Singapore Exchange Regulation (SGX RegCo) will begin incorporating the IFRS sustainability disclosure standards into its sustainability reporting regime after respondents showed “broad support” during a public consultation, announced the regulator on Sept 23.
From FY2025 onwards, all listed companies will be required to report their Scope 1 and 2 greenhouse gas (GHG) emissions. They will also have to start incorporating the climate-related requirements issued by the International Sustainability Standards Board (ISSB) into their climate-related disclosures.
The decision follows an SGX RegCo market consultation on incorporating the ISSB standards that was announced in March. SGX RegCo had proposed changes — including requiring issuers to report on climate-related disclosures according to the IFRS sustainability disclosure standards — to help issues navigate the green transition.
The consultation, which closed on April 5, saw responses from 52 participants including Temasek Holdings, CapitaLand Investment 9CI and its REITs, Singapore Telecommunications Z74 (Singtel), Jardine Cycle & Carriage C07 , Food Empire Holdings F03 , as well as the big four accounting firms.
The regulator noted that the majority of the respondents supported the shift to mandatory climate-related reporting for issuers compared to the current requirement for certain sectors to do so.
However, they also flagged challenges, especially for smaller issuers, such as the evolving measurements and reporting methodologies for the disclosure of Scope 3 emissions under the IFRS sustainability disclosure standards.
See also: ‘Huge momentum’ in Asia for ISSB adoption, says vice-chair of climate reporting standards body
As such, SGX RegCo will review issuers’ experiences and their readiness before establishing the implementation roadmap for reporting Scope 3 emissions. This does not factor in the one-year transition relief for the disclosure of Scope 3 emissions in the IFRS sustainability disclosure standards.
Currently, the regulator will focus on companies with larger market capitalisations to have them report their Scope 3 emissions from FY2026; and issuers will be given “ample notice” before they are required to do so.
To provide time for issuers to focus on these climate-related disclosures in FY2025, the other primary components of a sustainability report, other than climate-related disclosures, will be mandated from FY2026.
See also: SGX RegCo launches consultation on incorporating ISSB standards into sustainability reporting rules
The existing timeline for listed issuers remains in place, where a sustainability report must be issued no later than four months after the end of the financial year. If the issuer has conducted external assurance on the sustainability report, the report must be released no later than five months after the end of the financial year.
Leaders weigh in
“The changes to our rules mark the culmination of the efforts of the sustainability reporting advisory committee to prepare issuers for a low-carbon future. The disclosure of Scope 1 and Scope 2 GHG emissions is an important step to enable larger issuers to report their Scope 3 GHG emissions,” says Tan Boon Gin, CEO of SGX RegCo. “SGX RegCo on our part will continue to facilitate capacity building to assist issuers on their climate reporting journeys.”
“This is a positive step towards more globally consistent and comparable sustainability-related disclosures, which will enable SGX-listed companies to demonstrate resilience against climate risks as well as seize opportunities in our transition to a low-carbon economy,” adds Lim Tuang Lee, assistant managing director (capital markets), at the Monetary Authority of Singapore (MAS).
To Temasek International’s chief financial officer (CFO) Png Chin Yee, incorporating the IFRS sustainability disclosure standards into its listing rules is a “step in the right direction”.
“Investors require reliable, consistent, and comparable information to inform capital allocation decisions. While we recognise the inherent complexities and challenges associated with Scope 3 measurement, addressing Scope 3 emissions is critical for all stakeholders to move the economy towards net zero,” she says.
See also: ISSB to start researching disclosures on nature, human capital
Fang Eu-Lin, the sustainability and climate change practice leader at PwC Singapore, notes that the enhanced sustainability reporting regime by the SGX RegCo is a “step forward” for consistent and comparable sustainability disclosures across international capital markets.
“We have seen the SGX RegCo required for sustainability reporting to include climate-related disclosures based on the Taskforce for Climate-related Financial Disclosures (TCFD) framework in the past years,” says Fang, who is also a member of the ACRA-SGX RegCo sustainability reporting advisory committee and chairperson of the sustainability and climate change committee of the Institute of Singapore Chartered Accountants (ISCA).
“These lived experiences have helped build ‘muscles’ for the enhanced sustainability reporting regime. While these are enhanced requirements, I am also heartened by the capacity building materials and training that have been developed in the ecosystem, with more to come,” she adds. “Though it has been observed that a number of corporations have progressed well in this area, there is a recognition that Scope 3 measurement is not always straightforward. A number of companies have embarked on their Scope 3 journey to appreciate the emission impact and risks in its value chain, along with subsequent actions that could be taken for ecosystem decarbonisation to occur.”
“To the extent that there is reasonable and supportable information without undue cost or effort, organisations can, in addition to their Scope 1 and 2 emissions, take the lead in progressing on Scope 3,” she continues.
Adrian Chan, vice-chair of the Singapore Institute of Directors (SID), also welcomes the move, noting that adopting the IFRS sustainability disclosure standards will help Singapore companies align with global standards.
“To support SGX in building the capacity of board directors of listed companies on their climate reporting journey, SID together with SGX is launching the Advanced Programme in Sustainability for Listed Entity Directors programme with KPMG in Singapore as knowledge partner,” he says. “The programme will help directors gain knowledge in sustainability governance, equip them with skills to align sustainability goals with business objectives, and prepare them to meet regulatory changes including sustainability reporting based on the IFRS sustainability disclosure standards.”
Table: SGX RegCo
Read more about how Singapore is adopting the ISSB standards:
- ‘Huge momentum’ in Asia for ISSB adoption, says vice-chair of climate reporting standards body (September)
- SGX RegCo launches consultation on incorporating ISSB standards into sustainability reporting rules (March)
- Large private companies must report annual climate-related disclosures from FY2027: Acra, SGX RegCo (February)
- SGX RegCo to seek feedback by year-end on mandating ISSB-aligned climate reporting (September 2023)
- ISSB standards 'best chance we have' at consistent sustainability reporting: SGX RegCo (July 2023)
- ISSB issues inaugural standards, creating common language for climate-related impact on companies (June 2023)
