TODAY Online - Sustainability reporting for all listed companies mandatory from FY2017

A survey of institutional investors found that 90 per cent consider sustainability factors


In another move to raise standards on sustainability reporting here, the Singapore Exchange (SGX) has made it mandatory for all listed companies to report their environmental, social and governance practices from the financial year ending Dec 31, 2017 onwards.

The announcement yesterday came less than a month after the bourse launched four new indices based on sustainability measurements, offering investors a transparent way to assess such practices among listed companies here. SGX said it received strong support to introduce mandatory sustainability reporting during its public consultation in January, adding it will allow the close to 800 mainboard and Catalist primary-listed companies up to 12 months — instead of the proposed five months — from the end of the financial year to publish their first reports. This would be especially helpful to smaller companies new to sustainability reporting, noted SGX Special Adviser Yeo Lian Sim.

“For small companies, they are usually in fewer locations,” said Ms Yeo. “They may, in fact, be in one location as opposed to larger companies that may cross many borders and have many products. So, the cost and the scale of work is different — we have to recognise that. Second, it doesn’t mean that small companies are not managing their risks,” she continued. “They already are. What we are asking the companies is to go a little further, write down clearly what are the risks they are managing and what are the opportunities they see.

“So, we believe this is relevant to both large and small companies ... For the market as a whole, I believe this increases the transparency ... We have always stood for good governance and this is one more instance in which we want to demonstrate that governance and the transparency.”

The report, done on a “comply or explain” basis, must include a board statement to describe the company’s sustainability actions, identify environmental, social and governance factors that affect business strategies, explain their practices and performances, and set targets.

This practice is a step up from the voluntary sustainability reporting regime that has been in place since 2011. As of end-2013, only about 160 out of 537 mainboard-listed companies filed these reports voluntarily, a joint study by the Singapore Compact for Corporate Social Responsibility and National University of Singapore Business School found.

SGX said it will invite company CEOs to a briefing for clarity and understanding of the new requirements, as well as organise training for all listed companies to build up their reporting capability. Other efforts include working with Global Compact Network Singapore to organise training workshops by sustainability reporting consultants, as well as developing an online portal. Details of these initiatives will be announced later, said the exchange.

Bourses around the world, such as those in Europe, the United States and Hong Kong have already adopted mandatory sustainability reporting, well ahead of Singapore, as investors increasingly focus on such issues when making their investment decisions. SGX’s own survey of institutional investors in June last year found that more than 90 per cent of respondents consider environmental, social and governance factors when investing.

Mr Loh Boon Chye, CEO of SGX, said: “SGX supports our listed companies’ efforts to meet the growing interest in sustainability from shareholders and potential investors worldwide. The annual reporting of non-financial information will enhance the visibility of SGX-listed companies among investors who seek sustainable investment and want to review a company’s environmental, social and governance efforts.”

Source: TODAY Online 

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