Singapore will provide funding support of up to 30 per cent for large companies that will begin making mandatory climate-related disclosures aligned with the International Sustainability Standards Board (ISSB) framework from 2027, a government official said on Friday.
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This comes on the back of the finance ministry’s announcement that it will adopt recommendations first mooted last July by the regulatory bodies Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo) to make climate reporting mandatory for listed and large non-listed companies.
The latest regulation will make Singapore one of the first in Asia to mandate climate disclosures for non-listed companies. Others in the region like Malaysia and Australia have also started consulting on similar requirements.
While small and medium enterprises (SMEs) will not be affected by the new rules, the government will defray 70 per cent of the costs incurred from kickstarting their sustainability reporting, said Low Yen Ling, minister of state for trade and industry of Singapore. To close the skills gap in this area, the government will provide salary support for internships with sustainability reporting service providers, said Low.
She added that Enterprise Singapore, a statutory board under the ministry, will work with the National University of Singapore (NUS) and Nanyang Technological University (NTU) to develop training programmes in carbon management, services and trading.
In 2021, Enterprise Singapore set aside SG$180 million (US$133.2 million) for disbursement over the next four years to build up national capabilities in sustainability reporting and carbon management. Low did not mention whether this scheme will continue beyond 2024.
Reliefs for large companies subjected to new rules
While most of the initial suggestions put forth by ACRA and SGX RegCo have been kept in place, some changes were made to the definition of a large non-listed company and the timeline for disclosing Scope 3 emissions after the public consultation, which concluded last September.
On top of the annual revenue criterion of S$1 billion (US$0.74 billion), ACRA has added a total assets metric of S$500 million (US$371 million) to determine if a company will be subjected to the new rules. This criterion was added in response to suggestions for a more comprehensive assessment criteria that aligns with what other countries like Australia and the European Union are using.
Previously, this meant that about 300 non-listed companies would be affected. It is unclear how this number will change with the new criterion.
ACRA’s joint press release with SGX RegCo also stated that firms with parent companies already subjected to ISSB-aligned standards or other equivalent standards elsewhere like the European Sustainability Reporting Standards (ESRS) will be exempted from reporting.
ACRA will also grant a three-year period to transition to ISSB standards if their parent company is already using other international standards like Global Reporting Initiative (GRI) or Task Force on Climate-related Financial Disclosure (TCFD). A full list of standards and frameworks accepted during the transitional period will be issued in due time, it added.
Both regulatory agencies originally proposed for large non-listed companies to start disclosing their Scope 3 emissions, or value chain emissions from suppliers and customers, by 2029. But in response to feedback from businesses, the timeline will be confirmed at a later time, after asessing the reporting experience of listed companies. At least two years’ notice will be given to allow sufficient time for preparation, said ACRA.
Nonetheless, it encouraged large non-listed firms to “ramp up their capabilities and voluntarily report Scope 3 greenhouse gas emissions in anticipation of heightening market pressure on companies to make such disclosures.” From 2028, Singapore-based companies with significant operations in the European Union (EU) may be subjected to its sustainability reporting requirements, which require Scope 3 disclosures.
More consultations in the works
Two years after the new rules take effect, limited assurance – baseline accuracy checks provided by an independent auditor – on Scope 1 and Scope 2 emissions will be required. In terms of the timeline towards reasonable assurance, a more rigorous level of auditing of what is reported, many were in favour of mandating it two to three years after limited assurance requirements are implemented, noted ACRA.
Before consulting on its reasonable assurance roadmap, ACRA said that it will monitor the implementation experience in “more advanced jurisdications”, like New Zealand, which will require external limited assurance for Scope 1, 2 and 3 emissions from October this year, as well as Australia, which aims to progress to reasonable assurance for all climate disclosures by 2028.
The business regulator updated that it is currently working with the Monetary Authority of Singapore (MAS) and other stakeholders to integrate its disclosure filing system with existing digital platforms like the Singapore Exchange’s ESGenome for listed issuers and Gprnt – which spun-off from the MAS as an independent entity last November – for non-listed entities.
Separately, SGX RegCo will be conducting a public consultation with listed companies who will need to start reporting against ISSB standards from 2025. Since the start of 2024, TCFD-aligned reporting is mandatory for Singapore-listed companies in the financial, agriculture, food and forest products, energy, materials and buildings, as well as transportation industries.
