Sustainability Reporting: Singapore Stock Exchange

The Singapore Stock Exchange, otherwise known as SGX has released a set of guidelines encouraging its listed companies to adopt sustainability reporting. This move has finally given recognition to those investors interested in issues revolving around the environment, social changes, and governance issues. As of August 28, the first securities exchange in Asia has prompted listing companies to start sustainability reporting.

As of now, the Singapore Stock Exchange only suggests voluntary sustainability reporting from the issuers of securities and derivatives that sell on the exchange. Regardless of the considerate suggestion, this announcement is incredibly significant. SGX’s market capitalization, roughly $480 billion, is a large sum when considering the size of Singapore. About the size of Chicago, Singapore is home to five million people and has made some drastic changes within the last fifty years. The country has evolved from a diamond in the rough into a blossoming base for engineering, foreign exchange, and technology.

Singapore measures accountability, innovation, competition and transparency high on the ranks. The importance of Singapore’s push for sustainability reporting may be what Asia needs to encourage other companies to maintain some social responsibility. It is possible that through SGX’s example, other countries exchanges and regulatory agencies will follow suit. According to SGX’s “Proposed Policy Statement and Guide to Sustainability Reporting for Listed Companies,” it is the company’s Board of Directors responsibility to consider issues related to sustainability as it directs and leads a company’s operations and strategies.

As of now, the Singapore Stock Exchange does not endorse any specific standards; instead it merely suggests that the Global Reporting Initiatives ESG reporting guidelines is the way to progress. Since most of Singapore’s economy is reliant on exporting, the reporting guidelines will allow for cross-jurisdictional comparability, as well as a common, unifying goal in working towards the best practices relating to the ESG.

Many dislike the effects international trade and globalization has on our planet and how it creates many unsolvable issues. Singapore can help bridge the gap between these issues and be an example to other countries struggling to come to grips with the problems globalization presents.

Although, some sustainability reporting advocates may not be impressed with SGX’s call for voluntary reporting. They want the SGX to make sustainability disclosures a requirement. Chances are high that Singapore will make this change in no time. Only a few countries require any form of sustainability reporting, making Singapore an exception.

Countries, like Denmark requires their 1,100 largest firms to integrate sustainability reports, along with financial disclosures. The U.S. Securities and Exchange Commission has also set guidelines regarding climate change-related disclosures while the United Kingdom’s recent coalition government has mandated the reporting of non-financial information. Singapore is not alone in the world in regards to sustainability reporting.

The SGX policy proposal will be under public review until October 29. Despite the global recession, sustainability and ESG reports will become apart of a company’s disclosure routine. It is important for business and CFO’s to plan ahead for this change, and to understand what this change entails. Singapore’s push for sustainability reporting will only be the precursor to making this kind of reporting a requirement for all companies in the exchange.

Shirley Simpson writes for www.allcases.com. The site specializes in custom carrying cases and a variety of others to suit your specific needs.