Guide Published To Assist SGX-Listed Issuers In Conducting Internal Review Of Sustainability Report

• Published date: 15 December 2022
• Subject Matter: Accounting and Audit, Finance and Banking, Corporate/Commercial Law, Audit, Financial Services, Listing Rules & Flotation, Corporate and Company Law
• Law Firm: Rajah & Tann
• Author: Mr Chia Kim Huat, Abdul Jabbar Bin Karam Din, Evelyn Wee, Sandy Foo, Cynthia Goh, Ng Sey Ming, Lee Weilin and Cynthia Wu

Executive Summary

Since 2016, issuers listed on the Singapore Exchange Securities Trading Limited ("SGX-ST") have been required to issue a sustainability report for each financial year ("FY"). Currently, the issuers must describe in their sustainability reports their sustainability practices on a "comply or explain" basis with reference to six primary components set out in the rules under the Listing Manual of the SGX-ST ("Mainboard Rules") and Section B: Rules of Catalist of the Listing Manual of the SGX-ST ("Catalist Rules") (collectively, "Listing Rules"), including the Sustainability Reporting Guide set out thereunder ("SR Guide"). ¹

With effect from 1 January 2022, an issuer is required under the Listing Rules to subject its sustainability reporting process to internal review by the internal audit function. As mentioned in the SR Guide, the internal review should be conducted in accordance with the International Standards for the Professional Practice of Internal Auditing ("Standards") issued by The Institute of Internal Auditors.

To provide a "navigating map" on conducting an internal review of sustainability reports, the Institute of Internal Auditors Singapore ("IIA Singapore") published on 4 November 2022 the Guide to Internal Review of Sustainability Report ("Guide"), co-developed with Ernst & Young LLP (EY). It is built on the requirements of the sustainability report set out in Rules 711A and 711B of the Listing Rules, the SR Guide and the guide on implementing the Recommendations of the Task Force on Climate-related Financial Disclosures ("TCFD"). The Guide is not meant to be construed as the definitive manner to conduct the internal review of sustainability reports in Singapore.

The Guide aims to provide easy reference for its users in preparation for the conduct of an internal review of a sustainability report. Its key aspects include:

1. Requirements for a sustainability report;
2. Seven principles to be considered during the internal review and
3. Guidance on the internal review process.

We provide a brief overview of the Guide's key aspects below.

Requirements of a Sustainability Report

Rule 711B of the Listing Rules ("Rule 711B") requires the sustainability report to describe the sustainability practices of an issuer with...