Singapore’s stock market regulator has amended its listing rules to mandate climate-related disclosures in line with the International Sustainability Standards Board (ISSB) framework for all issuers from 2025, albeit a scaled-back version of the recommendations first mooted over a year ago.
To continue reading, subscribe to Eco‑Business.
There's something for everyone. We offer a range of subscription plans.
- Access our stories and receive our Insights Weekly newsletter with the free EB Member plan.
- Unlock unlimited access to our content and archive with EB Circle.
- Publish your content with EB Premium.
The much-anticipated rules now exclude a firm timeline for disclosing Scope 3 emissions or indirect value chain emissions, which typically account for over 70 per cent of a firm’s carbon footprint.
The original timeline for Singapore-listed companies to start disclosing their Scope 3 emissions was 2026, in line with the ISSB’s one-year transition relief for doing so.
In a media release on Monday, Singapore Exchange Regulation (SGX RegCo) shared that in its public consultation some respondents had “highlighted challenges” with Scope 3 reporting. Smaller issuers particularly had difficulties, “in relation to the evolving measurement and reporting methodologies for Scope 3 greenhouse gas emissions”, said the regulator. This is even after taking into account ISSB’s built-in one-year grace period, it added.
SGX RegCo will only start establishing a roadmap for reporting Scope 3 emissions after assessing the readiness of issuers, with “ample notice” given to issuers before the effective date. “The current plan is to prioritise larger issuers… with the intention that they report Scope 3 greenhouse gas emissions from FY2026,” it said.
In June, a survey by the country’s national accountancy body found that nine in 10 local firms have yet to fully measure their Scope 3 emissions. Among those who have set Scope 3 emission reduction targets, only 27 per cent are confident of achieving them, compared to 40 per cent and 31 per cent for Scope 1 and 2 emissions, which are from an entity’s own operations and energy use.
SGX RegCo’s public consultation on the proposed amendments to its sustainability reporting regime – which concluded in April – garnered comments from 52 respondents, including the asset manager BlackRock, sovereign wealth fund Temasek, standards body Global Reporting Initiative (GRI) and the Big Four audit firms Deloitte, Ernst & Young, KPMG and PwC.
The consultation was launched the week after the Singapore government announced that ISSB-aligned climate reporting will be made mandatory for listed and large non-listed companies starting as early as 2025.
“The disclosure of Scope 1 and Scope 2 greenhouse gas (GHG) emissions is an important step to enable larger issuers to report their Scope 3 GHG emissions. SGX RegCo on our part will continue to facilitate capacity building to assist issuers on their climate reporting journeys,” said chief executive officer Tan Boon Gin.
In April, Hong Kong similarly announced that listed companies will need to start disclosing Scope 1 and 2 emissions from 2025. Earlier this month, Australia passed a new law mandating climate reporting for large and medium-sized companies starting next year, which will extend to Scope 3 emissions a year after, in line with ISSB recommendations.
Elsewhere in the region, China, Japan and Malaysia have launched consultations on implementing similar rules in their respective jurisdictions.
A large majority of respondents agreed with SGX RegCo’s proposal to make climate-related reporting mandatory for all issuers, versus the current requirement – based on the Task Force on Climate-related Financial Disclosures (TCFD)’s recommendations – which only applies to five sectors.
As of 2024, only those in the financial, agriculture, food and forest products, energy, materials and buildings as well as the transportation industries are subjected to mandatory TCFD-aligned reporting.
Other primary components of a sustainability report – which include environmental, social and governance (ESG) factors that are material to a firm and board statement for sustainability practices – that are currently only required on a “comply or explain” basis will be made mandatory come 2026.
SGX RegCo also noted that it received requests for more guidance on how to make disclosures with reference to other standards like GRI – which remains the most popular standard among issuers. Respondents also asked that it mandates other frameworks to address impact materiality that considers a firm’s impact on the environment and society, on top of how sustainability-related factors affects its financial performance.
External assurance and transition plans not yet required
According to the media release, SGX RegCo will not be mandating external assurance – or an independent audit of a firm’s sustainability report – on Scope 1 and 2 emissions, and plans to hold a separate public consultation on the proposed timeline to mandate this starting from 2027.
Under the new mandatory rules, listed firms that do not audit their sustainability reports will need to issue them together with their annual reports from 2026.
However, as an interim measure to encourage issuers to conduct external assurance before it becomes mandatory, SGX RegCo will continue giving those who do so up to five months after the end of their financial year to issue their sustainability reports, in line with SGX RegCo’s existing guidance.
SGX RegCo noted that the transitional measure will be reviewed when consulting on external assurance, given “the benefits associated with concurrent issuance of sustainability reports and annual reports” which allows for “an integrated view of an issuer’s performance”. It did not specify when it plans to consult on this issue.
SGX RegCo has also not mandated the disclosure of transition plans – which ISSB chair Emmanuel Faber has deemed “the future of climate reporting” – under its new rules, though its CEO published a column on developing a credible climate transition plan last year.
With the ISSB taking over the United Kingdom-led Transition Plan Taskforce’s responsibility of developing a global guidance for corporate climate transition plans as of June 2024, the global standards body will be seeking to standardise the way firms put out their transition plans to meet net-zero targets.
