Singapore’s corporate responsibility reporting rates above the global average
Singapore’s corporate responsibility reporting
Worldwide, three quarters of companies surveyed yet to acknowledge climate change as a financial risk
In Singapore, 84 percent of the largest companies are reporting on corporate responsibility, faring better than the global average at 72 percent. This is according to the KPMG Corporate Responsibility Reporting survey, which studied annual financial reports and corporate responsibility (CR) reports from the largest 100 companies by revenue in each of 49 countries.
Mr Ian Hong, Head of Sustainability Advisory & Assurance at KPMG in Singapore commented: “Singapore’s high percentage could be attributed to the high standards set under its Code of Corporate Governance that elaborate the Board’s role to include a consideration of sustainability issues such as environmental and social factors, as part of its strategic formulation.”
“As Sustainability Reporting has also been mandated by the Singapore Exchange on a ‘comply or explain’ basis for the financial year ending on or after 31 December 2017, this is anticipated to increase the reporting rate in coming years,” Mr Hong noted.
Climate change not adequately recognised as a financial risk
A surprising find from the survey is that three quarters (75 percent) of the top 100 companies in Singapore do not address the financial risks stemming from climate change in their annual financial reports. On top of this, only 17 percent of Singapore companies have set carbon reduction targets, faring lower than the global rate at 50 percent.
These statistics support the need for initiatives such as the Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD).
Said Mr Hong: “Going forward, disclosures surrounding climate risk will expand further due to the increasing expectations of securities regulators, the investor community and other stakeholders. We encourage companies to start with a full assessment of where climate-related risk lies within the organisation and assess the current state of their processes and data quality for identifying and reporting on such risks.”
Singapore’s Environment and Water Resources Minister, Masagos Zulkifli recently announced that Singapore will designate 2018 as the Year of Climate Action. Earlier in 2017, plans were also announced to implement a carbon tax between S$10 and S$20 per tonne of greenhouse gas (GHG) emissions from 2019.
As of now, this tax will be applied upstream on large emitters, such as power stations and other large industrial facilities that directly emit GHGs.
The survey also explored further trends in CR reporting, including reporting on the United Nation’s (UN) Sustainable Development Goals (SDGs), a set of 17 global goals to end poverty, protect the planet, and promote prosperity for all.
Other key findings include:
- Reporting on the UN SDGs, has been gathering steam since their launch two years back. More than one third (39 percent) of the company reports studied in KPMG’s survey connect companies’ corporate responsibility activities to the SDGs. However, the proportion of such companies in Singapore remains low at 15 percent.
- Integrated Reporting is growing slowly but steadily with 14 percent of the reports studied globally in the survey being classified as “Integrated”. Only 4 companies in Singapore produced an “Integrated” report.
- The number of companies investing in third-party assurance of their corporate responsibility reports has grown steadily since 2005. It is now accepted standard practice among the world’s 250 largest companies (G250) with more than two thirds (67 percent) of the company reports seeking assurance. However, only a few companies in Singapore (9 companies) seek assurance on this information.
“A majority of Singapore’s largest 100 companies have been reporting on their sustainability initiatives. However, only a few are strategically utilising them to communicate with their stakeholders, especially investors.
Corporate responsibility reports should be used as a tool to present an organisation’s true value that goes beyond its financial performance. Boards can also benefit from recognising the risks and opportunities emerging from climate change and sustainability and integrating them within their company’s overall corporate strategy,” concluded Mr Hong.