VALUE OF SUSTAINABILITY REPORTING IN THE REAL ESTATE SECTOR

Abstract

There has been an increase in the number and quality of sustainability reports in Singapore over recent years. This reporting momentum is likely due to factors such as increased public awareness, regulatory pressure, stakeholders’ expectations, enterprise risk management, reputational brand name and others. In this urban island state, the real estate industry plays a significant role in developing the economy and providing space for its population. In addition, they are also the earliest adopters of sustainability reporting. These reporters include Ascendas-Singbridge, CapitaLand, City Developments Limited and Keppel Land.

However after years of reporting, these matured reporters have begun to question whether their routine reports continue to deliver value to the company or has become a periodic corporate communication affair. Meanwhile stakeholders themselves have become increasingly sophisticated and able to differentiate green washing from truthful and relevant disclosures. The ability of the reporters to disclose what their stakeholders require is the value of reporting. With the Singapore Stock Exchange (“SGX”) announcement of a “comply or explain” regime for listed companies on sustainability reporting to be targeted for implementation in FY17, the value of reporting has become even more important now.

Therefore, it is timely to evaluate the differences between what the companies are reporting versus what the stakeholders require. This dissertation attempts to map out stakeholders and their concerns against reporters and their disclosures in the real estate industry. One key requisite is that the reporters must be adopting the Global Reporting Initiative (GRI) reporting framework and have a history of reporting on sustainability.

Based on the outcomes of this dissertation, it appears that most of the selected real estate reporters have correctly disclosed the material sustainability indicators that are of concern to their stakeholders and hence reporting is valuable. To ascertain this, I have taken a 3-step approach which is simplified below:

First, I have established that the disclosures made by the peers are relevant to their targeted audience. Second, I have discovered that the value derived from reporting varies and it depends on the nature, width and depth of disclosure. Finally, I have looked for examples outside of the real estate industry to understand best reporting practices and how it can optimize value derived from reporting.

This dissertation is important to independently re-assess the value of sustainability reporting so as to uphold the principle of transparency to real estate stakeholders and to encourage companies to be accountable for their business impacts.