With the climate crisis pushing further to the forefront of social, economic, and industrial global policy by the day, Singapore appears set to introduce mandatory sustainability reporting in line with new guidelines produced by the ISSB (International Sustainability Standards Board) earlier this month. The climate disclosures would apply to listed companies from as early as FY2025, with large non-listed companies following by FY2027.<\/p>\n\n\n\n
This would be among the first mandatory climate-related disclosure policies in Asia, and for non-listed companies with revenue exceeding SG$1 billion (750million USD), would be the first of its kind. The policy would affect over 1000 companies, with a review scheduled for 2027 that could see the revenue threshold lowered to include a further 2,200 businesses. The move is likely timed to prepare for the fact that many Singapore-based companies with significant operations in the European Union will have to comply with reporting rules according to the CSRD (Corporate Sustainability Reporting Directive) by 2028, which are far stricter due to their double materiality approach; essentially measuring a firm\u2019s impact on the environment, not just the impact of sustainability factors on their financial position.<\/p>\n\n\n\n
BEING A WORLD LEADER<\/strong><\/p>\n\n\n\n The decision shows that Singapore is serious about being a leader not only in industry and economic growth but in taking on the responsibility of tackling sustainable corporate practices in the uncertain business landscape of the climate crisis.<\/p>\n\n\n\n A committee formed by Singapore\u2019s ACRA (Accounting and Corporate Regulatory Authority) and SGX RegCo (Singapore Exchange Regulation) is currently seeking feedback on the recommendations, with the public consultation concluding in September. The final recommendations are set to be finalised by 2024. Mandatory climate reporting already came into effect this year for listed companies in the financial, agricultural, food and forest products, and energy industries, and it will be required for materials, buildings and transportation industries in FY2024.<\/p>\n\n\n\n ASSISTANCE AND TRANSITIONING<\/strong><\/p>\n\n\n\n To assist in the transition to more sustainable corporate practices, another statutory Singaporean body, Enterprise Singapore, has set aside SG$ 180 million (135million USD), \u00a0to support local companies, particularly SMEs, to build their capabilities with regard to managing carbon emissions and sustainability reporting.<\/p>\n\n\n\n However, companies in the first year of reporting would not be required to disclose their scope 3 greenhouse gas emissions, which often account for the majority of a company\u2019s climate impact. This measures, designed to give companies more time to streamline their reporting processes and understand the complexities of transition, means that the material data for a particular company\u2019s carbon footprint is unlikely reliable until the second or third year of reporting.<\/p>\n\n\n\n REGULATORY SUPPORT<\/strong><\/p>\n\n\n\n Singapore\u2019s other regulatory and governmental bodies are also throwing support behind the proposal, with the Monetary Authority Singapore (MAS) calling it an \u2018important step\u2019 towards fully adopting climate reporting standards domestically, and the central bank promising to take into account the SRAC\u2019s feedback in their own forthcoming proposals.<\/p>\n\n\n\n The proposal comes alongside the ongoing effort of the \u2018Green Plan 2030\u2019 which is being spearheaded by multiple government agencies including the Ministry of Sustainability and the Environment, the Ministry of Trade and Industry, and the Ministry of National Development. The Green Plan sets out several ambitious targets for businesses and citizens, including the planting of 1 million new trees.<\/p>\n\n\n\n Enterprise Singapore is also providing new courses for businesses on Decarbonisation and Sustainable finance, which have been on offer since April of this year, fostering wider business participation in the national effort towards sustainability. SGX RegCo also intends to work with partners across Singapore (ACRA, GRI, Singapore Institute of Directors etc) to deliver training for company directors and those preparing sustainability reports, to ensure accurate and streamlined adoption of sustainable practices.<\/p>\n\n\n\n With businesses diversifying their sustainability efforts and governments backing the transition towards net zero by 2050, the business case for climate reporting is only getting stronger. Esther An, chairperson of the SRAC stated that reporting had helped businesses gain a \u2018stronger competitive advantage\u2019 in sustainable growth, allowing for investment and opportunity to be not just financially beneficial, but environmentally positive too.\u00a0 <\/p>\n\n\n\n