hygiene and impact factos sustainability reporting

Beyond basics: Hygiene & impact factors in sustainability reports

By Nicole Lim

The last decade saw a remarkable increase of interest in companies’ sustainability or environmental, social and governance (ESG) performance by investors, regulators, and consumers.  The charts below show the increasing demand from investors and regulators alike for companies to report on their ESG issues.

UN PRI Signatories growth

Number of signatories to the UN Principle of Responsible Investment (UN PRI).  Image from UN PRI

10 year progress on exchanges ESG requirements

Image from 10 Years of Impact and Progress, SSE (2019)


When the impacts of the pandemic first made waves through the global economy, many questioned if the momentum for sustainability will be put to a halt as societies and economies move into crisis survival mode and focus on rebuilding economies. However, with COVID-19 dubbed a “stress-test” on business resilience, ESG and sustainability practices have become evermore crucial for companies to manage their non-financial risks. BlackRock also noted that sustainable funds have been able to weather the pandemic storm and financial returns outperformed peers in the first quarter of 2020. Specifically, global sustainable mutual funds and ETFs had inflows of $40.5 billion in the first quarter, up 41% from the same year-earlier period[1].

“These inflows during a period of extraordinary market drawdown suggests a persistence in investor preferences toward sustainability,” BlackRock said. “They upend an oft-cited concern pre-Covid crisis that during sharp market downturns, investors will de-prioritize sustainability.”

Even in such extraordinary times, ESG issues and sustainability has proven yet again to be here to stay.

As sustainability / ESG reporting evolves and is now more mainstream than ever before, how can companies take this opportunity to go beyond ticking boxes, meeting regulatory requirements, and on to creating more meaningful impact?

Based on several reports and upcoming trends, we have identified disclosures that companies today should be reporting on (Hygiene Factors), and other metrics that shows a company is creating wider impact (Impact Factors).

Hygiene Factors (“must-haves”)

The International Business Council (IBC) along with the World Economic Forum (WEF) launched an initiative to “identify a core set of material ESG metrics and recommended disclosures that could be reflected in the mainstream annual reports of companies on a consistent basis across industry sectors and countries”. In January 2020, WEF prepared a report[2] proposing a set of 22 well-established, quantitative core metrics and reporting requirements. These factors were defined as “core” based on information currently popularly being reported on or information which should be easily obtainable by companies.

Core Metrics for Sustainability Reporting_Adapted from WEF

Adapted from Toward Common Metrics and Consistent Reporting of Sustainable Value Creation, WEF (2020)

The metrics and disclosures proposed here have been organized in four pillars that are aligned with the SDGs and principal ESG domains: Principles of governance, Planet, People and Prosperity. They are drawn wherever possible from existing standards and disclosures (such as the Global Reporting Initiative, Sustainability Accounting Standards Board, Task Force on Climaterelated Financial Disclosures etc.)

More details on the 22 metrics can be expected by the end of 2020.

In Singapore, the top 10 most disclosed Material ESG Factors by listed issuers also mirrors the 22 metrics proposed by the WEF[3].

Top 10 Material Issues Disclosed in Singapore

Image from Sustainability Reporting – Progress and Challenges, SGX & CGIO (2019)

Globally, these are the top material issues reported on by member companies of the World Business Council for Sustainable Development (WBCSD)[4].

Priority material issues of WBCSD companiesImage from Reporting matters, WBCSD (2019)


From the observations above, robust disclosures on issues such as good governance and ethics, climate change management (TCFD-aligned), ecosystem impacts, employee health, safety and wellbeing, and an organisations’ wider contributions to community/social development have become common practice. As investors and regulators increasingly look for comparability between companies and as quality of reports improve, basic disclosures on these “hygiene factors” will be expected of companies within their reports.

Additionally, in the COVID-era, we can also expect increased focus on social disclosures, particularly on expansion of employee workplace safety.

Impact Factors

Besides these “must-have” factors, there are other issues organisations can look at within their sustainability strategy to strengthen impact. These Impact Factors may not necessarily be separate material topics. In most cases, these are a strengthening of disclosures around similar material issues.

In the same report by the WEF, further 30 “Expanded Metrics” were proposed[5]. These metrics have “wider value chain scope or convey impact in a more sophisticated or tangible way, such as in monetary terms. They represent a more advanced way of measuring and communicating sustainable value creation, and companies are encouraged to report against them as well, when material and appropriate.”

Some notable metrics and disclosures include,

Extended Metrics for Sustainability Reporting_Adapted from WEFAdapted from Toward Common Metrics and Consistent Reporting of Sustainable Value Creation, WEF (2020)

For the full list of “Expanded metrics”, please see refer to the report.

Other key disclosures could stem from emerging trends in sustainability, particularly in the expected role of business within these trends. These include technology breakthroughs for climate mitigation, inevitable climate change adaptation, circular solutions, sustainable consumption, supply chain transparency and sustainability, biodiversity protection, and sustainable finance[6], among others.


Ultimately, what defines leadership is not reporting on a large laundry-list of material factors, but rather, in doing it well. Many reports, publications and studies[7],[8],[9],[10] have emphasised the importance of key principles and aspects of best-practice sustainability reporting. They include clearly stating the purpose of the organisation, defining material issues from stakeholder engagement and operating context, balanced reporting, strengthening alignment with global reporting and sustainability frameworks (GRI, SASB, TCFD, SBT, SDGs etc.), articulation of board responsibility, and integrating ESG risks and opportunities within the wider business model. Paia specailises in applying these principles to individual client circumstances, and working with clients to produce leading edge reports with impact.


Paia has a long track record of helping companies with their sustainability strategy and reporting. Do take a look at our areas of expertise here, or reach out to us if your organisation is looking for support on your sustainability journey.












charting materiality amongst Singapore's sustainability reporters

Charting materiality amongst Singapore’s sustainability reporters

by Carrie Johnson, Wong Dan Chi, Nicolas Heath & Lim Sze Wei

With the Singapore Stock Exchange’s (SGX) announcement this year that sustainability reporting is to be introduced on a “comply-or-explain” basis for all listed companies from the end of FY2017, understanding Environmental, Social and Governance (ESG) material issues has never been more important. Up to 700 companies will soon have to start reporting on their ESG risks and ultimately tackle the all-important question, which is: when it comes to sustainability, what is considered relevant?

This is where the idea of materiality becomes important. Material issues, as defined by the Global Reporting Standards (GRI) are issues “that reflect a reporting organisation’s significant economic, environmental and social impacts”. The process that a company goes through in defining these issues (often termed a ‘materiality assessment’) will form the inevitable backbone of the reporting process for new reporters.[1]

Hundreds of companies are now embarking on the process of assessing their material issues and prioritising risks and opportunities. Paia has, through conducting research, identified the material issues that matter to current sustainability reporters in Singapore.  Which issues stand out, and what processes are companies using to decide on their material issues? Paia attempts to provide insight to this question by analysing the material issues and materiality process of all 40 Singapore companies currently producing sustainability reports to an internationally recognised standard.

What do reporters consider most material?

The majority of Singapore’s reporters have aligned themselves to the guidelines set by the Global Reporting Initiate (GRI). The GRI is the global standard for sustainability reporting, and its materiality determination process often forms the basis of the materiality assessments undertaken by companies.  On the whole, Singapore’s reporters align their material issues with GRI’s predefined topics.  The updated GRI Sustainability Reporting Standards (released in 2016) encourages companies to align their material issues to GRI’s predetermined list, so that companies are reporting on standardised issues, and therefore standardised KPIs. This encourages comparability across companies and their reports. Some companies also include sector specific topics, which are reporting recommendations under the new GRI Standards. This is most prominent among agricultural reporters who tend to prioritise sector-specific issues such as smallholder rights and peatland degradation, making their reports more meaningful in the process.

Paia’s has identified the 6 most reported material issues out of the 40 Singaporean companies, as shown in the following chart:


Top 6 Materiality Sustainability Issues

Note: In identifying the top material issues reported, Paia considered material issues that were ranked as highly important by companies. In the absence of ranking or prioritisation of material issues, all listed material issues were included in the analysis.

From Paia’s analysis, Singapore’s most material issue is ‘Occupational Health & Safety’. It is material to 80% of all GRI reporters. Paia also found that companies that didn’t include this as a key material issue primarily fell into the financial services sector.

Paia also found that even for issues not ranked as a key material issue, companies often still disclosed performance data. For example, companies that did not rank ‘Energy’ or ‘Water’ as key material issues typically still disclosed performance data around these issues, as this practice was seen to be in-line with reporting expectations.

Paia’s analysis also attempted to identify the most reported KPIs. Our results are shown in the table below, indicating the KPIs that were reported on by more than 75% of Singaporean companies:

Training & Education Average hours of training per year per employee by gender, and by employee category LA9 90.0
Training & Education Percentage of employees receiving regular performance and career development reviews, by gender and by employee category LA11 90.0
Energy Energy consumption within the organization EN3 87.5
Economic Performance  Direct economic value generated and distributed EC1 85.0
Occupational Health & Safety  Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender LA6 85.0
Water Total water withdrawal by source EN8 82.5
Employment Total number and rates of new employee hires and employee turnover by age group, gender and region LA1 80.0
Local Communities Percentage of operations with implemented local community engagement, impact assessments, and development programs SO1 77.5
Energy Reduction of energy consumption EN6 75.0
Emissions Energy indirect greenhouse gas (GHG) emissions (Scope 2) EN16 75.0

More than 50%, but less than 75% of Singaporean companies report on the following indicators:

Emissions Reduction of greenhouse gas (GHG) emissions EN19 70.0
Environmental Compliance Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations EN29 70.0
Emissions Direct greenhouse gas (GHG) emissions (Scope 1) EN15 67.5
Diversity and Equal Opportunity Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity LA12 67.5
Anti-Corruption Communication and training on anti-corruption policies and procedures SO4 62.5
Training and Education Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings LA10 62.5
Anti-Corruption Confirmed incidents of corruption and actions taken SO5 60.0
Emissions Greenhouse gas (GHG) emissions intensity EN18 60.0
Occupational Health & Safety Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs LA5 60.0
Non-Discrimination Total number of incidents of discrimination and corrective actions taken HR3 60.0
Society Compliance Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations SO8 57.5
Effluents and Waste Total weight of waste by type and disposal method EN23 57.5
Employment  Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation LA2 55.0
Anti-Corruption Total number and percentage of operations assessed for risks related to corruption and the significant risks identified SO3 55.0
Energy  Energy intensity EN5 52.5
Customer Health and Safety Percentage of significant product and service categories for which health and safety impacts are assessed for improvement PR1 52.5
Customer Health and Safety Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes PR2 52.5
Effluents and Waste Total water discharge by quality and destination EN22 50.0
Product and Service Labelling  Results of surveys measuring customer satisfaction PR5 50.0

Note: Although the GRI Standards are the most updated version of the sustainability guidelines set out by GRI, Paia’s analysis focused on GRI G4 indicators as most reports prior to 2017 used this standard.


The Materiality Determination process

Material issues essentially represent a company’s key ESG risks and opportunities.  As such, a robust, auditable process should be used to identify which issues are most material. SGX’s reporting guidelines require companies to disclose the process used to determine its material issues. Companies are also required to engage internal and external stakeholders in this process. At present, only 68% of Singapore’s reporters state that stakeholder engagement was a part of their materiality process. Of this, only 7.5% provided meaningful disclosure on how stakeholder engagement informed their chosen material issues.  Paia also discovered that the majority of those who engaged external stakeholders did so through the use of an online survey.

Engaging external stakeholders is crucial in building a relevant sustainability report. If key issues that are considered critical by external stakeholders are not taken account, the validity of these reports can be called into question.  Through our work over the years, Paia has observed that reporters who embrace stakeholder engagement from the outset are more able to produce meaningful reports that address key material issues.

SGX also expects senior management and the Board of Directors to be involved in the materiality assessment process.  At present, only 45% of Singapore’s reporters made reference to senior management being involved in the materiality process.  Senior management teams and Boards of Directors are increasingly playing a vital role in determining the material ESG issues affecting long-term performance.  Paia increasingly observes the materiality assessment process being driven by the CEO or CFO and being reviewed by the Board.  This reflects a significant shift towards sustainability issues being viewed as business risks and opportunities.  Senior management and Board engagement is where we see rapid uptake of global leading practices within companies locally.



As the next generation of Singapore’s sustainability reporters start to release their reports, the materiality landscape will surely change. However, there is much that reporters can learn from the current state of reporting. To reiterate these lessons, we list the main points of our research here:

  • There are topics that will emerge as being material to most companies. Currently, ‘Occupational Health & Safety’ is one such topic.
  • There are reporting expectations that will encourage companies to disclose KPIs on issues that might not be directly material to them – for example, it is standard practice for companies to disclose performance related to energy and water consumption
  • Getting material issues right from the outset is at the crux of meaningful reporting and driving long term performance

We hope that Paia’s analysis has increased your understanding of the materiality determination process, and in particular, the state of reporting on material issues in Singapore.

[1] GRI Standards 101: Foundation 2016 pg. 27


Start my next Sustainability Report now??

We thought hard before posting this – it sounds a bit like shameless business development when we advise businesses to start reporting early. And 10 months early, too?!

But, allow me to forge ahead!

The dust has barely settled on the last report and it’s time to begin planning the next. Why?

  1. Engage your colleagues. Starting early will reduce the headaches from colleagues claiming they were not aware of what was expected of them. Data and information collection is a big part of the Content Management stages of a Sustainability Report.A big enemy in the Reporting battlefield is uncooperative colleagues. Just when you thought that data was secured and on its way, the contact over in HR says the new Enterprise Management Software sprang a leak and they need to re-do it.Just when you thought you could talk about that supply chain initiative as a core part of a section in your report, the legal team pipe up that it’s embargoed for a legal reason.

    If you align with the Annual Report calendar then you will be pleased if your timeline is relaxed, rather than squeezed. If you get squeezed later in the project then your families and consultants will be affected too! Best avoided!

    Keeping the internal network alive is a real boon to reporting. Better cooperation, better content.

  1. Enough time to do materiality. Most reporters are by now bruised by the ‘materiality stick’ wielded by consultants around the world. It’s not without good reason though. Applying this core principle of reporting is vital to an effective Report delivered in line with target audience expectations.Don’t forget all you SGX listed companies in Singapore: you will need to explain how you came up with the list of relevant issues to talk about in your Report.
  1. Save costs. I would say that wouldn’t I!? Well, the logical outcome from doing materiality well is normally a shorter report. That saves resources internally – who wants to waste time organising data for a report when it’s not relevant? You may still collect it internally because you’re managing the issue internally – but it may not be sufficiently ‘material’ to be covered in the sustainability report.Being organised in what you want to achieve with the report, what content you expect, how many words it will be etc., will mean clarity in resourcing. Failing to plan is planning to fail (my old lecturer used to say).
  1. Content management. Again, sequentially and logically, once you know the key relevant subjects (or ‘topics’ in new GRI-speak) you will want to talk to the colleagues you have communicated with (see above).Check who is on maternity leave, or on holiday. See if any staffing changes are on the horizon. What about assets – any changes to think about in terms of company structure or operational assets?As scrutiny increases of supply chain management practices, you may need to think through how to collect management approach information on slightly newer issues of interest.
  1. Sort imagery. A report with a staid and tired look using repeated photography will lose credibility. Readers are human and they like to be inspired to open your report when the alternative is catching up with the latest fast cars on YouTube or kiddy bargains on Ebay.So, by embarking early you can knock off a few of those slightly fiddly design tasks. Check in with marketing and communications colleagues about any new developments in branding at your company.Sorting the design early will mean your Report will work harder for you – you will feel enamoured by it and want to take it with you wherever you go. The romance will blossom and you will feel that you and your Report will go far!

Ok, good luck, and you know where we are if you need any help!