Singapore will introduce mandatory climate-related reporting requirements for listed and large non-listed companies. There will be obligations for some to start disclosing in line with the IFRS’ International Sustainability Standards Board (ISSB) standards as early as 2025. The new rules were announced by the Second Minister for Finance, Chee Hong Tat, in the Parliament of Singapore.
Following recommendations from the Sustainability Reporting Advisory Committee (SRAC), a committee was set up to guide Singapore-based companies with sustainability reporting. The committee was established by the Singapore Exchange Regulation (SGX RegCo) and the Accounting and Corporate Regulatory Authority (ACRA).
How will climate reporting be introduced, and what will businesses have to report on?
It was shared that the new climate reporting obligations will be introduced in a phased approach, starting with listed companies in 2025. This will be followed by large, non-listed companies with at least $1 billion in revenue and $500 million in assets in 2017.
The detailed obligations for every group will be phased in over time. Listed companies will be required to report on Scope 1 and 2 emissions in the first year and then move on to Scope 3 or value chain emissions the following year. Large, non-listed companies will adhere to a similar timeframe. However, Scope 3 reporting will not be required any earlier than 2029.
What impact can we expect from this?
Chee Hong Tat has said the government is still yet to determine if it will extend the climate reporting obligations to smaller organisations. ACRA is set to review the experiences of the larger and listed companies before deciding on this. He also added that the government plans to step up its efforts to support companies in engaging in sustainability reporting.
The Ministry of Trade and Industry (MTI) will unveil the specific steps to support enterprises. Regulators have said the new climate reporting requirements will form part of the government’s actions to strengthen companies’ sustainability progress. It is envisioned that companies will be able to provide climate disclosures that will enable them to access new markets, financing, and customers.
Singapore has committed to offering funding support of up to 30 percent for large companies that will start making mandatory climate-related disclosures aligned with the International Sustainability Standards Based framework from 2027. Despite the fact the new reporting requirements do not apply to SMEs, financial support has been announced for Singaporean companies who wish to engage in sustainability reporting.
Final thoughts
By spearheading this initiative, Singapore not only establishes itself as a frontrunner in corporate sustainability endeavours but also emphasises the worldwide trend toward more responsible and environmentally aware business practices. As companies conform to these evolving standards, they are anticipated to open up fresh opportunities in markets increasingly influenced by sustainability considerations.
