IRPAS roundtable: “Corporate reporting levelling up: The journey”

  • Integrated Reporting (<IR>), the next global standard in corporate reporting, is gaining prominence in Asia and Singapore
  • Providing a cohesive framework for disclosure of financial and non-financial aspects of business, <IR> allows companies to better communicate value creation, attract long term investors, achieve a fairer valuation and lower cost of capital
  • IRPAS, together with SGX, ISCA and industry practitioners, discussed the benefits of <IR> and international best practices at a roundtable event
  • SGX shared its experience as one of the pioneering group of Singapore listed companies to have successfully embarked on the <IR> journey

Singapore, 2 October 2014 The Investor Relations Professionals Association (Singapore) (IRPAS) today hosted a roundtable discussion on Integrated Reporting (<IR>), a hot topic in the corporate reporting world given the rising need for corporate disclosure by regulators and investors alike.

<IR> is relevant to organisations, especially listed companies, as a strategic tool for stakeholder engagement in today’s complex and competitive business environment. It provides greater levels of disclosure, accountability, and demonstrates how businesses create and protect value for stakeholders.

However, while <IR>, alongside sustainability reporting, has in recent years gained prominence and momentum, especially in the West, it remains, in practice, a relatively less understood model in Asia. In Singapore, this has prompted professional bodies to conduct research into identifying the relevance and associated benefits of <IR> to organisations, and establishing a reporting framework.

The roundtable discussion featured Harold Woo, President, IRPAS and SVP, Investor Relations, CapitaLand as moderator and a panel of prominent industry experts and practitioners including Dr Miao Bin, Research Director, Institute of Singapore Chartered Accountants (ISCA) and Darrell Lim, Head, Investor Relations, Singapore Exchange (SGX). The event was attended by more than 80 guests, over half of which were representatives from listed companies in Singapore.

Through case studies and practitioner experience, industry experts at the roundtable highlighted the importance of having a more cohesive approach to corporate reporting, and provided attendees with insights into cutting-edge international best practices in the field of <IR>. Key highlights of the roundtable:

  1. Sustainability and integrated corporate reporting: a process and a commitment
  • <IR> can be seen as a ‘levelling up’ of corporate reporting, beyond traditional financial reporting and sustainability reporting; experts agree that sustainability reporting underpins and form a part of <IR>
  • A Harvard Business School study shows over 20 years that investments in sustainable companies provide 40% more returns to shareholders
  • The best sustainability and integrated reports are transparent, future focused, inspire stakeholders and allow them to be a part of companies’ sustainability story
  1. The significance and key benefits of <IR>
  • <IR> provides a cohesive framework for companies to communicate the full range of factors which affect value creation; this means they can attract longer term investors, achieve fairer valuation and lower cost of capital
  • Whilst cost is a concern for <IR> adoption, it gives companies an opportunity to talk about more than what is financially and tangibly measureable; it gives tomorrow’s reason to invest today
  • Most annual reports today do not fully articulate what the future drivers of value are; <IR> seeks to do so
  1. Challenges and overcoming them
  • The biggest challenge for <IR> is incentive; companies must realize the benefits in order to embrace it
  • In Western markets, <IR> is often driven by institutional investors, but in Asia or markets led by predominantly family owned businesses, there is less incentive for companies to do so
  • For <IR> to succeed, senior management must buy in and drive change from the top; survey shows the responsibility of driving <IR> falls on CFOs, followed by CEOs, and the Board
  1. SGX’s <IR> journey
  • Traditional investment metrics are no longer enough
  • Better reporting is not more reporting; the point is to be concise and articulate the inter-dependence of material factors driving value-creation
  • There is a vibrant and growing <IR> community in Singapore
  1. Is it too premature for Singapore companies to think about <IR>?
  • Companies can take small steps and start thinking about how they can better link information they are currently already reporting
  • Essence over form
    • Content is key, not the length of the report
    • Only 20% of Singapore companies report KPIs due to fear of not achieving targets, but more should do so
    • Investors want companies to spend resources only on reporting items that are of material interest to the business
  1. Printed reports versus online reports
  • Three considerations for online reporting: wider reach, measuring results, and sustainability
  • Online reporting is more interactive than printed reports; but companies should think about how reports are presented, and how they engage and cater to the needs of their audience

On promoting <IR> in Singapore, Harold Woo, President, IRPAS, remarked “Levelling up to <IR> is an important next step for corporations globally as investors demand greater transparency and quality of disclosure, which is paramount to effective stakeholder communications in today’s competitive business environment.

“IRPAS understands the challenges companies face amidst increasing requirements for better disclosure practices. Through this discussion, we hope to empower Board of Directors, CFOs and fellow investor relations practitioners with the knowledge and tools to effectively execute their roles as we embark on the next chapter in corporate reporting in Singapore.”

On aligning with the <IR> framework, Darrell Lim, Head, Investor Relations, SGX, commented, “We believe that by eventually putting out an annual report aligned as closely as possible to the Integrated Reporting framework, the quality of our corporate reporting will improve as it will be driven by a more cohesive approach. We will thus be able to communicate more clearly to our stakeholders the full range of factors that materially affect value creation over time.”

On the benefits of <IR> Dr Miao Bin, Research Director, ISCA, said, “Integrated Reporting brings financial reporting, which many companies are reducing to a compliance exercise, back to being an effective communication channel between the company and its investors. Through articulation of the company’s business model, strategy and other key elements in its value creation process, Integrated Reporting can enhance investor confidence and help maintain stability in the market in times of heightened uncertainty.”

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About IRPAS

IRPAS was established in 2006 by leading investor relations (IR) practitioners, supported by the Singapore Exchange, with the primary objectives of championing IR best practices, enhancing professional competencies and elevating the overall standard of the IR profession in Singapore. Run by IR professionals for IR professionals, IRPAS is a voluntary commitment by a team of IR veterans united by the same dedication to build a community for IR professionals, empower members through education, professional development and networking initiatives, and to facilitate the sharing of IR knowledge and best practices through research as well as in partnership with prestigious institutions. IRPAS aims to represent the views of its members, and provides the platform to facilitate dialogue among the IR fraternity, regulatory bodies and investment community.

IRPAS has approximately 200 members comprising representatives from companies listed on the Mainboard and Catalist of SGX covering a spectrum of geographies, industries and market capitalisations, leading private institutions, as well as IR advisors and service providers in Singapore and the region. For more information, please visit http://www.irpas.com.

 

For media enquiries and more information, please contact IRPAS Secretariat:

Tulchan Communications, (65) 6222 3765

Jean Zhuang, jzhuang@tulchangroup.com, (65) 9061 1075