By 2050 the world must satisfy the needs of more than 9 billion people, of which over 5 billion are expected to reside in Asia. ESG safeguards people’s livelihoods.
In a significant move towards greater environmental accountability, Singapore recently announced mandatory climate reporting requirements for both listed and large non-listed companies. These regulations aim to enhance transparency, encourage sustainable practices, and contribute to the global fight against climate change.
SGX believes that economic growth and sustainability are inter-dependent in reshaping the sustainable future through a shared ecosystem to work in partnership. SGX FIRST or Future in Reshaping Sustainability Together(SGX)
Tan Boon Gin, Chief Executive Officer of SGX RegCo, said:
“SGX-listed issuers have had a head-start in climate reporting, and many have seen its benefits. Companies are better equipped to meet demand from their lenders, customers, and investors for sustainability-related information. They can also more readily access the growing pool of sustainable capital. These position Singapore well as a green economy.”
Who Is Affected?
Starting in 2025, all listed issuers in Singapore will be obligated to report on climate-related matters.
Large non-listed companies will follow suit from 2027.
Scope of Reporting
Listed companies will initially report on Scope 1 and 2 emissions in the first year.
In 2026, they will also report on Scope 3 emissions (value chain emissions).
External limited assurance on Scope 1 and 2 GHG emissions will be sought two years after beginning reporting.
Large non-listed companies will have a similar timeline, with Scope 3 reporting starting no earlier than 2029.
Criteria for Large Non-Listed Companies
Large non-listed companies are defined as those with at least $1 billion in revenue and $500 million in assets.
Objectives and Implications
Transparency and Disclosure
By mandating climate reporting, Singapore aims to enhance transparency. Companies will need to provide comprehensive information about their climate risks, strategies, and performance.
Investors, stakeholders, and the public will have access to critical data for informed decision-making.
Risk Assessment and Mitigation
Climate reporting encourages companies to assess their exposure to climate risks. These risks include extreme weather events, supply chain disruptions, and regulatory changes.
Identifying risks enables companies to develop effective mitigation strategies.
Transition to Sustainable Practices
The reporting requirement serves as a catalyst for companies to transition toward more sustainable practices.
Integrating climate considerations into operations contributes to a greener economy.
Global Alignment
Singapore’s move aligns with international standards, including the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.These standards emphasize climate risk assessment, scenario analysis, and disclosure.
Road Ahead
Review and Extension
The government will review experiences from listed and larger companies before deciding whether to extend the reporting obligations to smaller companies.
ACRA (Accounting and Corporate Regulatory Authority) will play a crucial role in assessing the impact and effectiveness of these regulations.
Support for Companies
Efforts to support companies in developing sustainability reporting will be stepped up.
Capacity-building initiatives, guidance, and best practices will empower businesses to meet their reporting obligations effectively.
Conclusion
Singapore’s mandatory climate reporting represents a significant step towards a more resilient and environmentally conscious business landscape. It encourages companies to proactively address climate challenges, contribute to sustainability, and pave the way for a greener future. As the world grapples with climate change, Singapore’s leadership in this area sets a positive example for other nations to follow.
Disclaimer: The information provided in this article is based on publicly available sources and does not constitute legal or financial advice. Readers are encouraged to consult official government announcements and seek professional advice for specific compliance requirements.
