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UP to now, sustainability reporting has been slow in taking hold in Singapore's corporate sector. While this reporting has become pervasive in many markets across the world, it is barely practised here.
The most recent biennial national study on sustainability reporting indicated that it is not widespread among Singapore's listed companies. In 2013, only 29.8 per cent of companies did some form of sustainability. Nevertheless, the practice is more prevalent amongst Reits (real estate investment trusts), with 72.4 per cent doing such reporting.
The Asean CSR Network and the Centre for Governance, Institutions and Organisations at NUS Business School are jointly completing the benchmark studies for the year 2015.
The results are expected to be released in July 2016.
Although there are guidelines published in 2011 by the local bourse, the Singapore Exchange (SGX), these are merely voluntary. It is unsurprising that companies do not have any impetus to communicate their efforts and results in sustainability.
In January 2016, SGX conducted a consultation exercise on its intent to require sustainability reporting guidelines on a "comply or explain" basis for listed companies. In other words, these companies will have to abide by the guidelines; otherwise, they will need to offer reasons why these are not adhered to.
SGX has indicated that the new requirements for sustainability reporting will apply to any financial year ending on or after Dec 31, 2017. To ease the adoption process, SGX has proposed a three-year phased approach for the full implementation.
The more stringent approach to push sustainability reporting is necessary for Singapore. In many developed markets, particularly those in the European Union and the United States, sustainability reporting has been worked into regulation or standards.
In Asia, Japan is ahead with its stewardship code while Hong Kong is moving forward with its comply or explain requirement for sustainability reporting.
Closer to home, Malaysia has a listing rule on corporate social responsibility while Thailand has sustainability reporting as a listing criterion.
To promote the rate of sustainability reporting in Singapore, it is clear that we have to move beyond the current voluntary guidelines. The enactment of a comply or explain approach will be a boost to promulgate and root the practice of sustainability reporting. In this light, steps must be mounted to strengthen the preparations as the date of enforcement is as close as the coming year-end.
Sustainability reporting in the corporate sector can be viewed as a three-stage process - awareness, acceptance and adoption. The logic is simple - for adoption to take place, there must be awareness and then acceptance.
So what needs to be done to get us to the new state of comply or explain sustainability reporting?
There are two levels in which we have to look at for sustainability reporting amongst companies.
First, at the national level, a more aggressive campaign is required to increase the awareness among companies on sustainability reporting. Most importantly, the message must reach all in clear and compelling ways. Efforts to do so may include using the mass media and also more targeted means like seminars and workshops.
The driver for national awareness does not rest on the regulators alone. Dedicated bodies like a broad-based council or agency may serve better to sell the merits.
Awareness alone is not enough. Companies must accept that there are benefits to sustainability reporting. At the onset, these are still unclear and uncertain. A guided approach at the national level may smoothen the journey and reduce confusion.
Thus, we need a boost to the system. Perhaps enhanced forms of tax deductions or investment credits can be provided. In the longer term, when companies begin to see that it is in their self-interest to do the reporting, the incentive schemes can be progressively scaled down.
Second, at the company level itself, awareness must permeate throughout the strategies and operations. This should be across all levels from the board and management leadership to the rank and file. Indeed, sustainability reporting should not be left to just the accounting or even corporate communications departments.
It is necessary for companies to put the right structure in place that has a clear responsibility for sustainability. Yet the contributions must be from all. It will be essential to have broad training and development plans so as to foster greater knowledge of sustainability reporting amongst the staff. Ultimately, it is all about new capability development.
To gain acceptance in the company, a sense of sustainability must prevail in all tasks and actions taken by everybody. Perhaps for every new plan or policy in any company, a section should be included that discusses the implications on sustainability.
The sense of sustainability works best when it is embedded in the organisational culture. In this light, like in pushing all other corporate initiatives, the tone at the top will be most pivotal to broaden and deepen acceptance.
The path to push sustainability reporting on a comply or explain basis will be fraught with challenges or even resistance. Many companies will come in "cold" into the arena. The process of assimilation may be difficult as much of the themes and concepts are new to many corporate leaders and staff.
It is thus all the more important that a total system approach is deployed to tackle the teething issues at both the national and the company levels. This is so to increase the rate of adoption through better awareness and greater acceptance. After all, sustainability reporting has to be sustainable in itself.