Sustainability Reporting to become mandatory for Singapore’s listed companies.
In line with the Global Reporting Initiative (GRI)’s deadline to have companies report using the latest G4 standards by 31 December 2015, Singapore Exchange’s ‘comply-or-explain’ ruling on Sustainability Reporting will mean stronger focus on Materiality for listed companies.
By 2016, publicly-listed companies are to take greater accountability for their environmental, social and governance and impact to their stakeholders. This is the biggest news yet – announced by Mr Magnus Bocker, CEO of local bourse Singapore Exchange (SGX) – for the corporate social responsibility scene in Singapore. SGX will be leading the fort after industry feedback has been gathered over a year-long consultation exercise.
For the past decade, sustainability reporting has unfortunately not taken off successfully among Singapore companies. Only about 29% (about 160) of companies communicated on sustainability in 2011. And among these, only 19 companies used internationally recognised sustainability reporting frameworks. This is despite the rest of Asia – particularly China and South Korea – seeing double growth in the past five years in sustainability reporting from companies. One of the reasons attributed to this slow uptake in Singapore was the lack of legislation or incentives to do so.
A key industry leaders actively pushing the sustainability agenda forward is the United Nations Global Compact’s Singapore chapter, Singapore Compact. “We warmly welcome SGX’s announcement for mandatory sustainability reporting of companies listed on the Exchange,” remarked Christopher Ang, Executive Director for the local body. “[sic] is a big push in the right direction, as it raises the transparency and accountability of environmental, social and governance indicators. As the national society that promotes CSR among businesses here, Singapore Compact will continue to support companies to embed CSR in their business so that they can communicate their ESG effort to their stakeholders. I believe this is a great opportunity here for Singapore-listed companies to demonstrate how well-managed they are.”
The timing of this couldn’t be better for the companies in general. GRI’s G4 guidelines has been the international standards body’s biggest progress on sustainability reporting in recent years. Instead of tedious requirements to disclose more ‘breadth than depth’ of company information, Singapore companies taking on G4 directly would only need to start reporting on information that is ‘material’, that is, has the greatest impact to its business and its stakeholders.
The challenge might thus be less daunting than most early reporters imagine it to be. Junice Yeo, Corporate Citizenship’s Director for Southeast Asia explains, “Many companies might expect all their ESG data to be graded or judged by the standards body or investment analysts. The GRI G4 actually gives companies the flexibility in explaining the core issues of their business in a more balanced way. They may need some training and external support at the beginning, but they may also be surprised as to how much of their current corporate practice they have already done can actually be incorporated systematically into their sustainability report.”
Clearer direction is already the first item on the To-Do list, as Mr Bocker himself acknowledged in his plans to open up the dialogue to market participants. “We’d like to invite all companies to work with us to shape what these new sustainability guidelines should look like,” he said.
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Junice Yeo comments on the annoucement on Eco-Business. Read the news piece and commentary here – SGX to make Singapore Reporting Mandatory