In a move that will affect a large swathe of companies in Singapore, local bourse Singapore Exchange (SGX) will be making it mandatory for all listed companies to publish sustainability reports.
Giving the keynote address at the annual International Singapore Compact CSR Summit on Friday, SGX chief executive Magnus Bocker said the exchange is embarking on a one year study to determine what guidelines should be adopted for these reports, which disclose a company’s economic, environmental and social impacts.
Bocker told Eco-Business that implementation of these guidelines will take place over a couple of years after industry feedback has been gathered in this one-year consultation exercise. This means companies - about 800 are listed on SGX - should be expected to comply with this mandatory requirement by 2017 or 2018.
He noted 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.
“We will take a leading role… and we will make it the rule,” he told a 200-strong audience at the summit held at the Marina Bay Sands Expo & Convention Centre.
“We’d like to invite all companies to work with us to shape what these new sustainability guidelines should look like,” he said.
Junice Yeo, director of sustainability consultancy Corporate Citizenship’s Southeast Asia office, stressed that the year ahead would be crucial in shaping the corporate sustainability agenda among Singapore companies.
“Hopefully by the same time next year, SGX will have a clear set of guidelines and timeframe to help companies break through the glass ceiling of sustainability reporting,” she told Eco-Business.
Rising tide: Corporate responsibility in Asia
Investors are more likely to sell companies that are not green, so while sustainability reporting is an opportunity for green companies to showcase their effort on a global stage, it is also a threat to companies that are not sustainable
Magnus Bocker, chief executive, Singapore Exchange
Bocker’s comments come as sustainability and corporate responsibility have been rising on the global agenda.
Speaking at the summit a day earlier, Dr Noeleen Heyzer, Under-Secretary-General of the United Nations, noted that civil society, governments and investors have been demanding greater transparency from global businesses and “pushed CSR from the margins to the boardrooms of corporations”.
“Asian businesses are beginning to realise that long-term profit and sustainability depends on how smartly they invest in the society which they are a part of and the environment that sustains them,” she said.
Bocker also noted that for Singapore, sustainability reporting was not just a domestic issue, but one that could affect the city state’s global economic performance.
“Many investors that come to Singapore ask questions about sustainability reporting,” he said. “Global investors will only invest in companies in this part of the world if they see that companies are reporting honestly.”
“Therefore, sustainability reporting is not just an issue for local markets, but one that affects our standing in the global financial system. This is why our market needs to collectively take a step upward,” he said.
For companies whose engagement with CSR was still superficial or non-existent, Bocker cautioned that “investors are more likely to sell companies that are not green, so while sustainability reporting is an opportunity for green companies to showcase their effort on a global stage, it is also a threat to companies that are not sustainable.”
“But transparency will no doubt drive improvement,” he predicted.
China, Taiwan, and Malaysia are among some countries in Asia where bourses already require listed companies to publish sustainability reports in some form.
Complying with mandatory reporting requirements may seem like a mammoth task for companies that have not done so in the past, but companies should not be afraid – the process may not be as painful as they fear, said Yeo.
“Some companies may initially struggle to grapple with what sustainability reporting entails. This is normal when starting out,” she said.
“They may need some training and external support at the beginning, but they may also be surprised at how much of the data from their current corporate processes – for example, human resources or environmental health and safety (EHS) monitoring – can be incorporated systematically into their sustainability reports,” she added.
A company that needs no introduction to sustainability reporting is SGX-listed property developer City Developments Limited (CDL). The company has voluntarily published an annual sustainability report since 2008, and in 2012 became the first Singapore developer to receive the Global Reporting Initiative’s (GRI) Level A+ rating, which indicates a very high level of compliance with GRI’s recommended guidelines for sustainability reporting.
CDL’s chief sustainability officer Esther An welcomed Bocker’s announcement as a move to push the sustainability agenda forward, and added that CDL “has been a firm proponent of corporate sustainability reporting to track, measure and improve on our environmental and social performance”.
“Reporting has helped us to identify material issues that impact our business, close-in on our gaps, seek new growth opportunities and strengthen risk management,” said An.
Getting a head start on sustainability reporting also meant that the firm’s operations had been relatively unaffected by the increasing environmental regulations introduced in the construction industry, she added.
For firms that are just embarking on sustainability reporting, Jenny Costelloe, founder of CSR consulting firm Skylark Advisory, offered this advice: “Companies should not get hung up on which framework to use for their sustainability reporting, but simply ensure that their reports are honest, present material data, and share the company’s strategy for managing sustainability concerns in the long term.”
“Practicing sustainability is ultimately more important than reporting it,” she said.
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