Raymond Cheung
Chartered Actuary · CRO · Board Adviser · Singapore
SGX now requires a board statement on the governance of sustainability practices in every listed company's annual report. Most boards treat it as a paragraph the company secretary drafts and the board approves. It was designed to be evidence of something else entirely.
A few years ago I sat on an audit committee reviewing a sustainability report two weeks before the annual general meeting. Management's draft included a board statement — three paragraphs, largely unchanged from the prior year, describing the board's 'oversight of sustainability matters.' When I asked which director had actually reviewed the materiality assessment behind the report, there was a pause. Nobody had, in any documented sense. The statement was true in the loosest possible reading and false in every way that mattered. We sent it back and rewrote it before sign-off, but the exercise stayed with me, because that gap — between what a board statement says and what actually happened in the boardroom — is where most of the governance risk in SGX's sustainability reporting regime actually sits.
What SGX actually requires the board to say
Every SGX-listed company must issue a sustainability report alongside its annual report, and that report must include a board statement on the governance structures the company has in place for sustainability practices — distinct from the substantive ESG content itself. From FY2025, larger issuers must additionally disclose climate-related risks in line with mandatory requirements, and from FY2026 large-cap issuers must disclose Scope 3 emissions. The board statement is not a summary of the ESG content. It is an attestation about governance: that the board has a process for identifying material sustainability factors, that it has oversight structures in place, and — implicitly — that a director could stand behind how the report came to say what it says.
The three things that make a board statement genuine, not boilerplate
- Ownership is named, not collective. 'The board oversees sustainability' is not a governance structure. A named committee or director with explicit responsibility, appearing in the charter and the minutes, is.
- The process for identifying material topics is described and was actually followed. If the materiality assessment changed this year, the statement should say why — a change in stakeholder input, a new regulatory threshold, a shift in the business — not repeat last year's list with updated numbers.
- Data quality and assurance are addressed honestly. The statement should reflect what level of assurance was obtained, over which figures, and what the board did with an assurance provider's findings — not simply that 'assurance was obtained.'
“A board statement that could be copied word-for-word from last year's report has already told the market everything it needs to know about how seriously the board took this year's cycle.”
Where boards get this wrong
The most common failure is delegation without return. The sustainability team or company secretary drafts the statement, it circulates as one line item among twenty in the board pack ahead of the AGM, and it is approved with the same attention given to routine administrative resolutions. The second most common failure is treating year-on-year consistency as safety — repeating the prior year's governance description because changing it invites questions. Both failures are invisible until an institutional investor, proxy adviser, or activist reads the sustainability report closely against the financial statements and finds the mismatch: a board statement describing rigorous oversight sitting next to a materiality assessment that visibly was not updated, or emissions data with a footnote about methodology changes nobody at board level appears to have interrogated.
What genuine oversight looks like across the year
The board statement should be the output of work done across the reporting cycle, not a document produced in the final fortnight. That means the audit or risk committee reviewing the material topics list at least annually and asking what changed and why; understanding, in plain terms, the difference between limited and reasonable assurance and which one the company's external provider is actually delivering on which figures; and tracking methodology consistency for emissions data year over year so the board can explain a jump or a drop before an analyst asks about it. None of this requires directors to become sustainability specialists. It requires the same discipline boards already apply to financial statements — knowing enough to ask whether the number in front of them is right, not simply whether it has been produced.
Before your next sign-off, have the committee responsible run a short pre-mortem: if a journalist or an activist investor picked the sustainability report apart line by line against the board statement, what would not hold up? Fix that before the statement is signed, not after someone else finds it. That single exercise does more for the credibility of the report than any amount of additional disclosure volume.
Common Questions
What does the board have to say in an SGX sustainability report?
SGX requires a board statement on the governance structures the company has in place for sustainability practices — how material ESG factors are identified, how oversight is structured, and what role the board plays in the reporting process. This is separate from the substantive ESG disclosures such as emissions data or climate scenario analysis.
Does the board need to personally verify ESG data before signing off?
Not personally verify in a technical sense, but the board should understand the assurance level obtained on key figures, know what changed methodologically from the prior year, and be able to explain the numbers if challenged. Signing off without that understanding exposes directors to the same liability risk as signing financial statements they cannot explain.
What is the difference between limited and reasonable assurance for Singapore sustainability reports?
Limited assurance means the external provider concludes nothing has come to their attention suggesting the data is materially misstated — a lower bar involving less testing. Reasonable assurance is a higher bar, closer to a financial audit, providing a positive opinion that the data is fairly stated. Boards should know which level applies to which figures in their report, since MAS and SGX are signalling rising expectations on assurance over time.
About the author
Raymond Cheung is a Chartered Actuary, C-suite executive and board adviser with more than 20 years of experience across Asia in risk management, insurance, ESG and corporate governance. He is the CEO of CER Consultancy and an accredited trainer at SMU Academy and the Singapore College of Insurance.