SGX RegCo, NUS Business School see improvement in companies’ sustainability reporting quality and disclosures

Listed issuers have shown overall improvement in their sustainability reporting and the level of disclosure as compared to the last review in 2019, according to a joint review in 2021 of Singapore-listed issuers’ sustainability reports by Singapore Exchange Regulation (SGX RegCo) and the Centre for Governance and Sustainability (CGS) at the National University of Singapore (NUS) Business School.

The assessment took place against a challenging backdrop with the COVID-19 pandemic, heightened concerns about the impact of climate change and a boom in sustainability-linked financing affecting sustainability management and reporting. The findings will be shared in a virtual forum on “Sustainability Reporting Review 2021” this morning.

The review found that the average overall score based on the SGX-CGS Sustainability Reporting Scorecard rose to 71.7 points from 60.6 in 2019, with broad-based gains regardless of listing board, size and industry sector. Results also showed that small-capitalisation issuers posted the largest increase in average scores (13 points), followed by the mid-cap issuers (10 points) and big-cap issuers (6 points).

The review indicates an overall increase in the depth and understanding of sustainability reporting, as well as sustainability management among Singapore-listed issuers.

64% of companies which disclosed performance did so in the context of targets in the 2021 review versus just 22% in the 2019 review. Among all companies, 66% cent disclosed unfavourable aspects of sustainability performance from 55% in 2019. In disclosing both positive and negative performance trends, 50% did so, compared to just 26% in 2019.

The study also explored the impact of COVID-19 and climate change in closer detail. Capturing information up to mid-2020, the review found that 61% of issuers made disclosures related to the pandemic in their sustainability reports. Almost half of the issuers discussed climate change as an economic, environmental, social and governance (EESG) factor.

“That issuers have become generally better in terms of their sustainability reporting in just a few years is heartening to see. Nevertheless, the call globally for efforts on the climate change and sustainable development fronts has grown exponentially and with a new urgency. Singapore too has stepped up measures in these areas and SGX is similarly committed. In response to these needs, we will consult the market in due course on proposals to place greater emphasis on climate-related disclosures, assurance and structured formats for reporting,” said Tan Boon Gin, CEO of SGX RegCo.

Associate Professor Lawrence Loh, Director of CGS at NUS Business School, said, “Better sustainability reporting can help companies attract environmentally-conscious customers, obtain lower-cost financing and gain better access to capital. This improves resilience in the face of future challenges. We hope that this review aids companies in prioritizing and pursuing these potential benefits.”

The full report and findings can be found here.