Large private companies in Singapore will be required to report and file annual climate-related disclosures starting FY2027. These companies are defined as those with annual revenue of at least $1 billion and with total assets of at least $500 million.
The move is part of the government’s efforts to help companies strengthen capabilities in sustainability, says Second Minister for Finance Chee Hong Tat at the Ministry of Finance Committee of Supply on Feb 28.
These large private companies will follow Singapore’s listed issuers, which will be required to do the same by FY2025, using the International Sustainability Standards Board’s (ISSB) standards, issued in June 2023.
These annual climate-related disclosures will first have to include Scope 1 and 2 greenhouse gas (GHG) emissions. Listed issuers will have to disclose their Scope 3 GHG emissions from FY2026 and conduct external limited assurance on Scope 1 and 2 GHG emissions from FY2027, while large private companies have until FY2029 to meet both requirements.
Mandatory climate reporting for listed issuers and large private companies was first mooted by the Sustainability Reporting Advisory Committee (SRAC) in July 2023.
The SRAC is an industry-led committee set up by the Accounting and Corporate Regulatory Authority (Acra) and Singapore Exchange S68 Regulation (SGX RegCo) to advise on the roadmap for advancing sustainability reporting by companies in Singapore.
Since FY2023, listed issuers in the financial, energy and agriculture, food and forestry products industries have been required to provide climate-related disclosures aligned with the TCFD recommendations.
All other listed issuers are required to apply TCFD to their climate-related disclosures on a “comply-or-explain” basis.
Exemptions for some
According to a joint statement by Acra and SGX RegCo, some companies have given feedback that they are already reporting using other international standards and frameworks, in order to meet requirements in other jurisdictions or to keep their investors informed.
Hence, Acra will exempt some large private companies with parent companies that are already reporting climate-related disclosures.
To qualify for this exemption, the parent company’s climate-related disclosures must use ISSB-aligned local reporting standards or equivalent, such as the European Sustainability Reporting Standards.
Should the parent company’s climate-related disclosures use other international standards and frameworks, such as the Global Reporting Initiative (GRI) Standards or the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, the large private company will be exempt from reporting and filing climate-related disclosures with Acra until FY2029.
Acra says it will review whether to extend the transitional period, “depending on global developments relating to the adoption and recognition of other standards and frameworks”.
Smaller private companies are next
Mandatory climate reporting could be on the horizon for smaller private companies as well.
See also: SGX RegCo to seek feedback by year-end on mandating ISSB-aligned climate reporting
The SRAC’s recommendations from July 2023 included a review, scheduled for 2027, to mandate climate reporting by private companies with annual revenue of at least $100 million by around FY2030.
In a Feb 28 announcement, Acra says it will review the experience of listed issuers and large private companies before introducing reporting requirements for other companies.
The Ministry of Trade and Industry (MTI) will extend support to help companies kickstart their climate reporting journey and build climate reporting capabilities. More details will be shared by MTI during their Committee of Supply.
Acra chief executive officer Ong Khiaw Hong says: “Acra is committed to sustainability and environmental responsibility, and to making Singapore the best place for business. That is why we are working actively with SGX RegCo and the business community to advance climate reporting in Singapore — a crucial step in addressing the pressing challenges of climate change.”
Tan Boon Gin, chief executive officer of SGX RegCo, says SGX-listed issuers have had a head-start in climate reporting and many have seen its benefits. “Companies are better-equipped to meet demand from their lenders, customers and investors for sustainability-related information. They can also more readily access the growing pool of sustainable capital. These position Singapore well as a green economy.”
SGX RegCo will separately conduct a public consultation on the detailed rule amendments to implement the recommendation relating to listed issuers, including requiring climate-related disclosures based on the ISSB Standards from FY2025.
SGX RegCo is expected to finalise its recommendations on the ISSB Standards this year.
