If you are looking for the sustainability reporting requirements to prepare and submit a sustainability report then you are reading the correct article. Here in this article you will get to know about what are sustainability repoting requirements and some tips for sustainability report writing.
All listed companies on the Singapore Stock Exchange (SGX) are required to prepare and submit a Sustainability Report on a ‘comply or explain’ basis. This means that the companies who fail to present a complete sustainability report to the public and various stakeholders must explain why it cannot incorporate sustainable business practices.
As per the rules and guidelines, the companies must prepare the sustainability report so that the industry and stakeholders easily understand it. While many large companies have been voluntarily following sustainability reporting in Singapore, others must follow suit now.
In a sustainability report, the company considers the ESG factors and makes everything transparent in front of the stakeholders. It is an excellent way of building a reputation in the industry and gaining the trust of stakeholders.
Requirements of Sustainability Reporting in Singapore
The sustainability report must contain 5 primary components:
1. Material ESG Factors
Environmental, social, and governance factors must be considered while preparing the report. The impact on the business model, strategy, and stakeholders must be identified. The interaction of the business activities on the environment and community must be stated in the report.
The company is supposed to disclose the internal operational activities, supply chain management details, and outsourced service concerning these ESG factors. This reporting is beneficial in identifying the potential risks and challenges that a company may face.
The report must convey the following information as it affects the decision of investors:
- How these factors are valuable for the company?
- What are the activities that impact the physical environment and social community?
- What is being done to reduce harm to the environment?
2. Policies, Practices, and Performance
After all the ESG factors are identified, it is important to explain the company’s policies and performance in a descriptive and quantitative way. The policies and practices followed by the business build trust among the internal and external stakeholders. If the performance during the reporting period is good, it positively influences investor’s decisions.
Companies must disclose their targets for the forthcoming years. It can be short term, long term, qualitative or quantitative. The performance of the company can be measured according to the set targets.
The company must choose a framework for reporting according to the business model or industry. To expand the business globally, it is advisable to select a reporting framework that is accepted globally. The issuer of the report must be careful while preparing the report in case some other reporting framework is selected.
When the company follows a particular framework for years, it gets immense knowledge and understanding about that reporting framework. It becomes easy for the company to communicate the information to the stakeholders. Though with changing times, the relevancy of the frameworks must be examined.
5. Board Statement
The statement from the board must be included in the report. The perspective of the board on strategy formulation considering the sustainability issues must be clear through the statement.
On 2 May 2012, the Code of Corporate Governance issued that the board has the collective responsibility for the long term success of a company (issuer). The board provides direction to the business strategies. The board must see that everything is managed and monitored by the management as per their vision and mission.
The interaction between the board and management is a deciding factor for the success of the company.
Ultimately, the board is responsible for sustainability reporting and must be answerable to any questions raised regarding the issuer.
Must Read: What is Sustainability Management?
Tips for Sustainability Report Writing in Singapore
If you are writing the sustainability report for the first time, then just remember it should be simple. Once you gain expertise, you can move to a comprehensive level. Always remember that the perception of the investors and customers is based on this reporting. While preparing the sustainability report, you can follow these steps:
1. Do Some Preparation
Firstly, determine your purpose of reporting. You must be clear about the content and the message that has to be conveyed.
2. Connect With Stakeholders
You must understand the needs of both external and internal stakeholders. The involvement of internal stakeholders makes your reporting more accurate.
3. Identify The Issues
Topics related to the material issues must be included on priority in the sustainability report. When these issues are openly discussed and analyzed, the company can do proper planning that leads to long-term success.
4. Collect The Data
Start collecting the data related to the key performance indicators. You can collect relevant data from the concerned departments.
5. Start Writing And Designing
Now, it’s time to develop a report that is capable enough of conveying the message clearly to all the stakeholders. It must have some graphics, images, and other visuals that make the report more engaging.
6. Share The Report
The report must be shared with all on different platforms such as the website of the company, social media channels, newsletters, and so on. Feedback from the stakeholders can be very helpful in improvement, so do keep track of that.
Sustainability reporting is important for companies to plan their business strategies and investors to make their investment decisions. Sustainable report writing plays an essential role in conveying key messages to the stakeholders. The above given are some requirements that must are important to make the sustainability reporting system in Singapore more trustworthy and transparent.
The primary components are mentioned in Listing Rule 711B and in paragraph 4.1 of the ‘comply or explain’ based guide. If the issuer is not able to comply with these requirements, then the issuer must state the reason for not doing so.
Looking at the importance of this report, it has become must make this report in order to have a better assessment of financial prospects and management quality of the issuer.
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