Singapore to propose climate reporting for large companies

On July 6th Singapore’s Sustainability Reporting Advisory Committee (SRAC), set up by the Accounting and Corporate Regulatory Authority and Singapore Exchange Regulation, launched a public consultation on its recommendations to make climate-related disclosures (CRD) mandatory for all listed and large non-listed companies with annual revenue of at least S$1bn (US$757.6m). Currently, only listed enterprises in the financial, food, forest products and energy sectors will soon be required to provide CRDs consistent with the recommendations of the Task Force on Climate-Related Financial Disclosures.

The move will set the industry standard practice, which will accelerate Singapore’s progress in achieving net-zero emissions by 2050. The introduction of mandatory CRDs is aligned with global standards set by the International Sustainability Standards Boards (ISSB). Companies will have a consistent framework for sustainability reporting, which reduces the confusion on how outcomes should be measured and reported. These CRDs will also have to undergo external audits to ensure accuracy and reliability. Adopting common metrics and ensuring quality reporting will facilitate comparison of environmental impacts across firms.

As Singapore attains international standards in green practice, sustainability reporting helps companies to capitalise on new growth opportunities. Stakeholders increasingly seek greater emphasis and transparency on a company’s carbon footprint, and those able to meet these demands will attract new investors who value sustainability. Sustainability reporting also allows companies to differentiate their green products or services in the market, giving them a competitive edge. Moreover, companies who act on the insights of their reports to evaluate their operations have the potential to drive innovation and optimise resource utilisation.

However, there are challenges in putting this into practice. First, the implementation of sustainability reporting regulations will require that companies allocate additional resources, posing a significant challenge for small and medium-sized enterprises if these regulations are extended to include them in the future. Second, as sustainability reporting is fairly nascent, companies will find it challenging to hire competent professionals in this area, which will push up costs even more. Although tertiary institutions in Singapore are revamping their curricula to incorporate sustainability education, it will take time for graduates to enter the workforce.

The mandatory CRDs by listed companies will start in financial year 2025 and large non-listed companies in financial year 2027. SRAC will consult industry players on this rule change within the next two months. This regulation is expected to uphold Singapore’s reputation as a prominent business hub, as it aligns with the growing emphasis on sustainability reporting over recent years. A review will be conducted in 2027 to mandate the smaller non-listed companies (with annual revenue of more than S$100m, or US$74m) in CRDs.

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