SGX launches guidelines for listed companies on sustainability issues

A Singapore Exchange (SGX) sign outside its premises at the central business district in Singapore, on Jan 18, 2016.
A Singapore Exchange (SGX) sign outside its premises at the central business district in Singapore, on Jan 18, 2016. PHOTO: REUTERS

SINGAPORE - The Singapore Exchange (SGX) has officially launched the requirements and guidelines that will ask listed companies here to conduct an annual review on their sustainability issues and practices.

The "comply or explain" framework will take effect in 2018, for any financial year ending on or after December 31 next year.

Companies must report - or explain their decision to not do so - within five months after the end of a financial year, but a grace period of up to 12 months will be given to the publishing of the first report.

Flexibility has been accorded to a company to identify what environmental, social and governance (ESG) issues to address in the report, which will then list out the company's policies and performance relevant to these factors.

The company is also expected to outline its sustainability targets for the upcoming year, the SGX said in the announcement on Monday (June 20).

These requirements are largely unchanged from the proposals first tabled for public consultation in January this year.

The requirements can give investors seeking sustainable investment a better visibility on non-financial information of listed companies, SGX chief executive Loh Boon Chye said.

But the reporting framework is also allowing enough flexibility to ensure it's not a hindrance to listed companies, SGX special adviser and former chief regulatory officer Yeo Lian Sim stressed, adding that investors must still exercise their own judgement on what to take away from the reports.

The latest initiative is flexible and strikes the balance between investors and business practicalities, PwC Singapore sustainability and risk partner Fang Eu-Lin said. "It's important for Singapore to maintain its leading status of being a transparent, well governed and well regulated global financial centre, and sustainability reporting plays a part in that," she added.

Around 160 listed companies already issue sustainability reports regularly, the SGX found.

Last month, the SGX launched four sustainability indices that track companies considered to perform well in ESG practices, as the bourse continues its efforts to enhance disclosure and transparency of the stock market.

Company executives that The Straits Times spoke to welcome the latest rules, but some are concerned over the resources and time required for preparing the reports.

A Catalist-listed healthcare firm CEO, who declined to be named, said: "It's a good thing to have, but for some smaller companies or the ones that are trying to survive, I think this process can be quite a pain, if not irrelevant."

To help companies prepare the reports, workshops will be conducted and an online portal will be set up to provide more information. More details will be shared at a later date.