Investors Seek Sustainable Companies

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Home > Articles > Investors Seek Sustainable Companies

 Investors Seek Sustainable Companies

Tan Chee Teik | Today's Manager
September 2, 2019

​The annual reporting of non-financial information will enhance the visibility of listed companies among potential investors who seek sustainable investment and want to review a firm’s environmental, social, and governance efforts. More companies are proud to announce what they are doing to promote sustainability.

The Singapore Exchange (SGX) supports listed companies’ efforts to meet the growing interest in sustainability from shareholders and potential investors worldwide. The annual reporting of non-financial information will enhance the visibility of listed companies among investors who seek sustainable investment and want to review a firm’s environmental, social, and governance (ESG) efforts.

Some key features of the SGX sustainability reporting requirements are:

•   Companies have to publish a sustainability report at least once a year, no later than five months after the end of each financial year.
•     Report should describe the sustainability practices with reference to material ESG factors; policies, practices, and performance targets; sustainability reporting framework; and the board statement.
•     Targets: Determine and include targets for the forthcoming year in relation to each material ESG factor identified.
•    Sustainability report will be based on the principles set out in the SGX Guide which include, among others, providing an accurate and balanced view of the risks and opportunities in a concise manner.

PricewaterhouseCoopers (PwC), a professional services company, recommends these steps for sustainability reporting:

  1. Prepare a roadmap for sustainability reporting.
  2. Perform a materiality assessment to identify issues and risks that matter to your business.
  3. Develop a stakeholder engagement policy.
  4. Conduct a value chain analysis to determine the impact points of your material issues.
  5. Perform a gap analysis between your current set of data and initiatives and requirements of global guidelines.
  6. Train your operational teams on the data collection process.
  7. Draft your sustainability report in accordance with international reporting frameworks such as Global Reporting Initiative (GRI).
  8. Develop your long-term sustainability strategy and key performance indicators.

We look at portions of the sustainability reporting of Starhill Global Reit (SGREIT) published in its Annual Report 2017/2018.

For SGREIT’s properties in Singapore, they have a 10-year target to reduce energy consumption by 15 per cent. Efforts to meet this goal have been ongoing, in terms of switching to more efficient light emitting diode (LED) lighting and adopting more energy efficient practices at work. Based on the progress so far, they are hopeful of meeting their 10-year goal.

On top of regular business dealings, the management team believes in sharing the group’s spaces with the local community. They welcome social entrepreneurs and non-profit organisations seeking to hold meaningful events and awareness campaigns in their malls to educate the public. They wish to play a part in shaping the communities that the company operates in, making a lasting social impact across the region.

SGREIT will focus on its sustainability framework in these four areas:

Embracing the Marketplace:

  • Corporate Governance,
  • Anti-corruption and Whistle-blowing,
  • Risk Management,
  • Customer Health and Safety,
  • Personal Data Security,
  • Tenant Satisfaction,
  • Unitholder Communications, and
  • Supply Chain.

On anti-corruption and whistle-blowing, the company states: “The Manager enforces a culture which has zero-tolerance towards corruption. An anti-corruption policy is in place to provide detailed guidance on corrupt practices. To ensure all employees are clear about the acceptable standards and procedures in business dealings, annual compliance training is held for all employees.

A whistleblowing policy is also in place as a safe channel for employees and other persons to report potential or actual improprieties in financial and operational matters. Complaints can be made verbally or in writing to whistleblowing@ytlstarhill.com.

Whistle-blowers’ identities are kept in confidence to the extent possible to facilitate independent investigations for appropriate remedial and follow-up actions.”

Environmental Conservation:

  • Sustainable Certification of their Properties,
  • Energy Efficiency,
  • Water Conservation, and
  • Waste Management.

The company participates in the Earth Hour programme. The external lights of their properties at Wisma Atria, Lot 10, and Starhill Gallery were switched off for an hour. The latter two malls are in Kuala Lumpur.

Empowering the Staff:

  • Fair Employment,
  • Workplace Health and Safety,
  • Employee Well-being and Active Engagement, and
  • Talent Management.

On talent management, the company states: “We believe in encouraging holistic development of our employees and grooming them to their fullest potential, personally and professionally. Hence, we are committed to learning and development programmes to drive productivity and develop the personal effectiveness of our employees.”

Enriching Communities:
The company strives to positively impact the lives of people in the countries where it operates, through participation in corporate social responsibility activities.

There are other examples of listed companies with well written and well-thought-out sustainability reporting. However, because of space constraints, we are unable to include their examples.

Competing for the Sustainable Business Award
The Sustainable Business Award (SBA) is an awards platform that provides recognition to companies for their sustainability initiatives. It focusses on the strategy and implementation of sustainability policies and initiatives. Companies are required to complete an online questionnaire across 12 categories and provide evidence for their initiatives. The categories that Global Initiatives provide awards for are: Strategy and Sustainability Management; Workforce; Community; Energy Management; Water Management; Waste and Material Productivity; Climate Change; Supply Chain Management; Land Use and Biodiversity; Business Responsibility and Ethics; Stakeholder Engagement and Materiality; and United Nations Sustainable Development Goals.

Past Singapore winners of the SBA awards are City Developments Ltd, Keppel Land Ltd, and Unilever Singapore, among others.

According to the Sustainability Reporting in Singapore 2018 study by the National University of Singapore Business School’s Centre for Governance, Institutions and Organisations, and Asean Corporate Responsibility Network, Capitaland, City Developments Ltd, Singapore Telecommunications Ltd, Olam International, and DBS Group Holdings are the top five SGX listed companies that adopt the best practices in sustainability communication.

The study revealed a 76 per cent rise in the number of listed companies communicating sustainability. In 2018, 327 out of a total of 678, or 48.3 per cent, of SGX mainboard and Catalist-listed companies, communicated their sustainability practices. This is an increase from 37.1 per cent in 2016 and 31.3 per cent in 2014.

The survey says SGX’s 2016 ruling for all listed companies to prepare an annual sustainability report under listing rule 711A on a “comply or explain” basis had driven up the number of companies reporting sustainability.

IMAGE: 123RF

Mr Tan Chee Teik is a freelance journalist. He is a regular contributor to M360 and Today’s Manager.

 

Copyright © 2019 Singapore Institute of Management

Article Found In

Today's Manager Issue 3, 2019

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