The Singaporean authorities have proposed a new regulation that would require both public and large private companies to provide climate-related disclosures. This initiative is in line with the International Financial Reporting Standards (IFRS) and the recently published International Sustainability Standards Board (ISSB) disclosure standards. The proposal was put forth by the Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo).

The mandatory climate-related reporting was recommended by the Sustainability Reporting Advisory Committee (SRAC), which was jointly launched by the regulators last year. The main goal of this proposal is to maintain Singapore’s position as a global business hub while contributing to the Singapore Green Plan 2030. This plan is the government’s sustainable transition strategy, which aims to strengthen Singapore’s commitment to the UN’s 2030 Sustainable Development Agenda.

Currently, only listed companies in select sectors are required to provide Task Force on Climate-related Financial Disclosures (TCFD) aligned climate reporting. However, under the new proposals, all listed issuers, including those incorporated overseas, as well as business trusts and REITs, would be required to report climate-related disclosures beginning in fiscal year 2025. Non-listed companies with at least $1 billion in revenues would begin reporting in FY2027.

The regulators plan to conduct a review in 2027 to consider extending the climate disclosure requirements to non-listed companies with revenues of at least $100 million, with reporting to begin around FY2030.

The committee recommended that companies’ reporting mirror the requirements in the ISSB standards, with additional reliefs on complex disclosures such as additional time to implement Scope 3 emissions reporting. The recommendations also propose requiring external assurance on Scope 1 and 2 GHG reporting, beginning in FY2027 for listed issuers and FY2029 for large private companies.

The regulators have launched a consultation into the new mandatory climate-related reporting rules, which will remain open until September 30.

This move by Singapore is a significant step towards integrating Environmental, Social, and Governance (ESG) factors into business operations. ESG ratings are increasingly being used by investors to assess the sustainability and societal impact of an investment in a company or business. They help investors identify potential risks and opportunities from an ESG perspective, and can be a useful tool for companies to improve their sustainability practices. By making climate-related reporting mandatory, Singapore is encouraging companies to be more transparent about their environmental impact, which can ultimately lead to better ESG ratings. This can help companies attract more sustainable investment and can contribute to the overall goal of transitioning to a green economy.