Following recommendations by the Sustainability Reporting Advisory Committee (SRAC) that climate reporting be made mandatory for listed and non-listed companies in Singapore, a public consultation was launched on Jul. 6.

The feedback exercise is being undertaken by the Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo), and was announced in a Jul. 6 press release.

Conducted via REACH, the consultation will end on Sep. 30, 2023.

Listed companies to lead

ACRA and SGX RegCo shared in a press release that the SRAC, after having consulted over 90 participants, made several key recommendations.

First, listed companies should report climate-related disclosures from FY2025 onwards.

This will include incorporated overseas, business trusts and real estate investment trusts.

Secondly, large non-listed companies with an annual revenue of at least S$1 billion should make climate-related disclosures from FY2027 onwards.

The SRAC recommends a review in 2027 with a view to implementing similar reporting requirements for non-listed companies with revenue of at least S$100 million.

For the climate reports, the committee recommends aligning with the standards set by the International Sustainability Standards Board (ISSB).

The ISSB was established at COP26 to develop sustainability disclosure standards for the financial market.

The SRAC also recommends that the climate-related disclosure reports obtain external assurance on Scope 1 and 2 emissions from FY2027 for listed companies and FY2029 for large non-listed companies.

In other words, companies will have to get their reports on these topics independently verified.

Scope 1 emissions are emissions generated from a company's direct operations, while Scope 2 emissions are those produced indirectly from the energy the company buys.

ISSB also recommended that the climate-related disclosures should be done along the same timelines as financial statements to "facilitate timely communication to shareholders and their stakeholders".

Recommendations to be finalised by 2024

According to the press release, ACRA and SGX RegCo will consider the public feedback received before finalising the recommendations by 2024.

Esther An, Chairperson of the SRAC, pointed out that there is a strong business case for climate reporting.

"With more countries pledging for net zero and the rising carbon cost globally, climate strategy and reporting can help companies, listed or non-listed, to mitigate and adapt to risks in the transition to a low carbon economy. What gets measured gets managed," An said.

Currently, only listed companies in five industries are required to provide climate-related disclosures progressively from FY2023.

All other listed companies are required to do so on a 'comply-or-explain' basis. This means the companies can choose to either comply with the reporting requirements, or simply explain why they are unable to do so.

The SRAC was set up by ACRA and SG RegCo in 2022 to help in the development of a sustainability reporting roadmap for Singapore-incorporated companies.

Top image via Nordea