In Singapore, 84% of the largest companies are reporting on corporate responsibility (CR), faring better than the global average of 72%. This is according to the KPMG Corporate Responsibility Reporting survey, which studied annual financial reports and CR reports from the largest 100 companies, by revenue, across 49 countries.
Said Ian Hong, Head of Sustainability Advisory & Assurance at KPMG in Singapore, “Singapore’s high percentage could be attributed to the high standards set under its Code of Corporate Governance that elaborate the Board’s role to include a consideration of sustainability issues such as environmental and social factors, as part of its strategic formulation.” As sustainability reporting (SR) has also been mandated by the Singapore Exchange on a “comply or explain” basis for the financial year ending on or after 31 December 2017, more companies will be reporting on CR.
Climate change not adequately recognised as a financial risk
A surprising find from the survey is that 75% of the top 100 companies in Singapore do not address the financial risks stemming from climate change in their annual financial reports. On top of this, only 17% of Singapore companies have set carbon reduction targets, faring lower than the global rate at 50%. These statistics support the need for initiatives such as the Financial Stability Board Task Force on Climate-related Financial Disclosures1.
Said Mr Hong, “Going forward, disclosures surrounding climate risk will expand further due to the increasing expectations of securities regulators, the investor community and other stakeholders. We encourage companies to start with a full assessment of where climate-related risk lies within the organisation, and assess the current state of their processes and data quality for identifying and reporting on such risks.”
The survey also explored further trends in CR reporting, including reporting on the United Nation (UN)’s Sustainable Development Goals (SDGs), a set of 17 global goals to end poverty, protect the planet, and promote prosperity for all.
Other key findings include:
- Reporting on the UN SDGs has been gathering steam
Some 39% of the company reports studied in KPMG’s survey connect companies’ CR activities to the SDGs. However, the proportion of such companies in Singapore remains low at 15%.
- Integrated reporting is growing slowly but steadily
Some 14% of the reports studied globally in the survey use the classification “integrated” reporting. Only four companies in Singapore produced an “integrated” report.
- The number of companies investing in third-party assurance of their CR reports has grown steadily since 2005
It is now accepted standard practice among the world’s 250 largest companies (G250), with 67% of the company reports seeking assurance. However, only nine companies in Singapore sought assurance on this information.
“A majority of Singapore’s largest 100 companies has been reporting on their sustainability initiatives. However, only a few are strategically utilising them to communicate with their stakeholders, especially investors,” said Mr Hong. “CR should be used as a tool to present an organisation’s true value that goes beyond its financial performance. Boards can also benefit from recognising the risks and opportunities emerging from climate change and sustainability, and integrating them within their company’s overall corporate strategy.”
1 The Task Force on Climate-Related Financial Disclosures was set up by the G20’s Financial Stability Board to provide a framework to improve the ability to assess and price climate-related risk and opportunities.