Corporate social responsibility (CSR) may not be a foreign concept to Singapore companies but it appears that articulating CSR policies and activities still isn’t common practice here.
Singapore firms are seen lagging their regional peers in sustainability reporting. But accounting professionals and CSR lobbyists believe that this gap should narrow as efforts to spur ‘green reporting’ gather speed.
Thomas Thomas, executive director of Singapore Compact, a multi-stakeholder platform that promotes CSR, notes that with more stock exchanges globally requiring listed companies to issue sustainability reports, there has been an increase in sustainability reporting among companies here, particularly those with overseas businesses.
‘Should Singapore Exchange (SGX) officially require sustainability reports from listed companies, that will of course be a considerable factor in advancing the practice,’ Mr Thomas says.
In Singapore, there is no legislation or regulation on the disclosure of sustainability practices. It is also not mandatory for listed firms to disclose the social and environmental impact of their businesses.
A game changer
But in what was touted as a major development for sustainability reporting in Singapore, SGX released last August guidelines on sustainability reporting, encouraging all listed companies to undertake such reporting.
In so doing, the exchange recognises that investors are increasingly expecting companies to be accountable not just for their financial results but also for how they achieve the results and the impact on communities within which they operate.
‘There is an increased need to provide hard evidence of the positive impact on society, the environment and the strategic returns for the business and how any negative effects are being addressed,’ says Chartered Institute of Management Accountants (CIMA) in a report, Tomorrow’s Balance Sheet, issued in February.
The report stressed that corporate reporting should ‘not only allow but actively promote this new corporate philosophy’ and urged companies to implement ‘integrated reporting’, which presents a more complete picture of a company’s performance and factors influencing its long-term success.
Not many companies in Singapore have internalised this yet, if current estimates are anything to go by.
According to a report published by the Association of Chartered Certified Accountants (ACCA) in March last year, Singapore produced the least number of sustainability reports among five Asean countries.
A total of 21 companies in Singapore undertook some form of sustainability reporting - whether in annual reports or as standalone reports - between 2003 and 2009. Out of these, only 10 are listed companies, which include Banyan Tree, Keppel Land, Olam International, City Developments and Singapore Airlines.
The country with the highest number of companies producing sustainability reports was Malaysia, with 54 firms issuing such reports, out of which 49 are listed companies. What helped, perhaps, was Bursa Malaysia’s requirement for listed companies to report on their CSR efforts and the impact of their businesses on the environment since 2007.
‘Although the (Singapore) statistics may be less than encouraging, ACCA is optimistic that more companies will come on board,’ says Darryl Wee, country head of ACCA Singapore.
‘There is reason to expect a rise in the awareness of sustainability reporting and consequently greater disclosure following the release of the Singapore Stock Exchange’s (SGX) policy statement on sustainability reporting guidelines,’ he adds.
At the start, companies may feel apprehensive about having to be acquainted with the requirements, terminology and conventions in sustainability reporting, says Mr Thomas of Singapore Compact.
Then, there is the difficulty of gathering relevant and concise data from various departments as CSR permeates all departments and functions.
Many companies think that embarking on sustainability reporting is costly to implement and that they do not have qualified people to write such reports, Mr Wee adds.
But this boils down to the lack of awareness, he says. ‘Most companies see sustainability reporting as resource-intensive, not realising that there are many options available to support organisations at different maturity levels of the reporting capabilities.’
For instance, the Global Reporting Initiative (GRI) guidelines allow companies to choose the level of reporting based on their current needs and resources. They can start with a Level C report, taking a progressive approach and finally reaching Level A, and eventually getting a ‘+’ when their reports are subject to external verification and assurance.
There are other reporting frameworks such as the UN Global Compact Communication on Progress, the ISO 26000 and International Integrated Reporting Committee’s Integrated Reporting framework.
Mr Thomas reckons that there is no best reporting framework and a company’s choice would come down to what they feel is most suited for conveying their practices and philosophy, and which framework may organise their information in the most appropriate way.
To help companies understand CSR and sustainability reporting, accounting firms and associations, such as CIMA, have launched reports and research on this issue. ACCA has tied up with Singapore Compact in organising three workshops per year to help companies understand how to put a sustainability report together.
Singapore Compact has also sought to build awareness among companies on how to undertake CSR in a sustainable manner through workshops, seminars and training sessions.
Doing well by doing good
Mr Thomas notes that while CSR awareness and implementation have grown in the past few years, there remains the misperception that CSR is about philanthropy and volunteerism - that is donating time and money.
‘While these are definitely positive and laudable contributions, CSR in fact goes far beyond donations to actual day-to-day practices in corporate responsibility,’ he says.
‘It is about companies making sure they behave in a responsible manner and consider employees, partners, the community and other stakeholders, as part of their overall strategy in doing business, rather than making money first and then donating later as a separate act,’ Mr Thomas adds. ‘In this sense, there is quite a bit of space for improvement in CSR in Singapore.’
Failing to recognise the importance of CSR and making CSR efforts known can be costly. A case in point was the deadly explosion on a British Petroleum (BP) oil rig last year, resulting in the biggest oil spill ever in the Gulf of Mexico.
On top of the cost of plugging the leak, BP lost one-third of its market value and dealt a severe blow to its credibility, having topped rankings in environmental, sustainability and social impacts among major oil and gas companies earlier.
But one doesn’t need to look too far to draw similar lessons. In Singapore, listed palm oil producer Golden-Agri Resources has lost big-name clients such as Unilever, Kraft and Nestle in the wake of allegations from Greenpeace that its Indonesian unit was clearing forest illegally in the country last year.
Some years ago, palm oil giant Wilmar International was also accused by Friends of the Earth Netherlands that it was illegally using fires to clear forest land for estates in 2006.
These two palm oil producers, which have denied those allegations, have since been active in sustainability initiatives and made these efforts publicly known through sustainability reporting, based on the GRI framework.
Both companies have become members of the Roundtable on Sustainable Palm Oil (RSPO), an industry group of palm oil players to develop and implement standards for sustainable palm oil production, and are now seeking RSPO certification for all their plantation operations.
According to Peter Heng, Golden-Agri managing director for sustainability and communications, the company is developing a Yield Improvement Policy and a Social and Community Engagement Policy, on top of a newly launched forest conservation policy in collaboration with conservation group The Forest Trust.
Wilmar CSR manager Sharon Chong notes that undertaking CSR helps enhance the group’s reputation and risk management. ‘As a leading Asian agri-business group, we recognise that our operations will have an impact on the environment and the society in which we operate,’ she adds. ‘Therefore, we have to do the right things and do things right.’
Global Palm Resources, another Indonesian oil palm producer listed in Singapore and a member of the RSPO, has not issued a standalone sustainability report yet, though it has a detailed sustainability section in its annual reports. It has, however, emphasised CSR as ‘an essential role in the long-term success’ of its business and its commitment to ‘triple bottom-lines’.
‘We are currently conducting a company-wide strategic planning process to align our company around the shared goal of sustainable development, and will definitely evaluate the need for standalone sustainability reports in the longer term,’ says Global Palm executive chairman and CEO Suparno Adijanto.
Besides a longstanding ‘zero burning’ policy and a ‘zero waste’ policy, Global Palm has an ongoing Plasma programme with the government, under which some 2,835 ha of plantation land is cultivated by 1,400 small landholders. It is now working on a clean development mechanism to derive revenue from trading carbon credits.
The extra mile
Global Palm has gone further in providing social welfare for the local communities. It has been providing housing, treated water and proper sanitation to families of employees and local farmers, as well as pre-primary and primary school education for some 430 children of its workers.
As for Singapore conglomerate Keppel Corp, group corporate communications general manager Wang Look Fung says its first standalone sustainability report based on the GRI framework will be available in June. Its property arm Keppel Land is the main sponsor for a mobile library project ‘Words on Wheels’ in Hanoi, Vietnam. Launched by Singapore International Foundation, the project seeks to grant some 4,000 village children access to story books, computer terminals with Internet capability, as well as educational games and toys.
‘Currently, Singaporean companies do not have the practice of articulating their CSR efforts, whether it is investing in staff training, corporate philanthropy, protecting the environment or ensuring a safe working environment for staff,’ Ms Wang says. ‘I guess this is very Asian in culture.’
But this is about to change as more companies are encouraged to share best practices in CSR and benefit from one another’s efforts, she adds.
Mr Wee of ACCA notes that as Singapore companies seek to become global players, ‘financial performance alone may no longer be sufficient to secure a market leader position as global investors demand leadership in both financial strength and corporate social responsibility’.
