SINGAPORE - Sustainability reporting among Singapore-listed companies has begun, though more needs to be done in terms of recognising climate change as a financial risk.
In Singapore, 84 per cent of the largest companies are now reporting on corporate responsibility (CR), faring better than the global average of 72 per cent, according to a KPMG survey.
This comes after the Singapore Exchange (SGX) implemented a mandate last year for listed firms to include sustainability reporting on a "comply or explain" basis for the financial year ending on, or after Dec 31, 2017.
Mr Ian Hong, KPMG Singapore's head of sustainability advisory and assurance, said Singapore's high percentage was due to the high standards set under its code of corporate governance. Under the code, the board's role is expected to include a consideration of sustainability issues such as environmental and social factors.
That said, a surprising finding from the survey is that 75 per cent of the top 100 companies in Singapore have yet to address the financial risks stemming from climate change in their annual financial reports. In addition, only 17 per cent of local firms have set carbon reduction targets, faring lower than the global rate of 50 per cent.
Globally, five economies stand out with a majority of their top 100 companies acknowledging climate change as a financial risk in their annual reports. They are: Taiwan (88 companies), France (76 companies), South Africa (61 companies), the United States (53 companies) and Canada (52 companies).
"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," said Mr Hong.
He added that CR reports should be used as a tool to present an organisation's true value 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," Mr Hong added.
Last month, Singapore's environment and water resources minister Masagos Zulkifli announced that the Republic will designate 2018 as the Year of Climate Action.
Separately, a carbon tax of between S$10 and S$20 per tonne of greenhouse gas (GHG) emissions would be imposed from 2019. The tax will be applied upstream on large emitters, such as power stations and other large industrial facilities that directly emit GHGs.
The KPMG Survey of Corporate Responsibility Reporting 2017 studied annual financial and CR reports from the 100 largest companies by revenue in 49 countries.
The survey also looked at trends in CR reporting, including reporting on the United Nation's Sustainable Development Goals.