Conditions in Government Contracts that Encourage Environmental, Social and Governance Practices

Ms Anthea Ong asked the Deputy Prime Minister and Minister for Finance (a) whether the Government's procurement process has criteria to encourage businesses to undertake environmental, social and governance (ESG) practices and, if so, what are they; (b) whether there is a national framework for businesses to track and measure the performance of businesses in ESG practices and, if not, whether there is consideration for one; and (c) what are the tax and non-tax incentives and schemes for businesses to undertake ESG practices such as inclusive hiring of persons with special needs, rental of premises to conduct social businesses, capital investment improving ESG practices.

Mr Deputy Speaker, the Government's public procurement processes seek to encourage environmental, social and governance (ESG) practices amongst businesses. For example, Government agencies practise green procurement by purchasing ICT equipment and electrical appliances that meet energy efficiency standards, and printing paper that are environmentally friendly; they are certified with the Singapore Green Label. In addition, events and functions organised by public sector agencies are to be held in venues with at least a Green Mark Certified rating, unless there are specific reasons why this is not possible.

All new public sector buildings with more than 5,000 sqm of air-conditioned floor area are required to attain Green Mark Platinum standards. The criteria for the awarding of construction contracts for these building and other infrastructure projects includes the use of productive construction methods which are typically also more sustainable.

Besides procurement, there are various national frameworks in place for ESG practices in the private sector. Large industrial energy consumers are required to track and report their energy usage, including greenhouse gas emissions annually. Similarly, industrial and business water consumers need to track and report their water usage annually and submit Water Efficiency Management Plans.

MTI's Business Excellence programme, through the Singapore Quality Award (SQA) and the Singapore Quality Class (SQC) requires awarded organisations to have well-defined corporate governance systems to ensure business continuity and risk management, as well as accountability and transparency that are consistent with statutory and regulatory requirements. They are also required to have well-defined policies and programmes to contribute to the sustainable development of the community and environment which they operate in. So, ESG criteria are embedded within the SQA and SQC criteria. Enterprise Singapore also actively promotes ISO standards related to ESG practices for the industry to adopt.

Since 2016, the SGX has implemented sustainability reporting for all publicly-listed companies on a "comply or explain" basis, and it has a number of sustainability indices to guide listed companies. We welcome other non-listed companies to consider and model their corporate practices on this guidance. In addition, there are various industry-led standards and certifications related to ESG practices, where companies are required to consider the impact of their decisions on their workers, customers, suppliers, community and the environment.

Finally, we also have various government incentives and schemes to encourage ESG practices in companies, which the Member has asked about. Let me cite several examples.

MAS and MEWR have been working on green financing initiatives to encourage the Financial Institutions to adopt more ESG considerations in their lending and investment decisions.

URA provides additional bonus GFA when commercial building owners set aside space for community and sports use.

The Special Employment Credit supports inclusive hiring of Persons with Disabilities, through offsetting their wages.

New and existing social enterprises benefit from Government grants when starting up or expanding their operations.

The Business and IPC Partnership Scheme encourages employee volunteerism through the provision of 250% tax deduction on qualifying expenditure for businesses.

So, these are just examples of the various incentive programmes that we have in place. The Government will continue to review these schemes and encourage firms and employees to make full use of them to strengthen their ESG practices.