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Guide to Sustainability Reporting for Listed Companies


Page 1. 2. 3. 4. 5. 6. 7. Purpose of the Guide Why should listed companies report ? Who should report? How should listed companies report? What should listed companies report? When should listed companies report? Where should listed companies report? 3 4 5 6 7 8 9


Purpose of this Guide

1.1 This Guide provides answers to frequently asked questions from listed companies on sustainability reporting as a supplement to the Policy Statement on Sustainability Reporting issued by SGX on 28 August 2010.

Voluntary Sustainability Reporting by Listed Companies


Sustainability reporting is not a mandatory requirement for listed companies under the Listing Manual. It is still a voluntary exercise in Singapore, as in many countries. However, there is growing interest in sustainability issues globally, and consequently, pressure to move towards mandatory reporting through regulations and rules.


Some listed companies lead sustainability reporting with high standards. However, most listed companies have yet to embark on sustainability reporting, perhaps due to constraints such as costs, reporting scope and continuity. This Guide helps listed companies take that important first step into, what seems, a complexity of environmental and social performance reporting.


Why Report?
2.1 The principal benefits of sustainability reporting are good corporate governance and improved stakeholder communications.

Good corporate governance 2.2 Corporate governance centres on stakeholder interests, and by encompassing the objectives of corporate performance and accountability, includes the practice of systematic sustainability reporting.


An issuer may, for example, track and disclose issues relevant to the environmental and social performance. This allows an all-rounded and systematic approach in measuring and assessing the issuers performance on the parameters set by the issuer, and engenders good corporate governance.

Improved Stakeholder Communication 2.4 The disparate nature and interests of stakeholders such as shareholders, employees, customers, suppliers and communities, compel sustainability reporting in order to provide a further dimension beyond financial performance. By

broadening disclosure beyond financial disclosure to include, for example, labour practices, environmental impact and risks, and wider social concerns such as human rights, stakeholders realize that issuers are not just money-making machines. Thus, communication between the issuer and stakeholders may be improved.


Who should report?

3.1 The Exchange strongly encourages all issuers without exception to consider sustainability reporting as an integral part of good corporate governance.


Sustainability reporting is particularly relevant for issuers who:(i) Operate in industries that are susceptible to environmental risks e.g. oil & gas, mining & metals, raw material processing; (ii) Operate in industries that produce significant environmental pollutants such as chemical and apparel industries; (iii) Heavy users of natural resources such as palm oil producers, forestry companies, etc.; or (iv) Part of a supply chain where end customers demand that suppliers behave responsibly.


How to report?
International accepted reporting frameworks 4.1 The Exchange encourages the adoption of internationally accepted reporting frameworks, such as the Global Reporting Initiative (GRI) Reporting Framework, in disclosing the issuers sustainability performance. The GRI Reporting Framework is universally applicable to all organisations and sets out general principles and indicators that issuers can use to measure and report their economic, environment and social performance.

Industry-specific reporting frameworks 4.2 Some issuers operate in industries that are extremely sensitive to environmental and social issues. Industries such as the oil and gas, mining and metal sectors have high environmental exposures and impacts that warrant specialized reporting frameworks for meaningful assessment of organisational risks and performance. These issuers are encouraged to adopt industry-specific reporting frameworks, such as the framework promulgated by the International Council on Mining & Metals for the mining and metal industry, or GRI Sector Supplements for selected industries.

External assurance 4.3 Issuers who have prepared sustainability reports may consider engaging external assurance providers to conduct independent verification of the reports. Assurance on a sustainability report increases the credibility of the report by establishing whether the information is accurate. Assurance also acts as an important feedback mechanism to issuers in improving the quality of their sustainability reports.


What to report?
Aspects of sustainability reporting 5.1 In considering reporting of sustainability issues, the Exchange encourages issuers to consider and provide disclosure on the following matters, where material to their business operations:(i) Relevant laws, regulations, international agreements, or voluntary

agreements with strategic significance to the organisation and its stakeholders, including fines, sanctions, prosecution, and accidents for noncompliance with environmental laws and regulation; (ii) (iii) Sustainability policy; Risk management policies and processes arising from environmental and social concerns; (iv) Main topics of interest and future challenges for the specific industry sector which the issuer operates in as observed by peers and competitors; and (v) Assessment of sustainability impacts, risks, or opportunities.


The above factors are not exhaustive and issuers will have to take into account unique industry concerns, risks, and company specific characteristics in determining relevant sustainability disclosure.


When to report?
Disclosure at initial listing 6.1 In a disclosure-based regime, disclosure of sustainability issues is critical to potential investors in assessing a prospective issuers future performance. Fundamental license-to-operate questions, which include management of environmental and social risks, compliance with key environmental and labour regulations, as well as past infractions, must be disclosed for investors to consider and arrive at informed investment decisions.


In reviewing an initial listing application, the Exchange will expect an applicant to disclose material information relating to sustainability risks affecting the applicants business and operations, including an impact assessment and description of risk mitigation procedures. This encourages an applicant to consider matters relevant to an investors appraisal of its stance on sustainability issues, given the increasing importance and coverage.

Disclosure on a continuing listing basis 6.3 Under Rule 703, an issuer is required to disclose information which is necessary to avoid the establishment of a false market in its securities, or that would be likely to have a material effect on the price or value of securities of that information. Disclosure of sustainability issues may fall within the ambit of Rule 703.


If an issuer assesses that a particular piece of information is currently not material under Rule 703, but may have wider and long-term implications on organisational performance, the Exchange encourages the issuer to make disclosure. Should there be no sustainability impact, a negative statement would be informative.


Where to report?
7.1 The Exchange does not prescribe the format of how issuers should report on their sustainability performance.

Annual report disclosure 7.2 The annual report provides investors an annual progress report of the companys performance. From the issuers perspective, the annual report is a valuable communications platform that allows the issuer to provide a frank assessment of how well it has met its organisational objectives for the year under review. As a medium for assessing annual corporate performance, an issuer may naturally choose to disclose its sustainability performance as part of its annual report in communicating with its stakeholders.

Standalone sustainability reports 7.3 There are issuers who have dedicated comprehensive disclosure of environmental and social issues in standalone sustainability reports. Such issuers are encouraged to continue with this trend.