Decoding the Key Aspects of the ESG Scoring Scale in Singapore

1. Decoding the Key Aspects of the ESG Score in Singapore Environmental, Social, and Governance (ESG) factors have become a cornerstone of corporate responsibility in recent years, shaping how companies operate globally. In Singapore, as well as in other financial hubs, the emphasis on ESG criteria has seen exponential growth, driven by both government regulations and investor demand. A key element in evaluating a company’s ESG performance is the ESG scoring scale. Understanding this scale and its application is crucial for businesses looking to operate sustainably and for investors seeking to make informed decisions. In this article, we will decode the key aspects of theESG score in Singapore, providing insights into how it works. What is ESG Scoring? ESG scoring is a method used to assess a company's performance based on three key sustainability pillars: Environmental, Social, and Governance. Each of these areas is evaluated using various criteria that help determine the overall score. A higher score indicates a better performance in these areas,

2. while a lower score signals the need for improvement. These scores are typically generated by third-party rating agencies, such as MSCI, Sustainalytics, and others, which use proprietary methodologies to evaluate and rank companies. In Singapore, ESG scoring is not just a tool for assessing corporate responsibility but is increasingly tied to financial performance, regulatory compliance, and public reputation. As such, many companies are now focusing on improving their ESG scores to align with global sustainability standards and attract responsible investors. 1. Environmental Criteria in ESG Scoring The environmental aspect of ESG scoring evaluates a company’s efforts to minimise its environmental impact. This includes factors like: ● Carbon footprint: The company’s efforts to reduce greenhouse gas emissions, energy use, and waste production. ● Resource management: How well a company manages natural resources, such as water, land, and raw materials. ● Sustainable sourcing: Whether a company sources raw materials in an environmentally sustainable way. ● Compliance with environmental regulations: The extent to which a company adheres to local and international environmental laws. In Singapore, where the government has introduced measures such as the Green Plan 2030 to guide sustainability efforts, companies are expected to demonstrate clear strategies for reducing environmental impact. Higher scores are typically awarded to companies with robust sustainability programs, innovative solutions for waste reduction, and clear carbon reduction goals. 2. Social Criteria in ESG Scoring The social component of the ESG scoring scale evaluates a company’s impact on society. This includes: ● Employee welfare: How well the company treats its employees, including workplace safety, diversity, and inclusion efforts. ● Community engagement: The company’s efforts to positively impact local communities through initiatives like philanthropy, volunteering, or partnerships with NGOs.

3. ● Customer satisfaction and product responsibility: How a company ensures the safety, fairness, and accessibility of its products and services. ● Supply chain transparency: The ethical sourcing and fair treatment of workers throughout the company’s supply chain. In Singapore, social considerations are becoming increasingly important, with companies being evaluated on their contributions to the local community and their approach to workplace diversity. A higher score in this category would typically reflect a company’s commitment to maintaining good labor practices, offering quality products and services, and fostering positive social relations both within and outside the company. 3. Governance Criteria in ESG Scoring The governance aspect of ESG scoring focuses on how well a company is managed. Key governance factors include: ● Board composition: The diversity, independence, and qualifications of the board of directors. ● Transparency and accountability: How transparent a company is about its operations, financials, and decision-making processes. ● Ethical business practices: The company’s commitment to ethical conduct, including anti-corruption policies, tax transparency, and responsible corporate behavior. ● Shareholder rights: Whether shareholders have the ability to influence decisions through voting and other rights. In Singapore, corporate governance is highly valued, with the Singapore Exchange (SGX) and other regulatory bodies pushing for better disclosure and more stringent corporate governance practices. Companies that score well in this category are typically those with independent and diverse boards, transparent operations, and a strong commitment to ethical behavior and legal compliance. 4. The ESG Scoring Process The process of obtaining an ESG score is typically handled by third-party agencies, such as: ● MSCI: One of the leading ESG rating agencies, MSCI rates companies based on industry-specific ESG criteria.

4. ● Sustainalytics: A global provider of ESG and corporate governance research, Sustainalytics scores companies on environmental impact, social responsibility, and governance practices. ● FTSE Russell: Known for its FTSE4Good Index, which ranks companies based on their ESG performance. These agencies evaluate publicly available data, company reports, and regulatory filings to generate their scores. The scoring system typically ranges from 0 to 100, with companies receiving higher scores for stronger ESG performance. The scores are updated periodically to reflect any changes in a company’s ESG practices or performance. Conclusion In Singapore, the ESG scoring scale plays a crucial role in how companies are assessed and how they operate within the global market. For both companies and investors, a focus on ESG scoring is essential for long-term success in today’s increasingly sustainable and socially responsible business world. To support this journey, platforms like Speeki provide integrated ESG and compliance solutions that help organizations monitor, measure, and improve their sustainability performance. By leveraging Speeki’s services, businesses can enhance their ESG scores and demonstrate greater accountability and transparency across all operational levels.