The Singapore Exchange (SGX), which operates the local securities and derivatives bourse, said that it has begun a consultation process that will eventually see its more than 800 listed companies implement sustainability reporting on a “comply or explain’ basis.
This means that companies will use a set of guidelines – an update to the existing Guide to Sustainability Reporting for Listed Companies introduced in 2011 - to increase their transparency in reporting on sustainability issues, said Yeo Lian Sim, SGX’s chief regulatory officer.
This reporting will focus on the disclosure of a company’s economic, environmental and social impacts.
Speaking on Wednesday at the Second Singapore Dialogue on Sustainable World Resources organised by the Singapore Institute of International Affairs, Yeo said the aim of the consultation – which started earlier this month – is to ensure that the new guidelines are “useful” and “reflect the current state of play” in sustainability.
After the survey of all listed companies, SGX will carry out focus group discussions on issues that emerged from the exercise, as well as current sustainability reporting practices.
It will then reach out to institutional investors and sustainability professionals for their views in “about a month’s time’, Yeo said.
“This is where you must respond,” Yeo told an audience of about 300 people from the corporate sector, academia, NGOs and government. “We will take these views on board and revise our guide which is a voluntary guide to reflect the state of play.”
The final stage of the process will be a public consultation where SGX will reach out to the general investing public. SGX will then submit the new listing rule and Guide for approval by the end of this year.
It hopes to implement both components in the 2017 financial year.
SGX chief executive officer Magnus Bocker first announced the reporting initiative last October, noting that since SGX launched voluntary guidelines for sustainability reporting in 2011, take-up by companies has been “frankly, very slow,” with only a handful of companies embarking on such activities.
Companies who had not yet taken up sustainability reporting often explained that they were waiting for the Exchange to “get serious and make the first move,” said Bocker.
Bocker, who took the helm at the SGX on 1 Dec, 2009, is leaving the company at the end of June when his contract ends.
Yeo said on Wednesday that while the SGX can implement rules that make non-compliance punitive, she would prefer all stakeholders to play a role in getting companies to be more transparent about their sustainability practices.
“The reason is this: we don’t want companies to engage in their reporting just because it’s a precondition for being listed. Because then, they just do the minimum,” she said. “And what’s actually being reported are maybe the numbers or the facts, rather than reporting.”
A more effective way to get companies to be transparent is for investors – whether they’re institutional investors or the public – to seek information from the companies to get them to engage meaningfully.
“I request that more people open their eyes to this and think what they might do to exact the information that they require,” she said. “And here, we are not just talking about investors. Banks… and NGOs – they can ask for information for their purposes.”
“It’s when these voices are heard that we can push and pull and make our needs known to listed companies and then see and help their response. I think it’s for all listed companies and certainly, that’s the approach that the SGX is taking.”