Singapore Exchange (SGX) Sustainability Reporting Guide

Description of Characteristics:

• Stock Exchange Listing Requirement: The SGX Sustainability Reporting Guide outlines the mandatory sustainability reporting requirements for listed companies on the Singapore Exchange (SGX).
• Comply-or-Explain Approach: The guide is principle-based and adopts a “comply-or-explain” approach, allowing companies flexibility in their reporting while requiring them to explain any deviations from the recommendations.
• Focus on Materiality: Companies are required to identify and report on material ESG factors that are relevant to their business and stakeholders.
• Alignment with TCFD: The guide emphasizes the importance of climate-related disclosures in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).   1. ps.boell.org ps.boell.org
• Progressive Disclosure: SGX is progressively enhancing its sustainability reporting requirements, with recent updates incorporating ISSB standards and mandatory climate-related disclosures.
• Investor and Stakeholder Relevance: The Guide aims to provide investors and other stakeholders with the information they need to make informed decisions about a company’s sustainability performance and its management of ESG risks and opportunities.

Targeted Audience:

• Listed Companies on the Singapore Exchange: The SGX Sustainability Reporting Guide is mandatory for all listed companies on the SGX.
• Investors and Stakeholders: The guide aims to provide investors and other stakeholders with the information they need to make informed decisions about the sustainability performance of listed companies.

Specific Criteria:

• Primary Components: The sustainability report must include the following:
  • Material ESG factors: Identification and explanation of material ESG factors.
  • Climate-related disclosures: Disclosures on climate-related issues consistent with the TCFD recommendations.
  • Policies, practices, and performance: Information on the company’s sustainability policies, management approach, and performance against targets.
  • Targets: Disclosure of sustainability targets and progress towards achieving them.
  • Sustainability reporting framework: Identification of the sustainability reporting framework used (if any).
  • Board statement: A statement from the board on the company’s sustainability practices and oversight.

Reporting Principles:

• Materiality: Companies should focus their reporting on material ESG factors that are relevant to their business and stakeholders.
• Relevance: Disclosures should be relevant and provide meaningful information to stakeholders.
• Quantitative and Qualitative: Disclosures should include both quantitative and qualitative information, providing a balanced view of the company’s sustainability performance.
• Completeness: Disclosures should be sufficiently complete to provide a clear understanding of the company’s sustainability performance.
• Consistency: Disclosures should be consistent over time to enable stakeholders to track the company’s progress.
• Comparability: While not strictly mandated, companies are encouraged to use consistent metrics and methodologies to facilitate comparison with industry peers.
• Balance: Reports should present both positive and negative aspects of the company’s sustainability performance.
• Clarity: Disclosures should be clear, concise, and understandable.
• Reliability: Information in the report should be accurate, reliable, and verifiable.
• Timeliness: Companies are required to publish their sustainability reports within five months of their financial year-end.

Reporting Process:

1. Identify Material ESG Factors: Conduct a materiality assessment to identify and prioritize the most relevant ESG factors.
2. Collect and Analyze Data: Gather and analyze data related to the identified material ESG factors.
3. Prepare Sustainability Report: Prepare the sustainability report in accordance with the SGX guide, addressing the primary components and reporting principles.
4. Obtain External Assurance (Optional): Although not mandatory, external assurance can enhance the credibility of the sustainability report.
5. Publish and Communicate: Publish the sustainability report on the company’s website and submit it to the SGX.

Connections to Other Frameworks:

• Alignment with TCFD: The SGX guide explicitly requires companies to include climate-related disclosures consistent with the TCFD recommendations.
• Flexibility in Framework Choice: While the SGX encourages the use of established frameworks like GRI, companies have the flexibility to choose the framework that best suits their needs, as long as they explain their approach.

Challenges:

• Comply-or-Explain Approach: The flexibility of the comply-or-explain approach can lead to inconsistencies in reporting across companies.
• Materiality Assessment: Conducting a robust materiality assessment can be complex and requires effective stakeholder engagement.
• Data Availability and Quality: Gathering reliable and comparable ESG data can be a challenge, particularly for smaller companies.

Compliance Guidance:

• SGX Sustainability Reporting Guide: Provides detailed guidance on the reporting requirements and recommendations.
• SGX Sustainability Knowledge Hub: Offers additional resources, including case studies, webinars, and FAQs.

Usability Evaluation:

• Level of Adoption: Mandatory for listed companies on the Singapore Exchange.
• Ease of Use: Relatively easy to use due to its principle-based and comply-or-explain approach.
• Focus Areas: Covers a broad range of ESG topics, with an emphasis on materiality and climate-related disclosures.
• Data Availability: Data availability may vary depending on the company’s industry and its existing ESG data management practices.

SyncFrame Compatibility:

• Alignment: SyncFrame’s focus on impact measurement, materiality, and stakeholder engagement aligns well with the SGX guide.
• Data Integration: SyncFrame can facilitate data collection and analysis for SGX sustainability reporting.
• TCFD Alignment: SyncFrame’s support for TCFD-aligned reporting ensures compliance with the SGX guide’s climate-related disclosure requirements.
• Expert Guidance: SyncFrame advisors can provide valuable support on conducting materiality assessments and preparing SGX-compliant sustainability reports.

Reference Links/Resources:

• SGX Sustainability Reporting: https://www.sgx.com/sustainable-finance/sustainability-reporting
• SGX Sustainability Knowledge Hub: https://www.sgx.com/sustainable-finance/sustainability-knowledge-hub

SyncFrame’s flexibility and alignment with the SGX guide make it a valuable tool for listed companies in Singapore seeking to comply with reporting requirements and demonstrate their commitment to sustainability.

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