Analysis of UOB Annual Report on Sustainability Reporting and IFRS 8

This assignment analyzes the annual report of United Overseas Bank Limited (UOB) on sustainability reporting and compliance with IFRS 8 operating segments disclosures. It evaluates UOB's performance in social, economic, environmental, and governance aspects, and assesses its adherence to Global Reporting Initiative (GRI) standards. The assignment also discusses the usefulness of the report to users.

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Student Name:
Professor:
University:
Date:
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Table of Contents
Introduction...........................................................................................................................................3
Sustainability Reporting.........................................................................................................................3
Environment......................................................................................................................................4
Social.................................................................................................................................................4
Economic...........................................................................................................................................5
Governance.......................................................................................................................................5
Comment:..........................................................................................................................................6
IFRS 8 Operating Segments Disclosures.................................................................................................7
Usefulness to Users...............................................................................................................................9
Conclusion:............................................................................................................................................9
References...........................................................................................................................................10
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Introduction
The primary objective of this assignment is to analyse the annual report of the
company and critically assess the performance on the basis of sustainability reporting and
segment reporting standards & guidelines. This also includes evaluating the extent to which
the chosen company conforms compliance with the Global Reporting Initiative and IFRS 8
and to record deviations, if any (Ahlstrom, Cumming, & Vismara, 2018).
The company chosen to achieve the above mentioned objective is United Overseas
Bank Limited, commonly called UOB. Headquartered in Singapore, UOB is one of the
renowned banks in Asia which is having a global reach and has more than 500 branches
ranging in over 19 countries round the world. It has presence in Asia Pacific, Europe and
North America. The bank offers a widespread array of financial services worldwide through
their core business segments which are namely Group Retail segment, the Group Wholesale
Banking segment and the Global Markets segment. Keeping customers at the centre forms
the pillar of its sustainability approach.
Sustainability Reporting
Sustainability reporting mainly on the three firm pillars of social, economic,
environmental performance and its extent, whether positive or negative.
In the year 2018, UOB had formed an ESG Committee. It was one of the committee
comprising of senior management that reported directly to the Management Executive
Committee (MEC) on matters relating to sustainability of the group as a whole (Alieid,
2016). This ensured that factors relating to ESG were given due importance during the
normal course of operation of business too. In that regard UOB has reported ESG related
indicators of their performance for the last three years. In the annual report UOB clearly
mentions that the company is complying with the sustainability related reporting with the
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SGX-Securities Trading Limited Listing Rules 711A and 711B, and Practice Note 7.6
Sustainability Reporting. Out of the 17 UN SDGs, UOB has recognized 11 such items and
has accordingly aligned its sustainability strategies.
Environment
UOB shows a strong commitment towards the conservation of resources for the
benefit of the generations to come. The report gives a clear picture about the achievements,
the steps taken to manage the direct environmental footprint, the programmes undertaken
with a view to create energy efficient workspaces, raising environmental awareness (Wild,
2013).
Data related to Purchase of grid electricity, greenhouse gas emission intensity, water
consumption intensity and other performance indicators have been presented in tabular form,
that enables quick understanding and analysis. At the same time, it also ensures adherence to
the guidelines set by the GRI, wherein proper disclosures are made and reported. Wherever
possible, previous year’s figures have also been retrospectively adjusted to give a clearer
picture and to ease comparison from previous year.
Social
A study of the annual report, enables the reader to perceive UOB’s inclination
towards doing its bit for the society. UOB has three main focus areas, namely art, children
and education, which according to them are the essentials for the quality and progress of
society. The part of the report which deals with societal and community impact is one of the
most impressive one (Sithole, Chandler, Abeysekera, & Paas, 2017). The highlights give a
bird’s eye view of the company’s achievement in this regard. UOB Heartbeat Run/Walk
Programme which is the company’s CSR programme has ensured participation in huge
numbers, fund raising from the same and also bagged few awards and accolades from the
industry. Details like the opening of art galleries in China & Malaysia, partnership with
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Indonesia’s Museum of Modern and Contemporary Art in Nusantara and 51000 hours of
volunteer work across the region comply with the GRI framework, giving the readers & users
of annual report an insight into the societal impacts that the company had made in the
reporting year.
Economic
UOB has made fair contributions to the economy through its continuous commitment
towards the progress and growth of the region of its operations and for various stakeholders
too (Dumay & Baard, 2017). As shown in the annual report out of the $9116 million of total
income generated in 2018, $2447 was distributed amongst the workforce in the form of
employee compensation and benefits. Besides this, $805 million was paid in the form of
income tax liability to the government. Also a whopping $2052 million were distributed
among the shareholders in the form of dividends. It is absolutely commendable that out of the
9950 suppliers, spread out in six main markets, local suppliers stood at 93.5%. These facts
and figures bring to light the economic aspects of the business activities and operations.
Governance
Though corporate governance does not form the fundamental pillars of sustainability
reporting, it definitely effects the achievement of economic, social and environmental
performances (Raiborn, Butler, & Martin, 2016). A good corporate culture ensures not only
prosperity for the business but also enhances its responsibility towards all the stakeholders in
general. It basically integrates all the activities, across the organization, that somehow
contributes to sustainability.
It is the Board of Directors who are entrusted with the task of carrying on the business
of the entity and taking all the decisions. The annual report of UOB clearly lays down how
the board of directors is comprised of, majority of whom are independent. It has a
Nominating Committee in place that assesses the composition of the board and also reviews
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their independence on a yearly basis. The Board has also delegated few of its duties to
Committees formed by them, so that it can focus on strategic decision making (Henderson,
Peirson, Herbohn, Artiach, & Howieson, 2014). The annual report makes full details about
the governance, making sufficient and appropriate disclosures about the composition,
responsibilities, duties, performance and review of each of these committees.
Comment:
The guidelines laid down by GRI proposes a set of two options to the reporting
entities, the Core option and the Comprehensive option. This is done to facilitate the
preparation of the report ‘in accordance’ with the guidelines. Entities are given freedom to
opt for given options that best suits their needs, irrespective of the size, the industry or the
location. The core option covers the crucial features of a sustainability report and makes
available the basic structure against which the entity would communicate its ESG impacts
and performance (Kew & Stredwick, 2017). The Comprehensive option is formed on the
basis of the Core option and requires additional Standard Disclosures like ethics, integrity and
strategy. UOB’s report seems to adopt the Comprehensive approach and therefore
concentrates on providing in depth information, both qualitative & quantitative, to the users
of the report. The report shows great standards of compliance with the sustainability reporting
standards provided by the GRI framework.
According to the Sustainability Context Principle the report should present the
performance of the company in terms of sustainability. Reporting only on movements in
individual performance fails to give the real & the big picture. It should seek to present
achievements in a wider connotation. This involves discussing the track record of the
organization at the sectoral, regional, national or global level. Looking at the report form this
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point of view does not give a commendable answer as the performance indicators are
individual only. No regard has been given to comparable (Goldmann, 2016).
Coming to disclosures, there are two different types of Standard Disclosures: General
Standard Disclosures and Specific Standard Disclosures. Based on materiality, a well
balanced mix of both the disclosures has been maintained throughout the annual report.
IFRS 8 Operating Segments Disclosures
According to IFRS 8, an operating segment is a unit or profit centre of an entity to
which expenditures and revenues can be allocated, specifically. The operating results of these
units, which carry out specific business activity or activities, are regularly reviewed by the
decision makers. In addition, discrete financial information for such units are also available.
IFRS 8 makes it mandatory for entities, whose securities, whether equity or debt, are
traded or about to be traded in the public market, to make certain disclosures. This is required
to make sure that the financial statements present a true and fair view to its users (Linden &
Freeman, 2017). Once the segments are identified, evaluation is done to determine whether
they are meet the reportable segments criteria as laid down by IFRS 8. Reportable segments
are operating segments, whose reported revenue or reported profit (or loss) or assets is more
than 10 percent of the combined revenue or profit (or loss) or asset of all the operating
segments put together. It also states that if the total external turnover of all the operational
segments put together falls short of 75 percent of the total revenue of the firm as a whole),
then additional segments need to be reported till the time it meets 75 percent of the total
revenue (Heminway, 2017).
The disclosures to be made are as follows:
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 General information regarding the identification of the segments, the types of
products or service that each of these segments offer.
 The reported profit or loss and asset, by each segment individually.
The operating segments identified by UOB (on the basis of internal organization structure) is
listed down below:
1. Group Retail (GR): it comprises of personal account holders and small enterprises and
includes a wide range of service being offered to them like deposit, insurance, wealth
management, loan facilities (Jefferson, 2017).
2. Group Wholesale Banking (GWB): this segment consists of clients coming from the
corporate and institutional sector and includes medium and large enterprises, MNCs,
financial institutions, government related entities, local businesses. The range of
products and services provided under this includes financing, trade services, cash
management, solutions relating to capital markets and advisory and treasury related
products.
3. Global markets Segment (GM): This segment extends a wide-ranging collection
products and services relating to treasury like foreign exchange, credit, commodities,
equities, interest rate and structured investment products (Bizfluent, 2017).
4. Others: this segment comprises of activities that have not been covered by the
segments mentioned above like corporate support functions, insurance and investment
management.
A detailed and careful study of the annual report of UOB makes it crystal clear that it
complies with the requirements of IFRS 8 by making proper and appropriate disclosure of
operating segments. Segment wise complete details regarding net profit, interest income,
capital expenditure, operating expenses, assets and liabilities have been published as a part of
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notes to accounts (note 43) (Guragai, Hunt, Neri, & Taylor, 2017). Similarly, complete set of
information has also been provided on the basis of geographical segments namely, Singapore,
Malaysia, Thailand, Indonesia, Greater China and others. The information is given after
excluding inter segmental transactions.
Usefulness to Users
A detailed study of the annual reports of UOB would enable any user to comment on
the usefulness of the same. The annual reports show absolute compliance with the general
reporting framework and the applicable standards and statutory requirements. Wherever
required, pictorial representation in the form of graphs, tables and images, has been used to
present data in a way that is easy to grasp and analyse. Comparison has been made with
previous year figures (Meroño-Cerdán, Lopez-Nicolas, & Molina-Castillo, 2017). This
enables the users to measure the performance of the company and know whether the same
has improved, or have worsen or remains constant. Apart from financial data that has been
appropriately disclosed, non-financial data has also been given due consideration. This
enables the users or readers to develop an understanding of the policies, strategies and the
business approach adopted by the entity. It clearly indicates the values created for the
different classes of stakeholders and thereby allows the users to make informed decisions.
Conclusion:
Keeping in mind the objective of this assignment, in a nutshell, it can be said that the
reporting method, manner and procedure adopted by UOB shows full compliance with
Global Reporting Initiative’s (GRI) Standards: Core Option and selected indicators from
GRI G4 Financial Services Sector Disclosures document. At the same time, it also adheres to
the requirements of IFRS 8 Operating Segments.
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References
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Alieid, E. E. (2016). The Role of Accounting Information Systems in Making Investment Decisions.
Internal Auditing & Risk Management, 11(2), 233-242.
Bizfluent. (2017). Advantages & Disadvantages of Internal Control. Retrieved december 07, 2017,
from https://bizfluent.com/info-8064250-advantages-disadvantages-internal-control.html
Dumay, J., & Baard, V. (2017). An introduction to interventionist research in accounting. The
Routledge Companion to Qualitative Accounting Research Methods, 1(1), 265.
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Heminway, J. (2017). Shareholder Wealth Maximization as a Function of Statutes, Decisional Law,
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Henderson, S., Peirson, G., Herbohn, K., Artiach, T., & Howieson, B. (2014). Ethics in accounting.
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Jefferson, M. (2017). Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland .
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Meroño-Cerdán, A., Lopez-Nicolas, C., & Molina-Castillo, F. (2017). Risk aversion, innovation and
performance in family firms. Economics of Innovation and new technology, 1-15.
Raiborn, C., Butler, J., & Martin, K. (2016). The internal audit function: A prerequisite for Good
Governance. Journal of Corporate Accounting and Finance, 28(2), 10-21.
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Wild, S. (2013). Accounting for Heritage, Cultural and Community Assets – Alternative Metrics from a
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