But disclosure of social and environmental aspects of business not mandatory for now
Jonathan Kwok Straits Times 29 Aug 10;
The Singapore Exchange (SGX) is going green.
It is encouraging all listed firms to undertake 'sustainability reporting' - or the disclosure of the social and environmental aspects of their business - and has issued guidelines regarding this.
'Investors who lead world opinion expect listed companies to be accountable for their financial results, how they achieve the results, and what impact they have on the communities within which they operate,' said a regulatory announcement yesterday.
But SGX added that this disclosure of the social and environmental aspects of a listed company's business will not be mandatory at this stage.
Still, mandatory rules could be developed in future as more companies adopt such reporting.
The guidelines come amid allegations from environmental group Greenpeace that a unit of locally listed Golden Agri-Resources had cleared forests illegally in Indonesia.
Sinar Mas Agro Resources and Technology (Smart), which operates all oil palm plantations for Golden Agri, has refuted these allegations after conducting independent reviews by certification bodies and forestry experts.
SGX made no mention of the incident yesterday, adding only that the disclosures on sustainability of operations are particularly relevant for 'companies susceptible to environmental risks'.
These include oil and gas and mining companies, as well as those that produce significant pollutants, like chemical and apparel firms.
Firms that use natural resources heavily - such as palm oil producers and forestry companies - should also look at issuing reports, said the exchange.
SGX suggested that the disclosures should highlight companies' policies regarding sustainability issues and contain assessments of the risks or impacts of the companies' operations.
It added that companies can follow internationally established frameworks like the Global Reporting Initiative (GRI) Reporting Framework.
The SGX guidelines were issued in conjunction with its annual Investor Day yesterday.
As SGX celebrated 10 years as a listed company, some 700 shareholders of the exchange gathered at the Suntec ballroom yesterday to hear from its top executives.
An afternoon panel session was also open to the general public, as were investment talks and an exhibition.
Mr David Gerald, president of the Securities Investors Association of Singapore (Sias), welcomed the SGX guidelines.
'Globally, there is a move towards recognising the importance of corporate social responsibility (CSR). So it's timely that SGX is paying attention to such issues,' he said.
Mr Gerald added that Sias itself has decided that from next year, it will be giving attention to CSR practices in selecting companies for its Corporate Governance Awards.
There has been an increasing focus in the region on CSR practices. In 2007, Malaysia legislated that all companies listed on Bursa Malaysia must report on their CSR efforts, including the impact of their businesses on the environment.
Some companies listed in Singapore have already been issuing sustainability reports. These include Banyan Tree Holdings, Keppel Land, City Developments and Sembcorp Industries.
But not everyone is sold on the idea of companies reporting on their own environmental and social efforts.
'Wherever your operations are, whether in Australia or China, you will have to comply with the regulations there anyway. I don't see much value added to investors or to the company in issuing additional reports,' said Mr Edwin Goh, chief financial officer of China Animal Healthcare, which has plants in China producing drugs to combat diseases linked to animals.
Mr Goh said his company has not issued sustainability reports, but noted that before being awarded a licence to manufacture drugs, the Chinese authorities would have already inspected his firm's plants to ensure compliance with various requirements, including those related to the environment.
Report environmental, social risks, firms told
SGX also proposes listed firms follow a set of sustainability reporting guidelines
Jamie Lee, Business Times 30 Aug 10;
LISTED companies have been prompted by the Singapore Exchange (SGX) to manage and declare business risks linked to environmental and social issues.
In the wake of fresh allegations against Golden Agri-Resources over illegal forest clearing in Indonesia, SGX also noted that companies should disclose sustainability issues related to the firm if such matters have a material impact on the firm's share price.
The SGX has proposed that listed companies follow a set of guidelines on sustainability reporting, it said in a regulatory statement on Saturday.
Sustainability reporting is not compulsory at this point, with SGX noting that it would take a 'progressive approach' in deciding whether to make such reporting mandatory.
'As more companies become inspired to adopt sustainability reporting, it will be natural to take the next step on guidelines and standards leading to rules,' SGX said, adding that it encourages listed firms to adopt and continually improve on sustainability practices and reporting.
It said that listed companies should consider the environmental and social risks as part of its risk management framework, as well as mitigate and report such risks to stakeholders.
SGX listed some sectors that are more relevant to sustainability reporting - such as the oil & gas companies, palm oil producers and chemical firms - and said that a listing applicant is expected to disclose critical information linked to sustainability risks.
It added that a company should disclose information on matters relating to environmental and social risks, if it has a material effect on its share price, or if it has a long-term impact on the business performance.
'Should there be no sustainability impact, a negative statement would be informative,' SGX added.
The method used to evaluate such risks should be aligned with a performance measurement system that allows the company to compare its own sustainability efforts against stated objective and the efforts of other firms, SGX noted.
SGX highlighted the Global Reporting Initiative reporting framework - touted to be used most widely around the world - as a reference for companies.
Under this framework, companies ought to describe the most important risks from sustainability trends and indicate targets set to overcome them.
Palm oil producer Golden Agri-Resources came under fire recently after its subsidiary PT Smart was accused by Greenpeace of destroying orang-utan habitats and clearing forests without permits in its homeland Indonesia.
This led major palm oil buyers such as Unilever, Kraft and Nestle to stop buying palm oil from Golden Agri, though PT Smart has rejected these allegations.
Companies such as Keppel Land and City Developments are part of the handful of firms in Singapore that issue sustainability reports.
