Singaporean companies lead in adjusting to EU’s CSRD

In line with the implications of the European Union's Corporate Sustainability Reporting Directive (CSRD), Singaporean companies are at the fore of the global transition toward integrated reporting.

The latest survey from Workiva identifies that these companies are outperforming their global counterparts in numerous reporting measurements. The CSRD demands the convergence of financial and sustainability revelations, a requirement that has encouraged swift adaptation from companies worldwide.

Workiva's third annual 2024 ESG Practitioner Survey reveals that 79% of firms in the APAC region not subjected to the CSRD are planning to entirely or partially sync their sustainability disclosures with CSRD guidelines. The survey indicates that these companies are leading the transformation in the way financial reporting is approached. Additionally, 73% of the Singaporean individuals surveyed acknowledge their requirement to conform with the CSRD.

The 2024 ESG Practitioner Survey involved the input of over 2,000 respondents implicated in corporate reporting. This group encompassed professionals from North America, Europe, and Asia, dealing in finance and accounting, sustainability, risk, and internal audits. According to the survey's findings, there is a noticeable shift in regulatory compliance dynamics, especially among Singaporean subjects. A remarkable 97% have faith that sturdy financial reporting positively affects their organisations, exceeding the global mean of 84%. This suggests that there is an increasing appreciation within Singaporean firms for the potential of assured integrated reporting to enhance their fiscal performance and ESG practices.

The survey also identified that companies are intending to voluntarily conform with the CSRD. Paul Volpe, Senior Vice President of Growth Solutions at Workiva, stated, "The adoption of the CSRD was a pivotal moment, marking the first major regulation calling for integrated financial and sustainability disclosures with third-party assurance... The CSRD has sparked a global shift toward assured integrating reporting, with business leaders recognising the market demand for contextual, transparent, and credible data that aligns with stakeholder expectations."

89% of practitioners globally agree that a strengthened ESG reporting programme will give their organisations a competitive edge despite acknowledging that meeting new mandates is their most immediate challenge. Encouragingly, in Singapore, almost all (97%) respondents agreed that merging financial and sustainability data benefits decision-making that can enhance a company's financial performance, with all local respondents asserting that integrated reporting would positively impact a company's long-term value creation.

Reflecting on the survey results, Paul Dickinson, a member of Workiva's ESG Advisory Council, commented, "Regulation is serving as a catalyst for innovation. Companies are seizing the opportunity to improve their sustainability disclosures, effectively making assured integrated reporting the gold standard in corporate reporting." Nonetheless, whilst the majority of respondents have faith in their data, regulation presents considerable difficulties for their teams.

In response to the CSRD, arguably the most comprehensive ESG regulation to date, many companies, both inside and outside of the EU, have been forced to reconsider long-standing reporting methods. The survey indicated that 73% of Singaporean respondents will need to comply with the CSRD, with the majority of them acknowledging that the data collection process to fulfil CSRD provisions would prove challenging, while most cited their inability to collate and share information with external organisations in their value/supply chain as another significant concern.

The survey results suggest that a transformation of reporting processes is underway, with practitioners exploring technology to simplify reporting protocols. A surge of companies in Singapore are increasing their budget for ESG initiatives and planning to undertake digital transformation projects. Reflecting on the figures, Erik Saito, Senior Vice President and General Manager of Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC) at Workiva, stated, "... companies are adapting to the shifting sands of regulatory demands and compliance obligations. The embracing of digital transformation and adoption of technologies such as cloud solutions and generative AI will prove critical in helping organisations streamline processes and integrate seamlessly with existing enterprise systems."