Raising standards for sustainability reporting in Singapore

Listed companies in Singapore achieved a collective “A” grade for sustainability reporting in the latest Sustainability Reporting Review by the Centre for Governance and Sustainability (CGS) at NUS Business School and Singapore Exchange Regulation (SGX RegCo). The average score of 75 out of 100 points on common measures used in previous reviews showed a continued improvement over the past six years, with the companies scoring 72 points in 2021 and 61 in 2019.

However, the score for 2023 fell to 66 points when new climate reporting requirements were included. The researchers identified multiple areas for improvement, including gaps in metrics, targets and climate transition plans.

The Sustainability Reporting Review is a biennial study of Singapore-listed companies’ sustainability reporting and disclosures. In the 2023 edition, CGS and SGX RegCo placed a strong focus on climate-related disclosures, which have been made mandatory in a phased approach starting from FY 2022.  Companies were also assessed on their climate transition plans for the first time as part of the report.

This year’s review was launched on 23 Nov 2023 at an event jointly organised by CGS and SGX RegCo and attended by close to 200 people. Deputy Prime Minister Heng Swee Keat and Coordinating Minister for Economic Policies delivered a keynote address as Guest of Honour at the launch.

Presenting the review’s key findings, CGS Director Professor Lawrence Loh noted that the overall decrease in the average score after factoring in climate-related disclosures was primarily driven by smaller companies. He called on regulators and educational institutions to extend more support to smaller firms to improve their capacity to meet the new SGX climate reporting requirements.

The study found that many companies need to identify more specific and meaningful metrics and targets, craft comprehensive climate transition plans, link sustainability to executive remuneration, and align their sustainability targets with corporate strategy and financial performance.

Only 65 of the 535 companies in the study provided climate transition plans, and about half of them lacked quantitative and time-based targets, making it difficult to gauge the companies’ ability to achieve their sustainability goals.

Prof Loh said: “We have reached a very strong level of maturity for sustainability (reporting), but going forward, climate and, more importantly, transition will be the next big challenge for us to uplift in capability and capacity.”

Enhanced review serves as practical guide

As the national assessor for the corporate sustainability and corporate governance performance of listed companies in Singapore, CGS has worked with SGX RegCo to produce the Sustainability Reporting Review every two years since 2019. Prof Loh noted that the rate of sustainability reporting in Singapore has increased significantly since 2013, when he worked on a similar series of studies and found only 160 companies that communicated any sustainability information, much of which was in “rudimentary terms”.

In this third edition, the team enhanced the review to not only provide a comprehensive overview of sustainability reporting among Singapore-listed companies, but also serve as a practical guide to drive improvements in reporting and share best practices.

Interspersed among the data analysis are eight business case studies, tips and insights to help investors analyse sustainability reports, recommendations for crafting a climate transition plan and frequently asked questions on greenwashing. One case study focuses on how public transport operator SBS Transit calculates and reports its Scope 3 emissions, while another provides a glimpse into how real estate giant City Developments Limited harmonises multiple sustainability reporting frameworks to produce a comprehensive report for its properties across the world.

The Sustainability Reporting Review 2023 has been added to the SGX Sustainability Knowledge Hub website, a repository of resources to help companies improve their sustainability practices.

NUS President Professor Tan Eng Chye thanked the NUS Business School and CGS for their work with industry partners such as SGX RegCo to move the sustainability agenda forward and drive the improvements seen in the latest review.

“These results attest to the efforts of SGX in understanding and promoting sustainability efforts, and the important role that assessment plays by research centres such as CGS,” said Prof Tan. “Together, we can work with industry to level up sustainability pursuits and reporting, and in helping industry to add value to stakeholders.”

To access the full report, click here.