SGX sustainability gains tempered by Scope 3 uncertainty: report

RHB maintained its NEUTRAL rating on SGX, with a target price of $17.80, implying about 4% upside.

Singapore Exchange (SGX) remains on track to reduce Scope 2 emissions by 42% by FY2031, based on FY2021 levels, according to RHB’s latest sustainability note.

However, the brokerage flagged several areas to watch, including volatility in Scope 3 emissions, renewable energy certificate (REC) pricing and availability, and potential target recalibration under the upcoming Science Based Targets initiative (SBTi) 2.0 framework.

RHB maintained its NEUTRAL rating on SGX, with a target price of $17.80, implying about 4% upside. The valuation is near the high end of historical ranges, with a ~25x P/E multiple, and could face downside if operating metrics weaken.

SGX reported a 16% YoY drop in total greenhouse gas (GHG) emissions in FY25, falling to 15,434 tCO₂e. Scope 2 emissions declined 8% to 3,635 tCO₂e, whilst Scope 3 emissions fell 18% to 11,775 tCO₂e, supported by data-centre efficiency gains and increased use of RECs.

Emissions intensity improved to 11.3 from 14.9 tCO₂e per SGD million.

On governance, SGX further integrated sustainability goals into executive remuneration, with continued board oversight.

As a market steward, it updated Practice Note 7.6 to align with the IFRS Sustainability Disclosure Standards, whilst SGX RegCo promoted adoption among listed companies through training and an ISCA-led illustrative report.

Operationally, SGX reported no major disruptions, downtime, or material data breaches in FY25. RHB gave SGX an overall ESG score of 3.3 out of 4, with sub-scores of 3.0 for Environment, 3.3 for Social, and 4.0 for Governance.

Near-term catalysts include unused funds under the Equity Market Development Programme (EQDP), a pickup in IPO activity, and a constructive view on Singapore equities.

RHB also highlighted that easing SORA rates and potential US Fed cuts could benefit REITs and yield-sensitive sectors, supporting trading volumes.

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