Singapore is taking significant steps to enhance corporate transparency and accountability by introducing mandatory climate and ESG reporting standards. The Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo) have introduced regulations for mandatory climate-related disclosures (CRD) to be introduced in a phased approach in line with the recommendations from the Sustainability Reporting Advisory Committee (SRAC).
These efforts align with the International Financial Reporting Standards (IFRS) S1 and S2 and reflect a growing global emphasis on standardized ESG disclosures. The Singapore Exchange (SGX) is at the forefront of this initiative, ensuring that companies provide clear and comparable information to investors and stakeholders.
Key Requirements of Singapore’s CRD
The CRD is designed to ensure that companies provide comprehensive and reliable information about their ESG practices. Here are the core requirements:
- Environmental Disclosures:
- Companies must report on their greenhouse gas emissions
- Disclosure of climate-related risks and opportunities, aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, is required.
- Social Disclosures:
- Information on labor practices, including diversity and inclusion, employee health and safety, and community engagement, must be provided.
- Companies need to disclose their impact on human rights and how they manage social risks in their operations and supply chains.
- Governance Disclosures:
- Details about board composition, executive compensation, and ethical business practices are required.
- Companies must report on their governance structures and how they oversee ESG risks and opportunities.
- Materiality Assessment:
- Companies are expected to conduct a materiality assessment to determine which ESG issues are most relevant to their business and stakeholders.
- Assurance and Verification:
- To enhance credibility, companies are encouraged to seek third-party assurance of their ESG disclosures.
Applicability and Timeline
The mandatory reporting requirements will apply to:
- Publicly Listed Companies: All companies listed on the SGX will be required to report and file annual CRD starting in FY2025, ensuring consistency across the exchange.
- Large Non-Listed Companies: Large Listed Companies with annual revenue of at least SGD 1 billion and total assets of at least SGD 500 million will be required to report and file annual CRD starting in FY2027
Implementation Timeline
For listed companies:
- From FY2025, report and file annual CRD, using requirements aligned with the International Sustainability Standards Board (ISSB) standards
- From FY2026, Scope 3 greenhouse gas (GHG) emissions will be phased in starting from the largest listed companies. SGX RegCo will provide such listed companies with ample notice before the effective date of Scope 3 GHG emissions reporting
- From FY2027, conduct external limited assurance on their Scope 1 and 2 GHG emissions
Large non-listed companies will also be subject to requirements under the Regulations, in particular:
- From FY2027, to report and file annual CRD
- From FY2029, to conduct external limited assurance on their Scope 1 and 2 GHG emissions, and disclose Scope 3 GHG emissions
Summary
Singapore’s adoption of mandatory climate-related disclosures (CRD) underscores its commitment to sustainability and corporate responsibility. By aligning with IFRS standards, Singapore is ensuring that its companies are well-positioned to meet the growing demands of global investors and stakeholders.
Contact us today to see how our solutions can help your business prepare for Singapore’s mandatory climate-related disclosures (CRD)