Sustainability reports are increasingly becoming a must-have for businesses instead of just being a nice-to-have aside.
Experts that BT spoke to say that companies which take stock of their sustainability efforts help with innovation, mitigate risk in supply chains, and ultimately enhance their reputations.
‘We are familiar with the old management adage – ‘what gets measured gets managed’,’ said Association of Chartered Certified Accountants (ACCA)’s head of policy for Asia Pacific, Chiew Chun Wee. ‘By measuring and collecting data for disclosure, an organisation is better equipped to improve their performance in many areas as well as drive efficiencies in its operations.’
‘If it’s supposed to be relevant to business operations, it should be available already. If it’s not there, you should worry because you’re not addressing all the risks,’ said Graham Owens, KPMG’s director of climate change and sustainability.
At the same time, few large listed companies in Singapore are forthcoming about recording their environment, social and governance efforts in an easily available report.
And levels of disclosure have slipped in the past year, says the ACCA .
Singapore slipped a notch to rank sixth among 10 South-east Asian countries in ACCA’s Asian Sustainability Rating. This year, only 35 per cent of companies made their sustainability reports public compared with 39 per cent last year.
Regulator Singapore Exchange last August issued guidelines and urged firms to undertake voluntary sustainability reporting.
Yet, besides Keppel Corporation, City Developments, SingTel, Sembcorp Industries and CapitaLand, few large listed entities have jumped on board.
‘Many companies may find no impetus to report unless more of their peers do so or reporting becomes mandatory or legislated,’ said Mr Chiew. ‘It boils down to awareness and priorities, in my view.’
Companies may also have mistaken notions about how sustainability reporting matters to their business. ‘For a long time, when people talked about corporate social responsibility, they related it to community work and philanthropy,’ said Mr Owens. ‘But it’s more than that. There are issues on the environment, product responsibility and corporate governance.’
They also regard churning out a report as a drag on time that requires a lot of coordination between departments. Legislation may be an option to help sustainability reporting take off in a bigger way in Singapore.
‘To a certain extent, that would be quite good, but Singapore is not ready for it yet,’ said Mr Owen. ‘First there has to be education among medium-sized companies about how to do it cost-effectively.’
He also pointed out that requiring onerous publication of information may dim Singapore’s spark as a lightly regulated financial centre.
Mr Chiew believes the tendency for Singapore corporates to opt for sustainability reporting will grow, even without regulation being passed.
‘In all likelihood, Singapore companies, listed or otherwise, will see themselves being shunned by international and home investors, suppliers and customers in the near future unless they engage in sustainability practices and conscientiously report them,’ he said. ‘Such is the cost of not reporting.’
As it is not yet compulsory to produce sustainability reports, this is actually a golden period for companies to test the waters.
‘No one expects a full perfect report from the start,’ said Mr Owens. ‘For a medium-sized company, maybe just 10 pages is enough.’
