Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies. The Accounting and Corporate Regulatory Authority (ACRA) and the Singapore Exchange Regulation (SGX RegCo) provided details on these requirements, which will be aligned with the framework developed by the International Sustainability Standards Board (ISSB), a global accounting standards body. The requirements will be phased in during FY2025 to FY2027, with the filers being expected to report and circulate climate-related disclosures at the same time as financial statements. The Singapore government also announced a Sustainability Reporting grant covering up to 30% of the cost of producing the first sustainability reports for certain companies.
The mandatory disclosures will focus on several crucial aspects of the environmental impact of a company, including the greenhouse gas (GHG) emissions. Companies will be required to report on their Scope 1 and Scope 2 emissions, which encompass direct emissions from their owned or controlled sources and indirect emissions from the generation of purchased energy, respectively. In a later phase, reporting will kick-in for Scope 3 emissions, covering indirect emissions throughout the value chain. Companies will need to disclose how climate change poses risks to their business, along with the strategies in place to mitigate these risks. The companies must also outline any opportunities that arise from the transition to a low-carbon economy. Finally, the disclosures should detail the governance structure of a company for overseeing climate-related issues and explain how climate considerations are integrated into the overall business strategy.
The implementation of mandatory climate reporting will be phased in over next few years:
- From FY2025: all listed companies in Singapore must begin reporting on Scope 1 and 2 emissions.
- From FY2026: listed companies will need to disclose Scope 3 emissions alongside the existing requirements.
- From FY2027: large non-listed companies, with annual revenue of at least $1.0 billion and total assets of at least $0.5 billion, must start reporting on Scope 1 and Scope 2 emissions (excluding Scope 3). External assurance on these emissions will also be required for listed companies starting from this year.
- Likely from FY2029 (tentative): large non-listed companies will need to report on Scope 3 emissions and undergo external assurance on their Scope 1 and Scope 2 emissions.
ACRA will exempt large non-listed companies with parent companies that are reporting climate-related disclosures using the ISSB-aligned local reporting standards or equivalent standards. It will also exempt the large non-listed companies with parent companies that are reporting these disclosures using other international standards and frameworks, for a transitional period of three years, from FY2027 to FY2029. SGX RegCo plans to separately conduct a consultation on the detailed rule amendments to implement the recommendation related to listed issuers, including requiring climate-related disclosures based on the ISSB Standards, from FY2025.
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