The news that rocked the sustainability scene in Singapore last week brought out a rather sore point – despite increasing regard for sustainability, Singapore companies are just not disclosing their sustainability information enough.
Among the dismal results: Of the 160 companies who communicated on sustainability, only 19 of them published CSR reports that used a globally recognized standard such as the Global Reporting Initiative (GRI). And of these, only eight companies sought external assurance on their reports.
In comparison, in 2013 China (including Hong Kong) produced 199 GRI reports, in Korea 109 and Japan 138. This has left Singaporean companies trailing far behind their Asian counterparts in this area.
The research also found the quality of the Economic, Social & Governance (ESG) data disclosed to be often vague and incomplete. Besides low percentage of disclosure on climate change risk and opportunities, basic social indicators like human rights, labour relations and equality and diversity were also under reported.
The research presents a bleak picture in which ESG reporting is not a priority in Singapore, and that companies do not want to spend time, money and resources on sustainability. Is this really the case?
Much has been said about the unique nature of business in Singapore which makes it structurally and culturally different from the traditional ‘western’ corporate context. There is a perception that transparency may lead to a ‘loss of face’, and disclosing information will dilute competitiveness. The lack of demand for information from the civil society, investors and consumers in Singapore has also given companies much less impetus to disclose further information than legally required.
The Singapore Stock Exchange (SGX)’s latest move towards firming its grip on sustainability was to declare in March 2013 that it was planning to move to a ‘comply or explain’ basis for reporting on sustainability information. Putting further regulation in place is a debatable point.
On the one hand, it would ensure companies report on their sustainability practices; on the other hand regulation could create a pattern of behaviour which is conformist, and ESG disclosures becomes a tick box exercise, rather than real thought leadership on sustainability.
Singapore companies are poised for sustainability reporting
Without a doubt, the business case for sustainability in Singapore needs to be strengthened. Having worked with more than 300 companies globally – Corporate Citizenship has come to understand not just the quarterly reporting pressures at public companies, but also the limitations private companies having to make do with limited funds.
That being said, what gets measured gets managed - companies need to realize the benefits of working towards sustainability. Not only can ESG disclosures lead to reputational enhancement they can also help identify areas of improvement, can contribute to operational efficiency, help companies to identify future risks and opportunities and provide innovative insights.
As a matter of fact, Singapore companies are in a unique position of ‘quick wins’, starting with preparations required for sustainability reporting. Using a framework such as GRI G4, which requires a materiality assessment, companies may realize that they already have the information needed to start compiling their sustainability data.
One such example is with respect to Governance - companies in Singapore following the Singapore Code of Corporate Governance are in fact already producing similar information in their existing annual reports. The main addition would be to demonstrate a commitment to sustainability by the highest governance body.
Reporting on environmental performance among companies in Singapore may also seem far-fetched for first time sustainability reporters. The good news is that companies who have achieved ISO 14001 Standard certification will already have some of the data required. Additional information such as energy emissions or effluent and waste management are not only useful to measure, they could also contribute to eventual cost savings for the company.
It is not uncommon to see very comprehensive employment policies and benefits already in place and for companies to already have information on employment type and gender and age of workers. Many companies may already work to health and safety standards and code of conducts. All of this information is an excellent starting point from which to build meaningful sustainability communications.
So while last week’s news projected an uphill climb for the sustainability agenda, Singaporean companies may already be well on their way to achieving significant sustainability goals for our planet, its people and for profit.
These findings were part of a year-long research, ‘Accountability for a Sustainable Future’, carried out by Singapore Compact, in collaboration with the National University of Singapore (NUS) Business School
Global Reporting Initiative (www.globalreporting.org)