Level of sustainability disclosures amongst SGX-listed firms only grew 3% in four years : study

City Developments, CapitaLand, Singapore Telecommunications, Olam International and DBS Group Holdings have the best practices in sustainability communication.

Of the 48.3% of Singapore Exchange (SGX) mainboard and Catalist-listed companies that communicate their sustainability practices, the average level of sustainability disclosures only marginally increased by 3% since 2016 to 55% in 2018, according to the latest findings from Sustainability Reporting in Singapore.

Firms in the construction sector were found to have the lowest level of disclosure (48%) whilst the agricultural sector had the highest level (61.1%).

SGX laid out its ruling for all publicly listed companies to prepare an annual sustainability report under listing rule 711A on “comply or explain” basis in 2016 which has seemingly driven up the number of firms reporting sustainability.

The percentage of reporting companies has increased from 37.1% in 2016 and 31.3% in 2014, however the level of sustainability disclosure in Singapore only hit 55.3% in 2018 which represents a dismal pace of growth from 52.1% in 2016 and 43.7% in 2014.

A minority of 42 firms studied disclosed the impact of sustainability trends, risks and opportunities on the long-term prospects and financial performance of the organisation, with more than half of the companies omitting this reporting practice altogether, the research noted.

“We noticed a newness effect wherein, in spite of the rise in the number of reporting companies, close to half of companies were first time reporters that lacked quantitative measurements, targets and policies,” the report’s authors said. “The newness effect had resulted in an overall 2018 average disclosure level that was close to stagnation.”

And whilst 186 out of the 327 companies demonstrated board level involvement in identifying and managing economic, environmental and social (EES) impacts, only 31 firms linked EES topics performance with the remuneration of board and senior executives. In addition, the report found that only 91 firms disclosed training policy on EES topics for its board of directors.

“Board leadership and commitment have to be elevated for this reporting to keep the momentum,” NUS Business School director of CGIO Lawrence Loh said. “These will be the most critical incentives for sustainability to be robustly embedded across the entire company.”

The most common environmental and social topics mentioned in reporting were training and education, occupational health & safety measures and philanthropy. Biodiversity, products & service stewardship and emissions were the least common.

Of the firms listed in Singapore, City Developments, CapitaLand, Singapore Telecommunications, Olam International and DBS Group Holdings emerged as the top five companies with the best practices in sustainability communication.

Conducted by the National University of Singapore (NUS) Business School’s Centre for Governance, Institutions and Organisations (CGIO) and ASEAN CSR Network (ACN), the study examined information disclosed by SGX-listed companies between January 2017 and May 2018 which was compared to national benchmark figures obtained from 2014 and 2016.