need their own supply chain data to meet their own reporting requirements.4. She then went on to reference a 2024 Schneider Electric survey that 78% of SME respondents had lost contracts due to emission reporting gaps. She also cited the example of how a precision parts company lost a major client because it failed to provide scope 1 and 2 emissions data on time. She concluded that even small companies were beginning to see climate reporting as a business opportunity rather than a compliance requirement, simply because the market demands it.Climate reporting – start big5. Our climate reporting rules are calibrated to achieve a similar outcome. The largest listed companies in the STI are required to comply with ISSB reporting standards from FY25 and report their scope 3 emissions in FY26. The rest of the listed companies must at least report their scope 1 and 2 emissions, so that the index components can report their scope 3. 6. Regulation is therefore aligned with market forces. As Bee Kim observed, with or without regulation, there is an unofficial reporting regime for smaller companies anyway, driven by market demand for supply chain climate data. An official regulatory reporting regime, alongside, provides consistency, comparability, and credibility to the data. This enables an efficient market that rewards the leading companies and punishes the laggards.Market forces in climate-reporting7. What then is required to create a market driven climate reporting culture? I think you need at least 3 factors.a) One is major policy moves. Major policy moves such as carbon taxes and emission caps are always going to hit the biggest emitters first before creating a ripple effect on the smaller emitters. These policy levers are key influences on the more challenging parts of the ISSB standards. These are namely climate scenario and supply chain analyses, which is why we have adopted a phased approach to require this first for our biggest companies. b) We need our biggest companies to forecast and design their green mandates and to start applying supply chain compliance pressures to meet their goals. This will create the 2nd driver in the form of demand from the market as a whole and the bigger companies, in particular. Our smaller companies should look at what the bigger companies are reporting and start preparing their own climate scenario analysis, risks, and opportunities, to meet this demand. c) A 3rd factor is a shift in skillset and mindset. On the skills front, we have been heavily involved in providing capacity-building programs. We are committed to doing more, together with ISCA. Acquiring the right skillset is probably easier than shifting mindset. And yet it’s the latter that is more important. My own observation is that if the sustainability function in a company is siloed from finance and operations, that company is likely to see climate reporting as an obligation rather than an opportunity. Earlier this year, at the 2025 Sustainability Impact Awards, I was interested to see that one of the individual winners had oversight over sustainability, finance, and operations. I am not saying this is the only model, but I do think it is a revealing recipe for success.Market’s role in driving other corporate directions8. So, if the market can be a key in companies’ adoption of climate reporting, what else can the market drive companies to do?9. I’m sure all of you have seen by now, the DBS report predicting the STI hitting 10,000 by 2040. Our market has certainly benefitted from tailwinds this year, led by the initiatives announced by the government-led Equities Market Review Group, and especially the Equities Market Development Program (EQDP). This will see for the first time, public monies deployed into the market, not just in big caps, but also mid and small caps, through Singapore focused active fund managers. But is that 10,000 achievable on the back of the EQDP?10. I like to think the answer is “Yes”. Consider how Japan has succeeded in propelling its market to levels most people would have thought unbelievable 1-2 years ago, let alone 10 years ago when their pension fund started putting money into the market. And it wasn’t just about money. Along with deploying monies, the fund managers also began engaging with companies and this laid the foundation for Japan’s “value up” plan.11. Last year, coincidentally, also at an ISCA event, I asked if we could be like Japan. It seems the answer is yes. I have posted about how one of the EQDP managers, Avanda chose value-up as an investment theme, while another, Fullerton, named their fund “Singapore Value-up". Both are reminiscent of the successful shareholder value-up strategy used to invigorate the Japanese stock market over the last decade and clearly an important EQDP consideration.12. Interestingly, Minister Chee Hong Tat uses a slightly different term. He uses value unlock. Unlocking shareholder value in the Singapore equities market, which suggests the value is already there. It just needs to be unlocked. I think he's right. A BT article published this week noted that 55% of SGX listings trade at less than price-to-book and 46% of companies have a net-cash balance sheet. Unsurprisingly, many of the big companies have indeed made moves to unlock value, by strategic restructuring, smart capital management and shareholder returns through dividends and buybacks. Some of the mid and small caps have also begun to do this.13. Like I said in the beginning, I need the market to care. Bearing in mind that Singapore is only 0.4% of the MSCI World Index, one could argue that even the big caps could do with more institutional participation, let alone the mid and small caps. That is why it is so important to have Singapore focused funds under the EQDP. Singapore focused funds that will actively stock pick and push the companies in our market to raise standards, do better and do more for shareholders, both behind the scenes, as well as on the trading screen.Driving better shareholder value14. What then is required to create a market driven corporate governance culture to achieve STI 10,000?15. To be investible by these funds, companies must first be what I loosely term “institutional grade”. Their financial reporting, climate reporting, and disclosures must be trusted by institutional investors. I recently read that chartered accountants are the second most trusted profession in the world. Perhaps listed companies could all do with some chartered accountants in their finance teams who can help build up this trust.16. I have heard that many mid to small cap companies, and maybe even a couple of big caps, have already been surprised when our fund managers started to come knocking on the door. I, for one, was heartened to hear first-hand about the genuine interest and willingness of these fund managers to engage even the smaller companies. I believe many companies will acknowledge they could have been better prepared to share their growth story, capital allocation plans, and strategy for long term value creation. The government, I understand, may soon help companies develop the skills to do so. 17. At this juncture, I am encouraged to hear that SIAS has been working with SGX Group to raise awareness of some of our midsize companies through their Corporate Connect series.18. As Minister Chee has mentioned, SGX is also reviewing how companies can do more to disclose policies such as dividend and investor relations. These would help investors understand the company’s capital management approach and how management will deliver shareholder value.Conclusion19. In conclusion, let me repeat what I said in very the beginning. I've been doing this job for 10 years. Trust me, driving compliance through regulation alone is an uphill battle, whether it's climate reporting or shareholder value creation. I need the market to care, to engage our companies, to reward outperformers and punish those who fall short.20. As I explained earlier, the market is beginning to care about climate reporting and unlocking value for shareholders. To all companies, directors, and C-suite in this room, the big companies are asking, fund managers are knocking on doors, this is your time to shine or be left behind. You need to seize this opportunity to develop the right skillsets, the right mindset, and the right culture now, because regulation yields the best results when aligned with market forces. And given the choice between climbing a mountain in Japan and skiing down a slope of that same mountain, I am sure you know which one I’d rather do.21. On that note, thank you and I wish you an insightful conference.

Opening speech by Tan Boon Gin, CEO of SGX RegCo, at ISCA-SIAS Corporate Governance Conference 2025

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