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sustainability
disclosure
Key insights from the Singapore
Exchange top 50
Our research
Definitions
Contents
Executive summary
Introduction 4
Insight 1 There is significant room for improvement
in the quality of sustainability reporting
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12
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15
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Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |
Executive summary
Contacts
Sector performance
The table on page three highlights sector
performance according to the different
criteria we assessed.
For those sectors in the SGX top 50
consisting of more than five companies,
transport and storage and property were
the most likely to undertake materiality
assessments and communicate their
sustainability disclosures, while
manufacturing, commerce and services
were the least likely.
| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50
Performance at a glance
Number of
companies
in the
sector
Sector
Finance
Multi-industry
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Details of process
in assessing
materiality
Public reporting of
material aspects
Identification on
boundaries of
material issues
Engagement with
stakeholders
Property
Manufacturing
Agriculture
Commerce
Food products
Services
It should be noted that the agriculture, electricity/gas/water and food products sectors contain only one company, and may therefore
not be reflective of these sectors performance as a whole.
Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |
Introduction
Historically, organizations have used the financial bottom line to benchmark success
and determine materiality thresholds, with social and environmental aspects either
overlooked or not measured.
SGXs move to
comply or
explain basis
Singapore
Exchange
Sustainability
Reporting Guide
EY, Tomorrows investment rules 2.0: Emerging risk and stranded assets have investors
looking for more from nonfinancial reports, 2015.
| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50
Sustainability
Accounting
Standards Board
Converging
developments
International
regulatory
trends
International
Integrated
Reporting Council
Global
Reporting
Initiative
Converging developments
SGX Sustainability Reporting Guidelines
While each of these regulatory or non-regulatory frameworks have their own specific explanation of materiality (as detailed in
Appendix 1), there is a high degree of consistency in their definitions.
With the focus now on material sustainability disclosure, EY sought to understand how Singapore companies were responding and
the impact this was having on sustainability reporting. We set out to examine the sustainability reporting habits of the SGX top
50 and how they were factoring materiality into their disclosures. In undertaking this research, we identified five key insights with
regard to materiality and sustainability disclosure among the SGX top 50.
Global Reporting Initiative, Carrots and Sticks, 2013 (accessed via https://www.globalreporting.
org//resourcelibrary/Carrots-and-Sticks.pdf)
Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |
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 report on their
sustainability performance.
| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50
There are some sectors that are clearly ahead with respect to
implementing a materiality approach.
Services, multi-industry and commerce lead the way with over
75% of companies in these sectors undertaking materiality
assessments, albeit a small number of these companies are
included in the research. The agriculture and food products
Sector
Number of reporters
Multi-Industry
Manufacturing
Property
Services
Agriculture
Food products
Finance
Commerce
30
25
19
Total
Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |
Property
Security of properties
Manufacturing
Fair employment practices
Procurement and sourcing
Innovation and productivity
| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50
Internal tests
Two of the 30 companies in the SGX
top 50 are using internal tests devised
by the organization to assess materiality.
These vary but usually involve some
type of internal and external
stakeholder engagement.
Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |
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| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50
Leading example:
Genting Singapore PLC
Genting Singapore was among
the first companies in Singapore
to disclose its sustainability
performance in line with the GRI
G4 comprehensive reporting.
FY 2014 marks the companys
second sustainability disclosure
and a thorough adherence to the
G4 principles for defining report
content: stakeholder inclusiveness,
sustainability context, materiality
and completeness. A stakeholder
engagement workshop was
conducted to identify material
issues and a detailed mapping of
sustainability issues to GRI G4 was
disclosed to illustrate relevant G4
aspects for reporting.
25
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Number of
companies
disclosing
material issues
Those also mentioning
efforts to act on
stakeholder concerns
Leading example:
StarHub Ltd
For StarHub, stakeholder
engagement is an important
ongoing aspect of the sustainability
approach. The feedback allows them
to assess, identify and prioritize
their most significant economic,
social and environmental impacts,
and determine what should be
included in their report. In 2014, the
company identified 12 stakeholders
(namely customers, employees,
suppliers, distributors/retailers,
business partners, investors, local
communities, media, government
and regulators, trade associations,
trade unions and NGOs and advocacy
groups). The details of their methods
of engagement, expectations,
responses to these expectations,
progress made during the reporting
period, and plans for the following
year were also systematically
disclosed in a table format.
Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |
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An EY Survey of 500 CFOs globally5 found that large companies are being confronted
with an increasingly challenging reporting environment as a result of business
complexity. Stakeholders, including regulators and consumers, are challenging
companies to not only improve reporting but compelling them to reconsider how they
disclose information in a fast-changing environment.
In addition to assessing the content
of the SGX top 50 sustainability
disclosures, our research also examined
the platforms and mechanisms that are
used to communicate this information.
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.
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Leading example:
Ascendas Real Estate
Investment Trust (A-REIT)
3
1
13
1
SGX companies
that disclosed
material issues
ESG section
integrated into
annual report
Sustainability section
integrated into
annual report
Independent
sustainability
report and
website
Sustainability report
section integrated
into annual report
and website
ESG section
in annual report
and website
EY, Connected Reporting: Responding to complexity and rising stakeholder demands, 2014 (accessed via http://www.ey.com/
Publication/ vwLUAssets/ey-assurance-faas-connected-reporting/$FILE/ey-assurance-faas-connected-reporting.pdf).
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| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50
Materiality
Like the quality of reporting, we will have
to wait and see whether or not materiality
will be a focus for new reporters.
Regardless of this, listed companies
should focus further on their material
aspects, particularly as businesses and
stakeholders face changes, and as new
aspects emerge. Currently only 25
companies in the SGX top 50 reported
on sustainability aspects that are
material to their business, while only 19
involved stakeholders in this process.
Since understanding and reporting on
material sustainability aspects requires
a tailored approach, organizations will
need to consider the best way for them
to undertake the process and then
determine the most appropriate ways
to communicate in order to maximize
the benefits to stakeholders and the
organization itself.
Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |
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Consequences of mandatory
reporting: international
examples
The introduction of comply or explain
reporting requirements impacts
companies differently depending on
where they are based. Before 2011, four
countries (China, Denmark, Malaysia
and South Africa) saw the introduction
of mandatory reporting requirements,
each with different effects on listed
companies. Those in China and South
Africa significantly increased their
disclosures, adopting reporting guidelines
to increase comparability. South
African companies also found increased
propensity to receive assurance and thus
increase disclosure credibility. In contrast,
however, companies in Denmark and
Malaysia adopted a different stance
towards increasing disclosure. Those
in Denmark embraced and embedded
sustainability in their supply chain
management, and committed themselves
to the United Nations Global Compact
(UNGC), while Malaysian firms adopted
specific reporting guidelines focusing
on CSR.6
Our approach
While the breadth and depth of
materiality assessments varies
between organizations and
the intended application of the
assessment, our approach is guided
by reporting frameworks and
standards including the GRI G4,
IIRC and the AA1000 Standard,
which acknowledge materiality as a
fundamental principle for reporting.
We tailor our approach to reflect the
needs of our clients ranging from
significant guidance and support to
higher level materiality assessments.
This is also seen in our approach to
sustainability reporting where we
work with clients to recommend
reporting frameworks, design report
structures, identify key performance
metrics, gather data and supporting
commentary, and advise on drafting
sustainability reports.
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| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50
Source
Definition of materiality
International Integrated
Reporting Council8
Sustainability Accounting
Standards Board9
Singapore Exchange
Investors Guide to Reading
Sustainability Reports10
AccountAbility AA1000
Guidance Note on the
Principles of Materiality,
Completeness and
Responsiveness11
Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |
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Sector
Material aspects
Economic performance
Resource use
Non-discrimination
Anti-bribery
Market presence
Multi-industry
Economic performance
Corporate governance
Environmental performance
Labor practices
Product excellence
Property
Emissions
Corruption and bribery
Supporting local communities
Health, safety and environment
Tenant satisfaction
Regulatory compliance
Workplace health and safety
Learning and development
Resource use
Innovation and productivity
Supporting local communities
Finance*
Manufacturing
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Agriculture*
Food products*
Labour relations
Supporting local communities
Supplier relations
Consumer relations
Sustainability in plantations
Services
Corporate governance
Regulatory compliance
Supporting local communities
Responsible provision of products and services
Training and development
| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50
Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |
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