Learn At Lunch: Role of IA in Sustainability Reporting
True Value of Sustainability Reporting
The introduction of sustainability reporting requirements by the Singapore Exchange (SGX) has seen an increase in awareness on non-financial disclosures and their impact on investors’ impression of a company’s performance. SGX adopts a “comply or explain” approach on sustainability reporting, which requires entities listed on the SGX to prepare an annual Sustainability Report with effect for any financial year ending on or after 31 December 2017.
Conducted by Mr Chin Chee Choon, Director & Partner of Nexia TS Public Accounting Corporation, over 15 internal audit professionals attended a Learn At Lunch on 13 September 2018 to understand more about preparing the Sustainable Report and the role they can play.
In the sharing session, Mr Chin outlined the primary components in a Sustainability Report comprising:
- the material environmental, social and governance (ESG) factors, why the factors were selected, their relevance to the business, strategy and key stakeholders;
- the policies and practices that address each of the material ESG factors and their performance in the context of previously disclosed targets;
- the targets and objectives for the forthcoming year in relation to each ESG factor;
- the sustainability reporting framework appropriate to the industry and business model; and
- a statement of the board that the issuer’s Sustainability Report complies with the primary components; otherwise an explanation of alternative practices.
Mr Chin also shared about the Global Reporting Initiative Standards which represents the global best practice for reporting on a range of critical sustainability issues.
As internal auditors have a broad view across the organisation’s systems and processes, they should play a role in providing assurance over quality of information contained in the sustainability report. They have to ensure that controls are effective, the right things are measured against the accepted framework and that systems and processes are in place to capture the data needed for reporting purposes. The quality of those systems and outputs must be evaluated and stakeholders assured on them so that reporting is accurate and reliable.
With the emphasis on corporate governance standards, companies should leverage sustainability reporting as a tool to improve their reputation and bottom lines and not as a mere paper exercise.
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