Singapore has taken a major step towards becoming Asia’s ESG hub as the island nation is poised to pioneer a set of mandatory climate-related disclosures (CRD) rules for all listed companies from financial year 2025.

Singapore’s Sustainability Reporting Advisory Committee (SRAC) recommended that issuers on the Singapore Exchange report their climate impact in line with the standards set by the International Sustainability Standards Board (ISSB). Concurrently, the public is also being consulted on whether similar requirements should be applied to large non-listed companies further down the road.

Specifically, non-listed companies with an annual revenue of at least S$1 billion ($730 million) could be subject to CRD from financial year 2027. Following a review in 2027, similar requirements might be extended to cover non-listed companies with an annual revenue of between $100 million and $1 billion by around financial year 2030.

Joseph Chun, ESG partner at Shook Lin & Bok, says the proposed CRD rules have catapulted Singapore to the forefront of ESG regulations and green finance development in Asia, especially “it is understood that there are currently no other Asian jurisdictions proposing or implementing mandatory climate reporting for non-listed companies,” says Chun.

Under the proposal, all listed companies will be required their Scope 1 emissions – direct emissions caused from companies’ activities, and Scope 2 emissions – those resulting from their production processes. In addition, “companies will be granted at least the same temporary transition reliefs to provide certain information or make certain disclosures, including on its scope 3 greenhouse gas (GHG) emissions,” notes Chun. Scope 3 emissions refer to those under the control of parties outside of the company’s operations on the value chain, including suppliers or customers.

He adds that ISSB requirements stated that companies should use “reasonable and supportable information available to them at the reporting date without undue cost or effort” when making certain disclosure requirements. Those include climate-related scenario analysis, identification of climate-related risks and opportunities, determination of anticipated financial effects of a climate-related risk or opportunity, and measurement of Scope 3 GHG emissions.

When it comes to filing, corporates should note that the reports should be filed in a digitally structured format as a separate report or as part of the annual report within the existing statutory timelines for companies to file financial statements. “If more time is required to prepare the report, companies can apply for an extension of time to hold their Annual General Meeting or to file annual returns,” says Chun.

The regulatory updates for listed companies in the ESG arena are expected to advance the city-state’s image as a green business powerhouse. But, the implementation process is not without potential challenges. For instance, cost of reporting and assurance, conducting climate-related scenario analysis, determining the anticipated financial effects of a climate-related risk or opportunities and linking this with the company’s financial statements could all present complications for targeted companies, especially with limited resources.

Measuring Scope 3 emissions is another tall order, as listed corporates will be required to map their value chain to obtain data from the upstream and downstream activities in the chain, including from entities in and outside Singapore that are not legally required to measure their emissions data and are not doing so voluntarily, according to Chun.

“Another potential challenge, at least in the initial years, may be the time constraint of submitting the report within the prescribed statutory timeline,” he adds.

To tackle these issues pre-emptively, Chun calls on listed companies to regularly review their supply chain contracts “to ensure that suppliers are obliged to measure and provide relevant climate-related data to concerned companies and collaborate with these companies on mitigating climate-related risks, capturing climate-related opportunities and achieving climate-related targets”. Companies should also keep abreast of developments in greenwashing liability to manage greenwashing risks that could befall their clients, he adds.

Overall, Chun is convinced that the proposed rules could buttress Singapore’s ESG regulatory framework and green credentials in the long run.

“This wider adoption of climate reporting aligns with Singapore’s plan to mobilise financing to catalyse Asia’s net-zero transition and decarbonisation activities by easing the data constraint to facilitate green finance flows into Singapore, accelerating the growth of Singapore’s existing ecosystem of carbon services, developing capabilities in our ecosystem for professional services in sustainability reporting and assurance, and lowering compliance costs for climate reporting through economies of scale,” says Chun.



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