Applying for an SLL: How to Audit Your Business for ESG Readiness

These days, you don’t apply for a Sustainability-Linked Loan (SLL) by filling out a form and hoping for the best. Rather, you earn it by clearly and confidently showing that your business understands its environmental, social, and governance (ESG) risks and opportunities. This is where an ESG readiness audit becomes invaluable. Think of it as a reality check that prepares you for lenders who now price loans based on sustainability performance.

At the same time, Singapore’s regulatory direction makes this shift unavoidable. In the Lion City, the Singapore Exchange now requires Scope 1 and Scope 2 climate reporting for listed companies from FY2025. In parallel, the Monetary Authority of Singapore has set guidelines for green and sustainable finance. This is part of a larger initiative around Southeast Asia to broaden the reach of sustainability-linked finance.

If your goal is to ensure that your business is ESG-ready and eligible for favourable financing terms, the smartest move is to get ahead of the questions before they land on your desk. Here’s how to do exactly that:

Step 1: Understand What ESG Readiness Really Means

You may come across the terms ESG compliance and ESG readiness as you start your journey. They may sound interchangeable, but they’re not. ESG compliance is a regulatory exercise focused on meeting mandatory reporting standards and disclosure deadlines for emissions. ESG readiness, on the other hand, moves beyond checklists to establish consistent data flows, internal controls, and repeatable processes.

Essentially, being ready is a deeper operational capability that ensures your business can provide verified information to stakeholders and partners without the last-minute scramble typical of basic compliance.

In this context, an ESG audit becomes more than just an academic exercise. It’s a practical assessment of your impact on the environment and society, and how decisions are made when pressure mounts.

More importantly, this audit becomes the foundation of ESG financing, which ties interest margins to how you achieve ambitious sustainability performance targets (SPTs). Your sustainability KPIs are integrated into the loan structure. You can then enjoy financial incentives for meeting your SPTs, such as grants or better terms. You may even get discounts from specialised sustainability partners. This approach transforms ESG metrics from reporting requirements into strategic assets that allow you to contribute to a sustainable economy while improving your processes.

Step 2: Consult Your Stakeholders

ESG audits work best when they reflect reality. That means that involving various stakeholders is essential. Moreover, as you conduct interviews and informal conversations, you’ll often uncover risks and opportunities that never appear in reports.

Just as importantly, these discussions build trust within your organisation. They can prevent resistance later on because you turn the audit into a shared effort rather than a top-down mandate. This matters when you later ask for documentation or behaviour changes.

Step 3: Define ESG Criteria

Generic ESG checklists rarely impress lenders. What works is criteria tailored to your industry, size, and risk profile. For example, that could mean reducing greenhouse gas emissions through solar technology for the environmental factor. Similarly, on the social side, you can look at diversity and anti-bias policies or cleaner supplier management.

You can benchmark against peers to set targets that feel ambitious without being unrealistic. Or you can work with your lender to select appropriate SPT options.

Step 4: Choose the Right Framework

The ESG reporting landscape has quietly simplified in Singapore. What used to be a maze of standards has consolidated into two dominant approaches:

The International Sustainability Standards Board (ISSB) framework focuses on financial materiality. It helps investors and lenders understand how sustainability issues affect cash flow, risk, and enterprise value. This is now mandatory for SGX-listed companies from FY2025.

Meanwhile, using standards from the Global Reporting Initiative (GRI) is voluntary. But it remains widely adopted because it addresses broader stakeholder impacts.

In practice, Singapore’s market leaders often combine approaches. Some use ISSB for investor confidence and GRI for stakeholder trust. An effective strategy is to discuss with your bank what to prioritize, then layer in additional disclosures as your capabilities mature.

Aligning with the United Nations Sustainable Development Goals further strengthens your story. It signals that your company isn’t just improvising, but also operating within a globally recognised agenda that investors and lenders already understand and respect.

Step 5: Collect Data

Quantitative data shows scale and trends, while qualitative insights explain why things look the way they do. So, as you gather information, collect both numbers and narratives. Then, focus on patterns rather than perfection when analyzing results. Banks don’t expect you to have flawless data, but they do expect honesty and a clear improvement plan.

Moreover, initiatives like MAS Project Greenprint are raising expectations around data quality while platforms such as ESGpedia and ESGenome aim to reduce greenwashing and standardise disclosures. These make credible data even more valuable.

Step 6: Act, Track, and Keep Improving

Once the data is clear, action becomes the priority. You must implement changes and assign responsibilities. This way, you embed ESG into daily operations, rather than treating it as an annual scramble before a loan review.

Just as importantly, monitoring and reporting matters because SLLs tie pricing to performance. Regular reviews help you stay aligned with SPTs and adjust when business conditions shift. Plus, this discipline builds credibility, which is ultimately the real currency in ESG financing.

Audit Your Business for ESG Readiness

Auditing your business for ESG readiness positions your company for smarter capital, stronger partnerships, and long-term resilience. Moreover, by moving beyond mere compliance, you can transition from reactive reporting to proactive strategy.

You’ll also bridge the gap between sustainability goals and financial advantages. That means that when you walk into an SLL conversation, you’re prepared, confident, and data-ready. Ultimately, you should show that you can be trusted through verified performance and operational maturity.