More Singapore companies should produce regular public disclosure on sustainable business practices in order to compete in a global market, to enable more informed investment decisions and to meet stakeholder expectations, say panelists at a roundtable discussion hosted by ACCA (the Association of Chartered Certified Accountants).
Compared to other ASEAN countries, Singapore produced the least number of sustainability reports with 21 companies producing 59 reports in the past eight years. In August 2010, the Singapore Stock Exchange (SGX) encouraged more sustainability disclosure by listed and soon-to-list companies.
The consensus was that the SGX announcement was a positive move for businesses and for Singapore. However, some of the panel expressed the need for more guidance and support for smaller companies and non-reporting companies to enable them to produce good quality reports.
The panelists, comprised of some of Singapore’s key opinion leaders, support sustainability reporting and concede that there is a trend towards more sustainability disclosure and reporting of a higher quality. The proponents of sustainability reporting described the benefits for external stakeholders, who demand increasingly detailed information, and the positive impact for managers wishing to improve the sustainability of their businesses.
From an investor’s perspective, it was agreed that more disclosure would improve investors’ understanding of businesses and create an opportunity for dialogue between companies and the investment community.
However, there was some disagreement about whether sustainability reporting should be mandatory or voluntary, with some panellists saying that mandatory reporting should not be too prescriptive, nor should it be an immediate requirement, whilst others felt that it was the right approach to get companies to report. Most panellists felt that it was important to have certainty from SGX on the expected timeline for the move towards mandatory reporting.
The panelists agree that companies should choose their own, most appropriate reporting format. From a practical perspective, choosing the best framework for a sustainability report was cited as a challenge, as was the scale of a sustainability reporting process – especially for SMEs.
The majority of the panel felt that sustainability reporting was moving towards an integrated format, combining financial with environmental, social and governance data in one document.
During the discussion, sustainability report assurance was discussed and recognised as valuable for the credibility of the report – but it was considered that it should not be the primary concern of companies which are producing their first sustainability report, but as a longer term goal.
The panel envisaged an increase in the numbers and in the quality of sustainability reports in the next three to five years, although an improvement in quality was not expected by all panellists in the short term.
Sustainability reporting describes the consideration and integration of environmental and social dimensions into traditional financial reporting to develop a holistic approach towards corporate disclosure. In the narrowest sense, sustainability reporting refers to the publication of environmental, social and governance (ESG) information in an integrated manner that reflect activities and outcomes across these three dimensions of an organisation’s performance.
“The comments at the roundtable emphasised the importance of a move away from glossy publicity brochures towards material and transparent sustainability reports. To deliver this, companies will have to allocate time and resources to accurately reflect their sustainable business practices. It is clear that in Singapore we need to respond to trends in sustainability reporting if we are to remain globally competitive,” says Erin Lyon, Executive Director of CSR Asia, who facilitated the roundtable.
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