Reporting Comply with SGX Sustainability Reporting Guide

Since June 2016, Singapore Exchange (“SGX”) has introduced the Sustainability Reporting Guide to enhance accountability and transparency significantly. Listing Rule 711A requires all listed issuers to prepare annual sustainability reports describing their sustainability practices regarding the primary components as set out in the Listing Rule 711B on a “comply or explain” basis. SGX emphasised that while financial reporting summarises the past and present performances, the sustainability reporting shows forward-looking performance of the company on risk management and climate change mitigation.

In the latest version of the guidance (1 January 2022), SGX announced that every issuer is required to make climate-related disclosures and reporting based on the globally recognised framework and practices. The Task Force on Climate-related Financial Disclosures (“TCFD”) is highly recommended with widespread acceptance in global markets. The issuer under the following industries identified by TCFD as the most affected by climate change will be prioritised to make mandatory climate-related disclosures.

For all financial year commencing Industry
1 January 2023

1 January 2024

 Financial, Agriculture, Food and Forest Products, Energy

Materials and Buildings, Transportation

*  For issuers in other industries, climate reporting remains a “comply or explain” provision

Key Contents of Sustainability Reporting

The sustainability report should comprise of the following primary components:

  • Material ESG factors:  Identify the material ESG factors relevant to the business and key stakeholders, with the reasons and process of selection described.

  • Climate-related disclosures:  Contain climate-related issues disclosures in consistent with the TCFD recommendations.

  • Policies, practices, and performance:  Provide descriptive and quantitative information about the Policies, practices, and performance related to identified material ESG factors.

  • Targets:  Set out the short, medium, and long-term targets for the coming year in relation to each material ESG factor identified.

  • Sustainability reporting framework:  Choose appropriate framework(s) to guide the reporting and provide the reasons of selection as well as the general description of the extent of application.

  • Board statement:  Include a board statement to show the role and responsibilities of the Board and the management in sustainability governance, while demonstrating that the sustainability issues have been considered in the business strategy, and the material ESG factors are consistently managed and monitored.

Phased Approach

A three-year phased approach allows the issuers to prepare for complete sustainability reporting in a step-by-step manner. In regards of the latest requirements of climate-related disclosures, compliance with the TCFD recommendations is also allowed to take place progressively.

Primary Components

Adoption
Material ESG factors
  • Addressed most critical factors
Climate-related disclosures
  • Described the governance structures
  • Description of the identification of climate-related risks and opportunities
  • Impacts in qualitative terms
  • Scope 1 and Scope 2 GHG emissions
Policies, practices, and performance
  • Description of how to manage material factors
  • One metric per factor
  • Plans for improved reporting in future
Targets
  • Qualitative commitments if no quantitative targets
Sustainability reporting framework
  • GRI
  • TCFD
Board statement
  • Complied

Primary Components

Adoption
Material ESG factors
  • Reviewed factor assessment and updated the material factors
Climate-related disclosures
  • Metrics for climate assessment
  • Impacts in more quantitative terms
  • Scope 3 GHG emissions
  • Targets in qualitative terms
  • Conducted qualitative scenario analysis
Policies, practices, and performance
  • Specific policies, practices per material factor
  • More quantitative metrics and qualitative description per factor
  • Comparison against previously disclosed commitments with explanations
Targets
  • Short- and long-term qualitative targets and some quantitative targets
Sustainability reporting framework
  • GRI
  • TCFD
Board statement
  • Complied

Primary Components

Adoption
Material ESG factors
  • Reviewed factor assessment and updated the factors
Climate-related disclosures
  • Scenario analysis with more quantitative outcomes
  • Targets in quantitative terms
Policies, practices, and performance
  • Specific policies, practices per material factor
  • Qualitative and quantitative description per factor
  • Comparison against previously disclosed targets with explanations
Targets
  • Short and long term qualitative and quantitative targets
  • Include peer/sector benchmarks
  • Targets linked to management performance incentives
Sustainability reporting framework
  • GRI
  • TCFD
Board statement
  • Complied

Internal Reviews and External Assurance

SGX emphasised the necessity of internal review and external assurance, which could significantly increase stakeholder confidence in the accuracy and reliability of the sustainability information disclosed. As the internal review shall build on existing governance structures and internal control systems, it should be conducted by the internal audit function, and may involve relevant functions such as risk management, sustainability, or other specialist functions. The review should be conducted in accordance with the International Standards for the Professional Practice of Internal Auditing and should be covered into the internal audit plan over an audit cycle as approved by the Audit Committee of the issuer.

The external assurance by independent professional bodies should be performed in accordance with recognised assurance standards (e.g., ISAE 3000, SSAE 3000, the AA 1000 Assurance Standards or the ISO), and the related information including scope covered, identity of assurer, standard used, and key findings should be disclosed in the report. The assurance may cover different aspects of sustainability disclosures, such as:

  • data and its associated data collection process;
  • narratives;
  • compliance with the specified sustainability reporting framework;
  • process to identify sustainability information reported; and
  • compliance with the Listing Rules.

Issuance

Companies should issue their sustainability report once a year. If the sustainability report is contained within the annual report, they should together observe annual report deadlines. If the company issues standalone sustainability report, it should be issued within 4 months of the end of the financial year, or within 5 months of the end of the financial year if external assurance has been conducted.

In either case, the sustainability report should be made available on both SGXNet and the company’s website.

What GreenCo can do for you

Materiality Assessment

We can assist the company in conducting a materiality analysis to determine the most relevant ESG issues for the organisation and stakeholders. Our scientific approach ensures that the material ESG factors identified are objective and useful to the organisation’s long-term sustainability and understand stakeholders’ expectations. We can provide guidance on effective stakeholder engagement practices and incorporate stakeholder feedback and perspectives into the ESG report.

Climate-Related Disclosures

Our expertise and experience in different industries enable us to provide professional support in climate-related disclosures that align with the TCFD recommendations. We are equipped with knowledge of carbon emissions calculation, emissions inventory building (such as Scope 3 GHG emissions) as well as qualitative and quantitative scenario analysis.

Practices and Targets Setting

We provide services to facilitate the company in establishing corporate sustainability policies as well as setting short- and long-term qualitative and quantitative targets that align with the organisation’s values, stakeholder expectations, and performance incentives.

Assurance

While it is noted that there are a lack of globally recognised standards and framework for sustainability reports assurance, we are competent in supporting the company throughout the reporting processes from data collection to report compiling, so as to ensure each step is traceable and ready for external assurance. We can help develop data collection processes, ensure data accuracy and reliability, and verify the accuracy of the reported information. Meanwhile, GreenCo is in partnership with Practising Certified Public Accountant, who can provide assurance service in accordance with ISAE 3000.

Why GreenCo

Considering the level of complication and resources needed to comply with the enhanced sustainability reporting guide from SGX, it is crucial for the companies to fully understand and prepare the sustainability report, particularly those from the most affected industries. As a professional ESG advisory firm, GreenCo has rich experience in assisting different companies in preparing their ESG reports, and has the competent to provide aforementioned services.

We can also support companies in establishing a framework for continuous improvement of ESG practices and reporting, including developing monitoring mechanisms, tracking progress toward goals, and proposing strategies to enhance future ESG reporting.

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