Sustainability and Corporate Social Responsibility (CSR) are intended to be voluntary, which goes beyond regulatory requirements. Many voluntary reporting initiatives have thus been created over time to improve the performance of organisations worldwide. Also, many national reporting provisions have been developed in recent years.
The purpose of this article is to answer the following questions:
- What is non-financial reporting?
- What are the benefits of sustainability reporting?
- What are the main international voluntary sustainability reporting frameworks?
- What are the sustainability reporting provisions in Singapore?
Non-financial Reporting
Non-financial reporting can refer to sustainability reporting, corporate social responsibility (CSR) reporting, extra-financial reporting, triple bottom line (TBL) reporting, Environment, Social, Governance (ESG) information and more. In Singapore and Asia globally, we generally talk about “sustainability reporting”. Regardless of the term used, non-financial reporting refers to measuring, analysing, and communicating to stakeholders the social, environmental, economic and governance aspects of business activity.
Non-financial reporting still lacks regulation and harmonisation compared to financial reporting. Nevertheless, there are several international recognised reporting frameworks and more and more countries have implemented sustainability reporting provisions, including Singapore.
Benefits of sustainability reporting
Sustainability reporting is a worldwide practice allowing organisations to identify and manage ESG risks and opportunities, assess and improve their ESG performance and win the trust of both internal and external stakeholders. It is a process that requires strong internal mobilisation and enhanced dialogue with external stakeholders.
Here are the main internal and external benefits for a company or organisation according to the Global Reporting Initiative (GRI):
Table 1 - Benefits of sustainability reporting. Source: global reporting
If you are an SME and interested in publishing your first sustainability report, please visit GRI and International Organisation of Employers’ (IOE) report from page 8 onwards Small Business Big Impact – SME Sustainability Reporting from Vision to Action.
You can search this multi-criteria database to find sustainability reports per the GRI Standards.
International voluntary sustainability reporting frameworks
Sustainability reporting frameworks are standards or guiding principles that are used by companies voluntarily to prepare their sustainability report. However, it is frequent that local regulations recommend or require these frameworks.
The best-known and globally recognised sustainability reporting frameworks are the GRI Standards, IIRC's Integrated Reporting Framework and Sustainability Accounting Standards Board (SASB) Standards.
In June 2021, IIRC and SASB announced their merger to form the Value Reporting Foundation. The nonprofit organization provides a comprehensive suite of tools to assess, manage and communicate value, through the Integrated Thinking Principles, the Integrated Reporting Framework and the SASB Standards.
Table 2 - Comparison between GRI Standards, Integrated Reporting Framework and SASB Standards Sources:
information from of GRI, IIRC and SASB websites and greenbiz.com
GRI Standards
The Global Reporting Initiative (GRI) is an independent international organisation that helps businesses and governments understand and communicate their impact on sustainability issues.
Created in 1997, GRI released in 2000 the first guidelines for writing a Sustainability Report, integrating environmental, social, economic and governance issues. In the following years, these were followed by the second generation (G2) of the guidelines, third-generation (G3) and fourth generation (G4). Finally, in 2016, the GRI G4 guidelines evolved into a modular series of GRI Standards, the first global standards for sustainability reporting.
Overview of the set of GRI Standards:
The use of GRI Standards is communicated in sustainability reports as:
The GRI Standards are currently under review. The new version is expected to be released in 2H 2021.
International <IR> (Integrated reporting) Framework
The International Integrated Reporting Council (IIRC) is a global coalition of regulators, investors, companies, standard setters, the accounting profession, academia and NGOs. The IIRC published in 2013 the International <IR> (Integrated reporting) Framework.
The <IR> Framework gives guidelines to state concisely how an organisation’s strategy, governance, performance and outlook result in short, medium and long term value creation given its environment.
The value creation over time is shown using a combination of quantitative and qualitative information, through six capitals: financial, manufactured, intellectual, human, social and relationship and natural. These capitals are stocks of value that are affected or transformed by the activities and outputs of an organisation. The business model of an organisation is based on various capital inputs and shows how its activities transform them into outcomes (Figure below).
Sustainability Accounting Standards Board (SASB)
The Sustainability Accounting Standards Board (SASB) is a non-profit organisation founded in 2011. Its first developed standards were intended for use in corporate reporting in the United States. In 2018, SASB launched a complete set of 77 industry-specific reporting standards that can be used by companies over the world.
The SASB standards are tailored to industry sectors, based on the relevance, comparability, and usefulness of the information to investors. These standards are explained graphically through their Materiality Map, which identifies financially material sustainability issues within an industry.
Other frameworks
We can also note the following frameworks:
There are also topic-specific frameworks, especially regarding climate change: Climate Disclosure Standards Board (CDSB), Carbon Disclosure Project (CDP), or Task-Force on Climate-related Financial Disclosures (TCFD).
Towards comprehensive corporate reporting
Given the multitude of guidelines and frameworks, sustainability reporting can be overwhelming for companies.
Good news: in 2020, GRI, IIRC, SASB, CDP and CDSB shared their vision of what is needed to progress towards comprehensive corporate reporting and announced their intent to work together to achieve it. Later, IIRC and SASB announced their merger into Value Reporting Foundation. These are major advancements towards simplifying the corporate reporting landscape.
For more information see the press release and the joint statement.
Sustainability reporting in Singapore
Over the last 15-20 years, sustainability reporting provisions have been rapidly increased for Singapore-based companies. These provisions refer to ESG - Environmental, Social and Governance information, and most of the reporting requirements focus on environmental topics such as water, waste, environmental protection, and pollution.
The main actors in these reporting provisions are the Singapore Exchange, the National Environment Agency (NEA) and the PUB, Singapore National Water. More info here
Singapore Exchange listing rules on Sustainability Reporting
Listing Rule 711A requires every listed issuer to prepare an annual sustainability report (since financial years ending on, or after 31 December 2017).
In Singapore, listed companies must publish a sustainability report annually.
The sustainability report must describe sustainability practices concerning five primary components set out in Listing Rule 711B on a 'comply or explain' basis:
For more guidance : SGX’s Sustainability Reporting Guide.
For information regarding sustainability reporting practices among Singapore-listed companies : “Sustainability Reporting: Progress and Challenges”.
