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2/3 of Listed Companies in Singapore Not Communicating Sustainability Information

Corporate Sustainability ReportingA total of 160 out of 537 companies listed on the mainboard of the Singapore Exchange (SGX) as of 31 December 2013 are found to have communicated, to various extent, sustainability information related to the governance, economic, environmental and social aspects of their businesses. Although this is an almost two-fold increase from the 79 companies in 2011 that were found to have communicated such information, two-thirds of Singapore’s listed companies are still not communicating sustainability to their stakeholders.

Of the 160 companies that had communicated sustainability, only 19 of the companies used internationally recognised sustainability reporting frameworks, which guides them to provide more comprehensive and in-depth information about their businesses to their relevant stakeholders. As for the 30 ‘blue chip’ companies on the Straits Times Index, only 14 are providing in-depth sustainability information and using internationally-recognised frameworks when preparing sustainability reports.

This finding is from a new study by Singapore Compact for Corporate Social Responsibility (Singapore Compact) and the National University of Singapore (NUS) Business School on sustainability communication by SGX-mainboard listed companies.

The latest study also showed that companies providing sustainability information are evenly distributed among large, medium and small capitalisation companies. This is an improvement from 2011, where large capitalisation companies accounted for almost 60% of those disclosing sustainability information. Also, more companies are including sustainability information into their annual reports, from 66 in 2011 to 141 in 2013.

However, despite these improvements, there are substantial gaps that need to be addressed.

Listed companies communicating on sustainability are still a minority, making only 29.7% of all mainboard-listed companies. This is in spite of efforts such as the SGX, which released its ‘Guide to Sustainability Reporting’ in June 2011.

Executive Director of Singapore Compact Mr. Christopher Ang said: “More companies need to communicate and report on their sustainability activities to gain a deeper understanding of their exposure to social and environmental risks, and demonstrate corporate transparency and accountability. Such insights can also help companies find growth opportunities and generates trust with their stakeholders, while providing drivers for companies to formulate long-term strategic visions and resilient business models.”

Added Associate Professor Lawrence Loh, one of the researchers and Deputy Head, Department of Strategy & Policy, NUS Business School: “Companies should see that it is in their own interests to report on sustainability. Increasingly, many stakeholders, including investors, are expecting companies to go beyond mere engagement and to also communicate their commitment to sustainability efforts. Being sustainable is the most fundamental assurance for the long-term survivability and viability of the companies.”

Here are some other highlights from the study:

  • Top three sectors with highest level of sustainability disclosures:

Multi-industry, Hotels and Transport, Storage & Communication sectors.

  • Sectors with the biggest increase in the number of companies communicating sustainability:

Manufacturing (42 in 2013, from 21 in 2011)
Services (24 in 2013, from 6 in 2011)
Commerce (22 in 2013, from 6 in 2011)

Though the improvements are laudable, the percentage of companies in these sectors that are communicating sustainability is still very low. Only 21.2% of companies in the Manufacturing sector, 25.3% in the Services sector and 28.9% in the Commerce sector are disclosing information on their sustainability efforts.

  • ‘High-Impact’ companies not providing sufficient sustainability information despite greater susceptibility to environmental and social risks.

A total of 137 companies fall under the 10 “High-Impact” sectors as defined under SGX’s “Guide to Sustainability Reporting”, with business operations that are susceptible to greater environmental and social risks. Only 44 of these companies (32.1%) had made available information on their sustainability efforts. Given the nature of these businesses and the potential adverse impact on the environment and communities in which they operate in, this is a worrying trend.