Materiality and sustainability disclosure
Key insights from the Singapore Exchange top 50
In 2014, the Singapore Exchange (SGX) announced that it would be transitioning towards sustainability reporting on a “comply or explain” basis, with a view to target implementation by FY17. In examining the sustainability disclosures of the Singapore Exchange (SGX) top 50 listed companies, we determined the following five key insights.
1. There is significant room for improvement in the quality of sustainability reporting
While 80% of the SGX top 50 make some mention of sustainability either in annual reports or on their company websites, only 60% of the SGX top 50 actually report on their sustainability performance. Ten companies in the SGX top 50 make no mention of sustainability at all.
2. Materiality is clearly gaining traction among reporters
Eighty-three percent of reporting companies reported on the sustainability aspects identified as material to their organization. However, only 63% of these companies provide evidence of the actual process to identify these issues.
3. Materiality assessments are guided by the GRI
Eighteen of the nineteen companies undertaking a materiality assessment use the GRI framework as a foundation. Of these 18 companies, five are using GRI G3 or G3.1 for guidance, and 13 are using GRI G4.
4. Stakeholders are engaged in the materiality assessment process
Understanding stakeholder needs is critical to a robust materiality assessment and yields rich information that can inform strategic thinking. Stakeholder engagement was used consistently among the 25 companies disclosing their material issues. Of these companies, 48% specifically mentioned efforts or an intention to act on stakeholder concerns.
5. Methods of reporting and communication are changing
Of the 25 companies in the SGX top 50 that disclosed the sustainability aspects material to their organization, the vast majority are reporting in at least two different formats, usually a combination of a sustainability report, website, integrated report or Environmental, Social and Governance (ESG) section in the annual report.
Recently we noted a decline in the number of printed sustainability reports, with organizations producing an electronic report on their websites or designing specific reporting webpages. Globally we are also noticing more interactive electronic reporting with links to video, audio and interactive diagrams.
While the number of reporters is likely to rise after the implementation of “comply or explain” reporting, it is yet to be seen whether this will lead to improved quality of reports. To improve the quality of reporting in the future, reports need to focus on the material sustainability aspects most relevant to the organization, follow an effective reporting framework such as the GRI G4, and include strong internal and external stakeholder engagement.
Want to know more?
Click here to download EY’s newly released report “Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50”.