SGX plans 'comply or explain' regime for sustainability reporting; seeks public feedback

Published Wed, May 6, 2015 · 09:34 AM

THE Singapore Exchange (SGX) is seeking public feedback on a plan to make listed companies follow sustainability reporting guidelines or else explain why they are not doing so.

"Expanding the coverage of reporting to include environmental and social aspects of businesses will further enhance disclosure and transparency to investors," the market operator said in a statement. "Sustainability reports complement financial reports to give investors an appreciation of the long-term value of the company. For example, companies that pollute the environment, or create products with potentially negative effects on society, run the risk of incurring high remedial costs."

The exchange expects to submit changes to the listing rules and a reviewed version of its existing sustainability guidelines by the end of 2015, with implementation targeted for financial year 2017.

SGX's proposal will take a leaf from the way that Singapore's Code of Corporate Governance is implemented. Under the "comply or explain" regime, companies who do not follow the guidelines are expected to explain why they are not doing so.

SGX said that it will begin the consultation exercise this month with a survey of listed companies and a series of focus-group engagements to understand current practices and the readiness of listed companies.

The exchange will then seek feedback on its existing guidelines on sustainability reporting from institutional investors and sustainability professionals.

Finally, SGX will carry out a public consultation to gather views from all stakeholders, including the investing public.

"There has been a growing momentum of sustainability reporting by investors and shareholders globally," SGX chief executive Magnus Bocker said in a statement. "To do this right, we are open to feedback throughout the exercise as we seek to write new listing rules and a guide that is well understood and beneficial to all users. We believe that greater transparency from listed companies will attract investors and empower them to make more informed decisions."