Sustainability reporting: going beyond basics in deliberations, decisions

THE Singapore Exchange (SGX) recently introduced sustainability reporting guidelines which will take effect for any financial year ending on or after Dec 31, 2017, on a "comply or explain" basis. The requirements highlight that sustainability reports should comprise five primary components: material environment, social and governance (ESG) factors; policies, practices and performance; targets; sustainability reporting framework; and a board statement.

The concept of sustainability reporting was seeded some time ago. A Guide to Sustainability Reporting was issued in 2011, with its adoption on a voluntary basis. In 2014, SGX announced that it had plans to elevate sustainability reporting from voluntary to a "comply or explain" basis. During the intervening period leading up to the finalisation of the requirements in June this year, surveys with investors and listed companies were conducted, awareness sessions were held, and responses to a consultation paper were reviewed and deliberated.

Areas such as obtaining a formal compliance statement from the board of an issuer, mandatory independence assurance, verification of material ESG factors with stakeholders, and the level of prescriptiveness around quality of adoption were also debated.