Materiality and

sustainability
disclosure
Key insights from the Singapore
Exchange top 50

Our research

Definitions

EY recently examined the sustainability disclosures of the

Singapore Exchange (SGX) top 50 listed companies (by market
capitalization). Specifically, we looked at:

EYs approach to determining material sustainability aspects is

based on guidance provided by the Global Reporting Initiative
(GRI) G4 Sustainability Reporting Guidelines and AA 1000
AccountAbility Principles Standard. We align with the GRI
definition of materiality in that materiality is the threshold at
which aspects become sufficiently important that they should
be reported1.

Whether or not they released a sustainability report

What frameworks they used to report
Whether they referenced a process to assess their material
sustainability aspects and provided details of this process
If they reported on sustainability aspects material
to their business
If they identified their stakeholders and involved them in the
materiality assessment
If they referenced specific improvement goals
Their level of preparedness to comply with comply or
explain reporting by FY17
The research took the form of a desktop analysis in which
we examined publicly available annual reports, sustainability
reports and company websites. The companies included in this
research were those forming the SGX top 50 as of 20 August
2015. This information was reviewed as of 29 September 2015.
From the results, we outlined five key insights. These insights
are supported by quantitative and qualitative data extracted
from the analysis as well as from our experience in assisting
companies to understand and report their material
sustainability aspects.

While financial reporting refers to material information as

that which could influence the economic decisions of users
of the financial statements, materiality from a sustainability
perspective takes into consideration a much broader
stakeholder perspective and examines the aspects from both an
internal and external lens. It assesses the potential impact of an
aspect on the business, and also considers the importance of
the aspect to stakeholders.
This report includes an examination of whether companies in
the SGX top 50 are undertaking an assessment of their material
sustainability aspects. We have chosen the word aspect rather
than issue, based on the definition in the GRI (G4) reporting
guidelines, which states that material aspects are those that
reflect the organizations significant economic, environmental
and social impacts; or that substantively influence the
assessments and decisions of stakeholders2. The use of
the word aspect also enables consideration of both risks
and opportunities.
The only section in which we have specifically referenced
risk rather than aspect, is in relation to the SGXs Guide to
Sustainability Reporting for Listed Companies, which refers to
the mitigation of risks.

The Global Reporting Initiative, Implementation Manual, 2014

As per above

Contents
Executive summary

Introduction 4
Insight 1 There is significant room for improvement
in the quality of sustainability reporting

Insight 2 Materiality is clearly gaining traction

among reporters

Insight 3 Materiality assessments are guided

by the GRI

Insight 4 Stakeholders are engaged in the

materiality assessment process

11

Insight 5 Methods of reporting and

communication are changing

12

Conclusion and recommendations

14

Appendix 1 Materiality definitions

15

Appendix 2 Key material aspects by sector

16

Lets continue the conversation Contacts

17

Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |

Executive summary
Contacts

Recent announcements regarding both regulatory and voluntary reporting frameworks

have put a new focus on sustainability disclosures with an emphasis now firmly on
materiality.

EY sought to understand how these

changes were impacting Singaporelisted companies. We undertook a
desktop analysis of the SGX top 50
(as of 20 August 2015), looking at
whether these companies are assessing
their own materiality aspects, how
they are undertaking that assessment,
and whether a materiality assessment
resulted in more focused disclosures.
In the course of our research we also
looked at the broader sustainability
disclosure, the platforms that are used
for reporting, and whether companies
were ready for a comply or explain
requirement, which is expected to
be effective as of 1 July 2017, as
reiterated at the 2015 International
CSR Summit held by Global Compact
Network Singapore.

Sector performance
The table on page three highlights sector
performance according to the different
criteria we assessed.
For those sectors in the SGX top 50
consisting of more than five companies,
transport and storage and property were
the most likely to undertake materiality
assessments and communicate their
sustainability disclosures, while
manufacturing, commerce and services
were the least likely.

Five key insights

Based on our research, we have identified
five key insights around the uptake and
maturity of materiality assessments
and sustainability disclosure in the SGX
top 50. While the focus of our research
was to understand how companies are
assessing their material sustainability
aspects, we also looked more broadly
at what they are reporting and the
platforms that are being used for
reporting. As a result, our key insights
are not limited to materiality but include
broader discussion around sustainability
disclosure. In the following pages we
examine in detail each of these insights.

| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50

Insight 1: There is significant

room for improvement in
the quality of sustainability
reporting
Insight 2: Materiality is clearly
gaining traction among
reporters
Insight 3: Materiality
assessments are guided
by the GRI
Insight 4: Stakeholders are
engaged in the materiality
assessment process
Insight 5: Methods of
reporting and communication
are changing

Performance at a glance
Number of
companies
in the
sector

Sector

Finance

Transport and storage

Multi-industry

12

Details of process
in assessing
materiality

Public reporting of
material aspects

Identification on
boundaries of
material issues

Engagement with
stakeholders

Property

Manufacturing

Agriculture

Commerce

Electricity, gas and water

Food products

Services

80% or more companies in the sector meet the assessment criteria

50% to 79% companies in the sector meet the assessment criteria
none to 49% companies in the sector meet the assessment criteria

It should be noted that the agriculture, electricity/gas/water and food products sectors contain only one company, and may therefore
not be reflective of these sectors performance as a whole.

Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |

Introduction
Historically, organizations have used the financial bottom line to benchmark success
and determine materiality thresholds, with social and environmental aspects either
overlooked or not measured.

Increasingly, challenges resulting

from macro geopolitical, social and
environmental events such as supply
chain impacts, economic instability,
climate change, natural resource
depletion and the pressures of a
growing population, have encouraged
stakeholders from investors to NGOs to
become more interested in understanding
how organizations are managing
these aspects.
While some companies have responded
to these trends and demands for
information by disclosing a myriad of
environmental, social and governance
aspects, others have done little
or nothing. As a result, external
stakeholders, such as investors,
regulators and NGOs, are pushing
organizations with limited or no reporting
structures to disclose their material
sustainability aspects the aspects of
most importance to companies and to
their stakeholders.
The focus on materiality also signals
a clear change from sustainability
reporting of the past where companies,
aiming to report on the triple bottom
line of social, environmental and
economic aspects, often released a mass
of information covering everything from
paper recycling to human rights. Indeed,
there was little regard to the relative
importance of these disclosures to their
business performance, or to the relative
importance of each aspect to
their stakeholders.

Despite reporters investing significant

time and effort in preparing increasingly
larger reports, investors and other key
stakeholders were left frustrated by
the need to sift through volumes of
information to find the aspects of most
importance to them. Their dissatisfaction
is highlighted in EYs 2015 Global
Investor Survey, which found that
investors face a severe deficit of useful
non-financial information3.

SGXs move to
comply or
explain basis

Singapore
Exchange
Sustainability
Reporting Guide

EY, Tomorrows investment rules 2.0: Emerging risk and stranded assets have investors
looking for more from nonfinancial reports, 2015.

| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50

Sustainability
Accounting
Standards Board

Converging
developments

International
regulatory
trends

With stakeholders driving the push for

more targeted and relevant non-financial
disclosures, regulators and voluntary
reporting organizations have responded
accordingly by focusing on the principle of
materiality, an underlying foundation for
sustainability disclosure. These converging
developments are detailed below.

International
Integrated
Reporting Council

Global
Reporting
Initiative

Converging developments
SGX Sustainability Reporting Guidelines

Move to comply or explain basis

International Integrated Reporting Council

The SGXreleased their Guide to

Sustainability Reporting for Listed
Companies in 2011 (the Guide) to increase
transparency in reporting on sustainability
issues. While reporting is not mandatory,
the Guide provides the suggestion that
all companies should disclose their
sustainability performance, and provides
basic actions regarding how to report and
what to report on.

At the 2014 International Singapore

Compact CSR Summit, the SGX CEO
announced that the exchange would be
transitioning to sustainability reporting on
a comply or explain basis, with a view to
target implementation by FY17.

The International Integrated Reporting

Council (IIRC) was established in 2010 and
released the International <IR> Framework in
December 2013. Adoption of the framework
is gathering momentum with materiality
underpinning its vision to report on the
factors critical to value creation across six
capitals financial, manufactured,
intellectual, human, social and relationship,
and natural.

International regulatory trends

Global Reporting Initiative and

AccountAbility AA1000

Sustainability Accounting Standards Board

The Guide and the move to a comply or

explain basis are reflective of an
international trend towards non-financial
sustainability disclosure. Research released
in 2013 by the Global Reporting Initiative
(GRI) reviewed reporting requirements
from 45 countries and found 180 policies
specific to sustainability disclosures, of
which 72% were mandatory4. In September
2014, the EU published its requirements
for non-financial disclosures with a focus
on environment, social and employeerelated aspects.

The GRI is the most commonly used

international framework for sustainability
reporting. The latest iteration of its guidelines,
GRI G4, was released in 2013 with materiality
as a fundamental guiding principle.

The Sustainability Accounting Standards

Board (SASB) was established at Harvard
University in 2011 and is aimed at developing
sustainability accounting standards that
include analysis of material aspects for a
range of industries.

The SGX has already begun a one-year

consultation exercise to aid with the
development of a new listing rule and to
review the existing Guide. The SGX
anticipates they will submit the proposed
Listing Rule and reviewed Guide for
regulatory approval by the end of 2015.

AccountAbility produces widely-used

standards and leading research on
sustainability. Their AA1000 Assurance
Standard is used globally, and is
complemented by their Guidance Note on
the Principles of Materiality, Completeness
and Responsiveness.

While each of these regulatory or non-regulatory frameworks have their own specific explanation of materiality (as detailed in
Appendix 1), there is a high degree of consistency in their definitions.
With the focus now on material sustainability disclosure, EY sought to understand how Singapore companies were responding and
the impact this was having on sustainability reporting. We set out to examine the sustainability reporting habits of the SGX top
50 and how they were factoring materiality into their disclosures. In undertaking this research, we identified five key insights with
regard to materiality and sustainability disclosure among the SGX top 50.

Global Reporting Initiative, Carrots and Sticks, 2013 (accessed via https://www.globalreporting.
org//resourcelibrary/Carrots-and-Sticks.pdf)

Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |

There is significant room for improvement

in the quality of sustainability reporting

While 80% of the SGX top 50 make some mention of sustainability either in annual
reports or on their company websites, only 60% of the SGX top 50 report on their
sustainability performance.

Ten companies in the SGX top 50 make

no mention of sustainability at all, while a
further 10 refer broadly to sustainability
either on the company website or briefly
in their annual report. The remaining 30
companies in the SGX top 50 actually
report their sustainability performance,
however the depth of reporting varies
enormously, with some companies
providing robust and detailed disclosures
on their performance while others offer
limited information.

There are also disparate levels of

reporting among companies issuing
disclosures. Of the 30 companies
reporting on their sustainability, 47%
produced unbalanced reports, in
that they presented a one-sided view
of their sustainability performance,
failing to mention challenges, negative
performance, missed goals and areas
for improvement, and rather focussing
solely on positive progress and Corporate
Social Responsibility (CSR) programs.
A further 43 percent produce reports
that were fairly balanced, with many
companies disclosing sustainability data
(such as greenhouse gas emissions),
and commenting on areas where
performance targets had not been met.
Just 10% of the reports among the SGX
top 50 companies could be considered
truly balanced in terms of what they
disclosed. These reporters disclosed:
A wide range of performance data
Whether specific targets had been met
or not
Negative impacts of the companys
operations and how these impacts were
being managed

For example, one company disclosed a

full list of endangered species potentially
impacted by their operations, and the
steps they were taking to protect them.
With the SGXs announcement of a
transition to a comply or explain
model by FY 2017, we expect to see an
increasing number of listed companies
reporting in the next few years.
Of the 30 companies that report, the
majority (19) produced stand-alone
sustainability reports, while the others
reported their performance in the
companys annual report.
As sustainability reporting continues
to evolve, we expect to see greater
alignment of financial and non-financial
reporting, particularly as leading
organizations integrate sustainability
concerns into their core business
strategy. Integrated reporting that links
the financial results with the business
context will continue to gain popularity as
companies respond to growing demands
for information, and link financial and
non-financial performance.

Leading example: City Developments Limited

City Developments Limited (CDL) was the first Singapore company to produce a
GRI-checked report in 2008. Since then CDL has continued to improve both its
sustainability performance, and reporting methods. Starting from 2015, CDL
has transitioned to an integrated reporting approach, guided by the International
Integrated Reporting Councils (IIRC) Integrated Reporting Framework, allowing
them to better connect their social, environmental and financial performance for a
more meaningful and all-rounded corporate reporting. This new approach aims to
present a holistic picture to investors and stakeholders on value creation over the
short, medium and long term.

| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50

Materiality is clearly gaining traction

among reporters

Eighty-three percent of reporting companies reported on the sustainability aspects

identified as material to their organization. However, only 63% of these companies
provide evidence of the actual process to identify these issues.

There are some sectors that are clearly ahead with respect to
implementing a materiality approach.
Services, multi-industry and commerce lead the way with over
75% of companies in these sectors undertaking materiality
assessments, albeit a small number of these companies are
included in the research. The agriculture and food products
Sector

sectors also performed well, although both sectors contain just

one reporting company and may therefore not be reflective of
these sectors as a whole.
The finance sector appears to be slow to take up materiality,
with one out of two companies not disclosing material issues.

Number of reporters

Reporting on material issues

Adopting a materiality assessment process

Multi-Industry

Manufacturing

Property

Services

Transport and storage

Agriculture

Food products

Finance

Commerce

30

25

19

Total

Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |

Key aspects identified

Property

Community engagement was the most

commonly reported sustainability issue
among the SGX top 50, whether or not a
materiality assessment was undertaken.
Resource use, particularly energy
and water, was also a major concern
among companies.

Security of properties

We also determined that those companies

undertaking materiality assessments
were more likely to identify and report
specific aspects beyond the standard
heading such as community, health
and safety, and governance. These
companies are more likely to report on
additional specific topics under these
general headings.

Corruption and bribery

Community development and
social integration

Transport and storage

Reliable access to telecommunications
Responsible practices
Employee safety

Manufacturing
Fair employment practices
Procurement and sourcing
Innovation and productivity

Some sustainability aspects were

common across sectors, particularly
health, safety and environment, and
environmental impact. There were also
sector specific aspects, examples of
which are outlined here.

The key aspects by sector are included

in Appendix 2. The sectors in which
no companies undertook materiality
assessments have not been included.
With a robust assessment of material
sustainability aspects forming the basis
of sound sustainability disclosure, it
also presents opportunities for internal
audiences, from the board to site-based
working groups, to use the information to
not only report but also to drive strategy
and link to performance.
We expect materiality assessments
to become the norm as companies
appreciate the value of determining the
sustainability aspects most important to
their business and to their stakeholders.
Indeed, taking such an approach will
allow companies that have previously
done little in terms of sustainability
reporting to rapidly mature and produce
targeted, meaningful and, hopefully,
more connected disclosures.

Leading example: Singapore Telecommunications

Limited (Singtel)
2015 saw the release of Singtels Sixth Sustainability Report prepared in
accordance with GRI G4 core reporting. In keeping with the guidelines, their
report places a firm emphasis on materiality, including a detailed materiality
assessment process flowchart. The material issues are prioritized based on
discussions with internal stakeholders, direct inputs from external stakeholders,
value and supply chain analysis and lastly benchmarking research on industrial
and global best practices.

| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50

Materiality assessments are guided

by the GRI

18 of the 19 companies undertaking a materiality assessment use the GRI framework

as a foundation. Of these 18 companies, five are using GRI G3 or G3.1 for guidance
and 13 are using the GRI G4. Four of these companies are also using the AA1000
AccountAbility Principles Standard for their materiality assessment.
GRI
Since its launch in 1997, the GRI
sustainability reporting guidelines
have emerged as a leading framework
for sustainability reporting. The latest
iteration of its guidelines, GRI G4, was
released in 2013 with a focus firmly on
materiality. Organizations can report in
accordance with GRI G3, GRI G3.1 or GRI
G4. However reports published after 31
December 2015 should be prepared in
accordance with GRI G4.
While GRI G3 or G3.1 does not mandate
a specific process to support the principle
of materiality, it does recommend that
companies consider both internal and
external factors to understand the
organizations significant economic,
environmental, and social impacts as well
as those aspects that would substantively
influence the assessments and decisions
of stakeholders.

With the introduction of the GRI G4

guidelines, the focus on materiality has
become more precise. These guidelines
recommend a process for identification,
prioritization and validation. A number
of companies using the GRI G4 also
plot their material aspects against a
materiality matrix.
Additionally, the GRI G4 also requires
that companies report the boundary, or
impact, of each material aspect.

Risk management frameworks

Internal risk management frameworks
are extremely popular among the 30
companies producing sustainability
reports, with 90% demonstrating internal
processes for risk management. The
most common forms of risk management
frameworks are based on a process
of identifying risks and using internal
engagement to categorize them.

AA1000 five part

materiality test
Four companies used the AA1000s five
part materiality test to help determine
their key sustainability aspects. The five
part test takes into consideration
short-term financial impacts, policyrelated performance, peer-based norms,
societal norms and stakeholder behavior
and concerns.

Internal tests
Two of the 30 companies in the SGX
top 50 are using internal tests devised
by the organization to assess materiality.
These vary but usually involve some
type of internal and external
stakeholder engagement.

Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |

Identifying aspect boundaries

GRI G4 requires organizations to report
on a series of standard disclosures
applicable to all organizations as well
as on specific standard disclosures
applicable to each material aspect
identified. GRI G4 also asks reporters
to determine and disclose the boundary
for each material aspect. This requires
organizations to understand where the
impact of the aspect occurs, whether
internally, externally, or both.
Of the 25 companies in the SGX top
50 that reported on their material
aspects, only 12 have identified a
boundary for them.
Of the 13 companies that used the
GRI G4 to determine materiality, all
but one sought to identify the aspect
boundaries. And of the four companies
using GRI G3, again, all but one identified
aspect boundaries.

Many companies simply stated that the

boundaries for their material aspects
were internal and/or external to their
organization, without elaborating on
particular entities, subsidiaries or joint
ventures. Our research finds that it is
common for companies to list internal
and external stakeholders (such as
employees, suppliers, contractors and
customers) but make no further mention
to aspect boundaries.
It is our view that as companies move
into their second and third year of
producing GRI G4 reports and further
refine their materiality process, they will
develop a more nuanced understanding
of boundary setting, leading to enhanced
disclosure. Such disclosures will better
enable the reader to distinguish where in
the value chain an aspect occurs, and the
propensity for the business itself to be
able to manage it.

While GRI G4 reporters appear to have

developed a sound grasp of boundary
setting, other companies however are still
struggling to point out exactly where the
impact of the material aspect occurs and
whom the aspect affects.

10

| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50

Leading example:
Genting Singapore PLC
Genting Singapore was among
the first companies in Singapore
to disclose its sustainability
performance in line with the GRI
G4 comprehensive reporting.
FY 2014 marks the companys
second sustainability disclosure
and a thorough adherence to the
G4 principles for defining report
content: stakeholder inclusiveness,
sustainability context, materiality
and completeness. A stakeholder
engagement workshop was
conducted to identify material
issues and a detailed mapping of
sustainability issues to GRI G4 was
disclosed to illustrate relevant G4
aspects for reporting.

Stakeholders are engaged in the materiality

assessment process

Understanding stakeholder needs is critical to a robust materiality assessment and

yields rich information that can inform strategic thinking.

The GRI, the most widely used

sustainability reporting framework in
the SGX top 50, specifically references
the importance of engagement with
stakeholders as part of the materiality
assessment and reporting processes.
Stakeholder engagement was used
consistently among the 25 companies
disclosing their material issues. All 25
described some level of internal and
external stakeholder engagement as part
of the materiality assessment.
Of these companies, 48% specifically
mentioned efforts or an intention to
act on stakeholder concerns. This was
frequently demonstrated in a table
outlining the stakeholder, their primary
concerns and the actions taken to
address these concerns. Common
concerns among stakeholders included
training and development, resource use
and community engagement.

As the SGX transitions towards comply

or explain reporting by their target
of FY17, we expect to see increased
disclosure and frequency and depth of
stakeholder engagement.

25

12

Number of
companies
disclosing
material issues
Those also mentioning
efforts to act on
stakeholder concerns

Leading example:
StarHub Ltd
For StarHub, stakeholder
engagement is an important
ongoing aspect of the sustainability
approach. The feedback allows them
to assess, identify and prioritize
their most significant economic,
social and environmental impacts,
and determine what should be
included in their report. In 2014, the
company identified 12 stakeholders
(namely customers, employees,
suppliers, distributors/retailers,
business partners, investors, local
communities, media, government
and regulators, trade associations,
trade unions and NGOs and advocacy
groups). The details of their methods
of engagement, expectations,
responses to these expectations,
progress made during the reporting
period, and plans for the following
year were also systematically
disclosed in a table format.

Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |

11

Methods of reporting and communication

are changing

An EY Survey of 500 CFOs globally5 found that large companies are being confronted
with an increasingly challenging reporting environment as a result of business
complexity. Stakeholders, including regulators and consumers, are challenging
companies to not only improve reporting but compelling them to reconsider how they
disclose information in a fast-changing environment.
In addition to assessing the content
of the SGX top 50 sustainability
disclosures, our research also examined
the platforms and mechanisms that are
used to communicate this information.
Of the 25 companies in the SGX top 50
that disclosed the sustainability aspects
material to their organization, the vast
majority are reporting in at least two
different formats, usually a combination
of a sustainability report, website,
integrated report or Environmental,
Social and Governance (ESG) section
in the annual report.
Recently we noted a decline in the
number of printed sustainability reports,
with organizations producing an
electronic report on their websites or
designing specific reporting webpages.
Globally we are also noticing more
interactive electronic reporting with links
to video, audio and interactive diagrams.
25

There has been movement around

build your own report platforms,
where readers select the areas that
interest them, with the content
automatically compiled and available
to be viewed online or downloaded. This
may be the start of more stakeholder-led
reporting where specific interest groups
can target the information of greatest
interest to them.

By connecting information using different

formats, companies can effectively
meet the needs of different groups of
stakeholders. Innovative digital formats
offer the option to link seamlessly from
high-level information in one place to
detailed data in another, and to present
information in different ways for
alternative audiences.

Other companies are beginning to use

apps as a reporting tool, giving readers
mobile and interactive access to company
information. Social media is also growing
in prominence with companies using
a host of platforms to both report and
lead people to reports on their websites.
Additionally, these mediums are being
used to present a snapshot of key
initiatives, opinion pieces or particular
performance information.

Leading example:
Ascendas Real Estate
Investment Trust (A-REIT)

3
1

13

For the 2014-15 reporting period,

A-REIT disclosed its sustainability
performance in a designated
section of the annual report. The
report content is clear, concise and
graphics are adequately used to
illustrate performance comparison
over different years. This report is
available for print and download
and can also be accessed via an
interactive online format. The
interactive report features easy
navigation through each page, with
the option of adding a bookmark to
keep your place. The table contents
menu also allows readers to jump
between the sections, allowing them
to locate the areas they are most
interested in.

1
SGX companies
that disclosed
material issues

ESG section
integrated into
annual report

Sustainability section
integrated into
annual report

One reporting format

Independent
sustainability
report and
website

Sustainability report
section integrated
into annual report
and website

ESG section
in annual report
and website

Two reporting formats

EY, Connected Reporting: Responding to complexity and rising stakeholder demands, 2014 (accessed via http://www.ey.com/
Publication/ vwLUAssets/ey-assurance-faas-connected-reporting/$FILE/ey-assurance-faas-connected-reporting.pdf).

12

| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50

Conclusion and recommendations

While the number of reporters is likely to rise after the implementation of comply
or explain reporting, it is yet to be seen whether this will lead to improved quality of
reports, or a greater uptake of materiality assessments.

Volume and quality

of reporting
While our research found that 80%
of the SGX top 50 makes some
mention of sustainability, only 60% are
producing sustainability reports. With
the introduction of comply or explain
reporting, it is expected that most will
begin to report in some capacity.
However, regardless of this, there is no
guarantee it will improve the quality of
the reports.
As the findings suggest, of those who
currently report on sustainability,
the level of sophistication varies
substantially. Many reporters are using
sustainability reports, or CSR sections
of annual reports, as a forum to list
their achievements and involvement in
environmental and social projects. Very
few reporters are disclosing performance
data, and even fewer are assessing
whether their sustainability goals from
the previous period have been met.
To improve the quality of reporting,
future reports need to instead focus
attention on presenting a balanced
overview of the companys sustainability
information, allowing stakeholders to
gain a comprehensive understanding of
the companys financial and non-financial
performance.

Materiality
Like the quality of reporting, we will have
to wait and see whether or not materiality
will be a focus for new reporters.
Regardless of this, listed companies
should focus further on their material
aspects, particularly as businesses and
stakeholders face changes, and as new
aspects emerge. Currently only 25
companies in the SGX top 50 reported
on sustainability aspects that are
material to their business, while only 19
involved stakeholders in this process.
Since understanding and reporting on
material sustainability aspects requires
a tailored approach, organizations will
need to consider the best way for them
to undertake the process and then
determine the most appropriate ways
to communicate in order to maximize
the benefits to stakeholders and the
organization itself.

In considering the insights into

sustainability reporting, materiality
assessments and sustainability
disclosures highlighted in this report,
we recommend that organizations
continue to drive improvement in
sustainability disclosure by:
1. Being proactive in engaging with
the SGX during and even after the
Consultation Exercise
2. Articulating the business case
for sustainability reporting
including responding to
regulatory requirements
3. Undertaking an assessment to
understand material sustainability
aspects and put in place strategies
to manage them
4. Engaging with internal and
external stakeholders as part
of the materiality process
5. Using outcomes of the materiality
process to drive relevant reporting
that includes understanding and
articulating where the impact of
the material aspect occurs
6. Developing a reporting framework
to communicate more effectively
7. Selecting appropriate channels
and platforms to communicate
with audiences

Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |

13

Consequences of mandatory
reporting: international
examples
The introduction of comply or explain
reporting requirements impacts
companies differently depending on
where they are based. Before 2011, four
countries (China, Denmark, Malaysia
and South Africa) saw the introduction
of mandatory reporting requirements,
each with different effects on listed
companies. Those in China and South
Africa significantly increased their
disclosures, adopting reporting guidelines
to increase comparability. South
African companies also found increased
propensity to receive assurance and thus
increase disclosure credibility. In contrast,
however, companies in Denmark and
Malaysia adopted a different stance
towards increasing disclosure. Those
in Denmark embraced and embedded
sustainability in their supply chain
management, and committed themselves
to the United Nations Global Compact
(UNGC), while Malaysian firms adopted
specific reporting guidelines focusing
on CSR.6

Our approach
While the breadth and depth of
materiality assessments varies
between organizations and
the intended application of the
assessment, our approach is guided
by reporting frameworks and
standards including the GRI G4,
IIRC and the AA1000 Standard,
which acknowledge materiality as a
fundamental principle for reporting.
We tailor our approach to reflect the
needs of our clients ranging from
significant guidance and support to
higher level materiality assessments.
This is also seen in our approach to
sustainability reporting where we
work with clients to recommend
reporting frameworks, design report
structures, identify key performance
metrics, gather data and supporting
commentary, and advise on drafting
sustainability reports.

Given the current reporting environment

in Singapore, the implementation
of comply or explain reporting
requirements will likely see new
reporters adopting guidelines such
as those from the GRI, and mature
reporters increasingly seeking assurance
from established independent audit
organizations such as EY.

Ioannou, I and Serafeim, G. The consequences of mandatory sustainability reporting:

Evidence from counties (Harvard Business School, 2014).

14

| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50

Appendix 1: Materiality definitions

Source

Definition of materiality

Global Reporting Initiative7

Materiality is the threshold at which aspects become

sufficiently important that they should be reported.

International Integrated
Reporting Council8

A matter is material if it is of such relevance and

importance that it could substantively influence the
assessment of providers of financial capital with regard
to the organizations ability to create value over the
short, medium and long term.

Sustainability Accounting
Standards Board9

SASB uses the US Supreme Court definition of

materiality. US Federal law requires publicly listed
companies to disclose material information, defined
by the US Supreme Court as information presenting
a substantial likelihood that the disclosure of the
omitted fact would have been viewed by the reasonable
investor as having significantly altered the total mix
of information made available. (TSC Industries, Inc. v.
Northway, Inc., 426 U.S. 438 (1976)).

Singapore Exchange
Investors Guide to Reading
Sustainability Reports10

A material issue is [one] that could significantly

influence the decisions, actions and performance of an
organization or its stakeholders.

AccountAbility AA1000
Guidance Note on the
Principles of Materiality,
Completeness and
Responsiveness11

Information about [an organizations] sustainability

performance required by its stakeholders for them to
be able to make informed judgments, decisions and
actions.

Global Reporting Initiative, Materiality, 2014 (accessed via https://g4.globalreporting.org/how-you-shouldreport/reporting-principles/principles-for-defining-report-content/materiality/Pages/default.aspx).

8
American Institute of Certified Public Accountants, Materiality: Background Paper for IR. American Institute
of Certified Public Accountants (accessed via http://www.theiirc.org/wp-content/uploads/2013/03/IRBackground-Paper-Materiality.pdf).
9
SASB, Why is it important? , 2014 (accessed via http://www.sasb.org/materiality/important/).
10
Singapore Exchange, An Investors guide to Reading Sustainability Reports, 2014 (accessed via http://www.
sgx.com/wps/wcm/connect/6d1251df-ca80-456d-a96c-ccc2eec2c068/SGX+Investors+Guide+Sustainabilit
y+Brochure_D6.pdf?MOD=AJPERES).
11
AccountAbility, Guidance Note on the Principles of Materiality, Completeness and Responsiveness as they
Relate to the AA1000 Assurance Standard, AccountAbility, 2014 (accessed via http://www.accountability.
org/images/content/1/8/189/AA1000%20Guidance%20Note%20-%20Low%20Res.pdf).
7

Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |

15

Appendix 2: Key material aspects by sector

The table below details some of the key material sustainability aspects by sector.
We have assigned companies to the same industry group, or sector, as referenced
by the SGX.

This information has been compiled from

those companies that have undertaken
a materiality process. Sectors where
there were no companies undertaking a
materiality assessment are not included
in this list.
Companies in many of these sectors
identified common aspects such as
health and safety and environmental
impacts in their materiality assessments.
In the summary, we have chosen to
highlight aspects that tended to be more
specific to particular industries.
* Only one company reports material
aspects in this sector

Sector

Material aspects
Economic performance
Resource use
Non-discrimination
Anti-bribery
Market presence

Transport and storage

Responsible business practices

Customer focus
Workplace health and safety
Employment
Supporting local communities

Multi-industry

Economic performance
Corporate governance
Environmental performance
Labor practices
Product excellence

Property

Emissions
Corruption and bribery
Supporting local communities
Health, safety and environment
Tenant satisfaction
Regulatory compliance
Workplace health and safety
Learning and development
Resource use
Innovation and productivity
Supporting local communities

Finance*

Manufacturing

16

Agriculture*

Workplace health and safety

Anti-corruption
Environmental management
Waste management
Emissions

Food products*

Labour relations
Supporting local communities
Supplier relations
Consumer relations
Sustainability in plantations

Services

Corporate governance
Regulatory compliance
Supporting local communities
Responsible provision of products and services
Training and development

| Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50

Lets continue the conversation

Find out how we can help you tackle

your sustainability challenges at
ey.com/SG/en/Services/Assurance/
Climate-Change-and-Sustainability-Services
Contact
K. Sadashiv
Partner, (ASEAN)
Climate Change and Sustainability Services
Tel: +65 6309 8813
Mob: +65 9008 4635
[email protected]
Keat Meng Mak
Head and Partner, Assurance
Tel: +65 6309 6738
[email protected]

Materiality and sustainability disclosure: Key insights from the Singapore Exchange top 50 |

17

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