SGX seeks public feedback on proposed rules for sustainability reporting

The move to introduce rules and a guide is in response to growing global interest in sustainability information, says the bourse.
Channel NewsAsia 5 Jan 16;

SINGAPORE: The Singapore Exchange (SGX) is seeking public feedback on proposed rules and a guide for sustainability reporting, which it will introduce on a "comply or explain" basis.

SGX expects the new rules to apply to companies from the financial year ending on, or after Dec 31 2017, with reports published from 2018.

In a media release on Tuesday (Jan 5), the bourse said the introduction of the rules will be further progress from voluntary reporting which has been in place since 2011 and is in response to growing global interest in sustainability information.

SGX said sustainability reporting would enable investors to more comprehensively assess a company's prospects and quality of management.

The bourse said its survey of institutional investors in June 2015 found that more than 90 per cent of respondents consider environmental, social and governance (ESG) aspects of business and strategy when investing. It added that the "comply or explain" approach to sustainability reporting gives companies the opportunity to report in the way that best suits their industry and circumstances.

SGX said it is seeking comments on five proposals. Issuers will have to include the following five primary components in a sustainability report:

Identification of material ESG factors, giving reasons for their choice and a description of the process of selection.

Policies, practices and performance of the company in relation to each of the material ESG factors in both descriptive and quantitative terms. Performance should be discussed in the context of any previously disclosed targets.

Targets for the forthcoming year.

A chosen reporting framework to guide the disclosure of relevant information on the ESG factors. Using an internationally recognised or industry-relevant framework enhances acceptance and comparability.

A statement of the board confirming compliance with the primary components or description of any alternative practices with reasons for preferring them.
SGX added that it is also consulting on:

Companies reporting only material ESG factors.

That reports be published within five months from the end of each financial year.

Whether anti-corruption and diversity aspects should be included as a primary component in a sustainability report.

Roles and responsibilities assignment to the Board, with regard to sustainability reporting.
"Sustainability reporting builds on transparency and governance for which Singapore is internationally recognised. It addresses investor demand for quality returns and gives companies the opportunity to differentiate themselves," said SGX CEO Loh Boon Chye.

SGX Special Adviser Yeo Lian Sim, said: "What sustainability reporting does is to have more information about the environmental, social and governance aspects of the company, its opportunities and its risks that have effect on the company business performance.

“So to the investor with this information, it enables a more in-depth analysis of what is coming in terms of the company's performance and you'll also be able to assess how good the quality of the management is."

SGX said it plans to work with industries to further fine-tune its approach.

Ms Yeo said: “We expect to have the final rules and guide by the end of the first quarter, which leaves another nine months of preparation time before the financial year 2017.

“In this period, we will work closely with Global Compact Singapore in terms of training and capability building, and we already started with plans to work with our listed companies in terms of industry commonalities and industry assessment."

The public consultation is open until Feb 5 and can be accessed via SGX's website. Members of the public can also email SGX at sustainability.reporting@sgx.com.

- CNA/dl/xk


Public views sought on SGX sustainability reporting proposals
LEE YEN NEE Today Online 6 Jan 16;

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.