Although the deadline to meet climate-related disclosure requirements under the IFRS Sustainability Standards Board (ISSB) is drawing near, most companies listed on the Singapore Exchange (SGX) do not appear prepared for the new sustainability reporting regime, according to the results of an annual study by EY and global accountancy body CPA Australia.
Of the 359 companies that published sustainability reports for the financial year ended Dec 31, 2024, 98% — or 351 — contained disclosures that met at least one of the Task Force on Climate-related Financial Disclosures' (TCFD) recommendations, according to the third edition of EY’s “Transparency in focus: State of Climate Reporting in Singapore” study.
The TCFD recommendations have been in place since FY2022 and provide the basis for reporting under the ISSB standards, which will take place for FY2025.
However, despite the phased approach, only 32% have made disclosures against all 11 recommendations by the TCFD.
EY notes that most (60%) of the large-cap issuers made disclosures against all 11 TCFD recommendations, while only 35% of mid-cap and 25% of small-cap companies did the same.
Since FY2022, listed issuers in Singapore have been required to provide climate-related disclosures based on the TCFD recommendations. At the end of the reporting period for FY2025, all issuers will be required to disclose mandatory climate-related disclosures under the ISSB standards.
The ISSB standards build on the four core themes of the TCFD recommendations — namely: governance, strategy, risk management and metrics and targets — but demand more detailed information.
Companies with financial years ending Dec 31 now have less than six months to make the transition to the ISSB standards, says Ken Ong, Partner, Assurance at EY.
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In FY2024, 14% of issuers have considered ISSB standards in forming their climate-related disclosures, according to EY.
Nevertheless, disclosures pertaining to the step-up requirements under the ISSB standards, such as cross-industry climate metrics and quantification of financial effects, remain limited, adds EY.
“These low levels of disclosures reflect nascency in the adoption of the ISSB framework and suggest increased focus and resources may be needed to address the requirements to comply with the FY2025 adoption deadline,” reads EY’s 42-page report.
Themin Suwardy, Associate Professor of Accounting (Practice) at Singapore Management University and chairperson of the membership committee in CPA Australia, says: “Transitioning to ISSB-aligned sustainability reporting is more than a compliance exercise — it demands a fundamental mindset and capability shift.”
Suwardy adds: “Organisations must move beyond viewing climate reporting as the sole responsibility of sustainability teams. This requires investing in upskilling staff across all functions to ensure that climate-related information is integrated into strategic decision-making processes. Strengthening internal capabilities will better position organisations to deliver high-quality and useful disclosures that align with global requirements.”
SBF recommendations
Last month, the Singapore Business Federation (SBF) made four recommendations to Singapore Exchange Regulation (SGX RegCo), proposing an extension of “one to two years” for small- and mid-caps to comply with the climate reporting requirements.
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SBF’s other recommendations are to make disclosure requirements “proportionate” for these smaller listcos, which typically have a market capitalisation of below $1 billion; provide “Singapore-relevant cross-sector and sector-specific guidance”; and to designate a central platform for digital reporting of climate-related disclosures.
SBF says it partnered SGX RegCo in April and May to engage “close to 40” Mainboard- and Catalist-listed companies, each with market capitalisation of below $800 million. Through a roundtable and survey, SBF assessed these companies’ readiness to meet SGX RegCo’s mandatory climate reporting requirements.
According to SBF, only 4% of these companies surveyed are “very confident” in meeting the timeline.
Infographic: EY
Read more about how Singapore is adopting the ISSB standards:
- SGX RegCo ‘aware’ ISSB climate reporting rules are ‘ambitious’, ‘welcomes’ SBF’s call to delay deadline (June)
- Nearly all listcos have begun climate reporting; SGX RegCo still mulling Scope 3 roadmap (March)
- SGX RegCo will require ISSB-aligned climate-related disclosures from all listed issuers starting FY2025 (September 2024)
- ‘Huge momentum’ in Asia for ISSB adoption, says vice-chair of climate reporting standards body (September 2024)
- SGX RegCo launches consultation on incorporating ISSB standards into sustainability reporting rules (March 2024)
- Large private companies must report annual climate-related disclosures from FY2027: Acra, SGX RegCo (February 2024)
- 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)
