SINGAPORE - Singapore Exchange (SGX) is tabling a set of guidelines that will ask listed companies here to conduct sustainability reporting - and to explain their failure to do so - starting from 2018.
The "comply or explain" guidelines require companies to identify risks involving environmental, social and governance (ESG) factors in a framework selected by the firms.
These are to be disclosed in an annual report which will be published within five months of the financial year end.
The companies must also set out policies and performance relevant to the issues disclosed in the report, while putting forth targets to achieve for the following year, SGX said on Tuesday (Jan 5). The bourse is now seeking feedback for these guidelines in a public consultation from now until Feb 5.
The proposed guidelines, first mentioned in 2014, will replace the existing ones which require listed companies to issue a sustainability report on a voluntary basis.
The proposals came amid an increasing focus on corporate governance standards, following the long spell of haze caused potentially by negligence of companies.
The Association of Banks in Singapore released guidelines on responsible lending in October last year.
SGX's latest regulatory move will give investors insights into how well a company is addressing its ESG risks, which may impact on company performance and cost structure, SGX special advisor Yeo Lian Sim told reporters in a briefing on Tuesday.
She added that the guidelines are devised with flexibility in mind, to allow listed companies to adjust their reporting format, quality, scope and timeline at their own pace.
As a result, listed companies can adopt the new guidelines in a phased approach, gradually improving and expanding their reporting after 2017. External auditing of the reports are currently not part of the proposed guidelines.
But Ms Yeo shot down suggestions that the guidelines, which do not set out specific enforcement actions, may be toothless, stressing that the bourse is ready and able to dole out punishments according to the current non-compliance rules if necessary.