Singapore Exchange Regulation (SGX RegCo) and the Centre for Governance, Institutions and Organisations (CGIO) at the National University of Singapore (NUS) Business School, today said their joint review showed that almost all listed companies have produced their sustainability reports on a timely basis following the mandating of the requirement.
About 80% of companies reported for the first time, and the number of reporting companies was five times that of a year earlier. The review covered companies which had produced reports as at 31 December 2018.
The real estate, health care and communication services sectors produced the best-quality reports, based on the study. But sectors such as energy, information technology and utilities scored lower than the overall average score. Mainboard and Catalist issuers produced reports that were of similar quality.
The review was released at an event this morning on “Sustainability Reporting: Progress and Challenges”. Co-organised by SGX and CGIO, the event highlighted the progress of sustainability reporting practices among Singapore-listed companies and discussed opportunities for achieving higher reporting quality.
“Global demand for responsible investing is growing and more corporates are responding to this development by integrating sustainability considerations with business strategy. We are committed to helping our listed companies on their sustainability journey and will utilise this review to continue to work with them on improving their ESG disclosures,” said Tan Boon Gin, CEO of SGX RegCo.
“Organisations have become more conscientious about submitting their sustainability reports and this is a good springboard for companies to seize opportunities in renewable energy, circular economy and green buildings,” said Associate Professor Lawrence Loh, Director of CGIO at NUS Business School.
“The study’s findings are a positive step forward but more can definitely be done by companies to contribute to the fight against climate change,” he added.
In contrast to the global focus on climate action, only 6.5% of Singapore-listed companies which have published their sustainability reports, or 32 companies, acknowledged climate change as a material factor.
The 2016 listing rule was introduced before the Task Force on Climate-related Financial Disclosures (TCFD) published its recommendations in June 2017 and did not contain mandatory requirements around climate disclosures.
SGX allows companies up to 12 months from the end of their FY ending on or after 31 December 2017, to issue their sustainability reports under the new rules. Subsequent reports must be published no later than five months after the end of the issuer’s FY.
The report and findings can be found here.
Methodology
The study examined information disclosed by SGX-listed companies as at 31 December 2018. Out of 627 listed companies, 496 were required to publish their reports by end December 2018, and 495 companies did so while one did not submit on time. After factoring in the 12-month grace period, the remaining 131 companies are expected to submit their inaugural reports by the end of this year.
They were reviewed under the SGX-CGIO Sustainability Reporting Scorecard with a focus on general scope and the five primary components set out in SGX-ST Listing Rule 711B. The five primary components are:
SGX has also published a Practice Note 7.6, being the Sustainability Reporting Guide, which provides guidance on the principles, structure, and preparation for the sustainability report.
Key findings
Of the five primary components, “material ESG factors” and “policies, practices and performance” were the most disclosed with reporting rates above 95 per cent. For material ESG factors, the top five most mentioned factors were occupational health and safety, code of ethics, energy, economic performance, as well as training and education.
Discussion of sustainability performance and non-financial risk became more prevalent in corporate disclosures. 103 companies discussed their performance data in relation to previously disclosed targets, while 388 companies have disclosed risk factors in business operations. They include workplace health and safety, regulatory action against non-compliance, political instability and lawsuits.
From a sector perspective, those from the real estate, health care and communication services fared better.
In observing reporting principles, 88 per cent of 495 listed companies disclosed the process of stakeholder engagement, while 78 per cent analysed risks as part of strategic planning.
In the process of identifying the company’s material factors, 333 companies consulted their internal stakeholders, such as employees, while 280 companies consulted external stakeholders.
Annex 1
Sustainability Reporting Performance Overview
Annex 2
Assessment on General Scope
Annex 3
Assessment on Material ESG Factors
Annex 4
Assessment on Policies, Practices and Performance
Annex 5
Assessment on Targets
Note: 1. Short term targets refer to the targets that listed issuers hope to achieve within the next reporting period. 2. Intermediate term targets are aimed to be achieved within 2 to 5 years. 3. Long term targets are aimed to be achieved after 5 years or are not time-bound.
Annex 6
Assessment on Sustainability Reporting Framework
Annex 7
Assessment on Board Statement
About Singapore Exchange
Singapore Exchange is Asia’s leading and trusted market infrastructure, operating equity, fixed income and derivatives markets to the highest regulatory standards. As Asia’s most international, multi-asset exchange, SGX provides listing, trading, clearing, settlement, depository and data services, with about 40% of listed companies and over 80% of listed bonds originating outside of Singapore.
SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN and offers commodities and currency derivatives products. Headquartered in AAA-rated Singapore, SGX is globally recognised for its risk management and clearing capabilities. For more information, please visit www.sgx.com.
About Centre for Governance, Institutions and Organisations, NUS Business School
The Centre for Governance, Institutions and Organisations (CGIO) was established by the National University of Singapore (NUS) Business School to spearhead relevant and high-impact research on governance and sustainability issues that are pertinent to Asia. This includes corporate governance and corporate sustainability, governance of family firms, government-linked companies, business groups, and institutions. CGIO also organises events such as public lectures, industry roundtables, and academic conferences on topics related to governance and sustainability.
More information about CGIO can be accessed at https://bschool.nus.edu.sg/cgio
NUS Business School is known for providing management thought leadership from an Asian perspective, enabling its students and corporate partners to leverage global knowledge and Asian insights.
The School is one of the 17 faculties and schools at NUS. A leading global university centred in Asia, NUS is Singapore’s flagship university which offers a global approach to education and research, with a focus on Asian perspectives and expertise. Its transformative education includes a broad-based curriculum underscored by multi-disciplinary courses and cross-faculty enrichment. Over 38,000 students from 100 countries enrich the community with their diverse social and cultural perspectives.
For more information, please visit bschool.nus.edu.sg, or go to the Think Business portal which showcases the School’s research.
Media Contacts
Carolyn Lim Marketing & Communications Singapore Exchange Regulation +65 6236 8139 Carolyn.lim@sgx.com
Ang Hui Min Manager, Corporate Communications NUS Business School National University of Singapore +65 6601 5857 huimin19@nus.edu.sg
