Public views sought on SGX sustainability reporting proposals
SINGAPORE — Moving a step closer towards requiring listed companies here to report their economic, environmental and social impact, the Singapore Exchange (SGX) is inviting the public to comment on proposed rules and guidelines that all listed companies will have to follow in publishing these reports.
The exchange’s announcement today (Jan 5) marked “further progress” from the voluntary sustainability reporting regime that has been in place since 2011, it said, adding it expects to implement these rules on a “comply or explain” basis from Dec 31, 2017, onwards.
Companies are expected to include in their annual sustainability reports components such as identifying environment, social and governance factors that affect business strategies, and explaining their practices and performance, as well as setting targets and a statement from the board to affirm compliance.
Those who do not report the required components must explain their reasons for not complying, and stating that the component is not relevant will not be enough, said SGX.
“Sustainability reporting builds on transparency and governance for which Singapore is internationally recognised. It addressed investor demand for quality returns and gives companies the opportunity to differentiate themselves,” SGX chief executive Loh Boon Chye said in a statement.
The move will affect close to 800 primary-listed corporates on both Main and Catalist boards. As of end-2013, only about 160 out of 537 Mainboard-listed companies filed these reports voluntarily.
The launch of the public consultation today follows a year-long effort by the bourse to garner views from corporates and investors through focus groups and surveys.
SGX special advisor Yeo Lian Sim said at a media briefing today that the move is timely given the signing of the “momentous Paris accord”, where 195 countries committed to taking action to limit the increase in global temperatures to below 2°C.
“For ourselves, we’ve had the haze (last) year. It was pretty prolonged, it affected our way of life. It became not just a business matter, regulatory matter or government matter, it really affected everybody, including the man on the street,” said Ms Yeo. “I think this is something that is needed and asked for by investors as well as other stakeholders ... At the same time, we can see that doing sustainability reporting also conveys internal benefits to the companies.”
While compliance will entail additional costs for companies, sustainability reporting may also allow them to reach out to new groups of investors who base their investment decisions on a company’s sustainability practices.
Mr Ian Hong, a partner at KPMG, said the Paris accord and the prolonged haze situation have raised awareness of the potential impact of environmental and social risks on companies’ value chain. “Ultimately, commitment from top management is critical in the success of a company’s sustainability journey and this is best reflected through tangible targets and performance reporting,” he said.
SGX suggested giving companies five months after the end of each financial year to publish their sustainability reports on SGXNet.
The public consultation is open from now until Feb 5.
