Singapore-listed issuers outside the Straits Times Index (STI) can reference a new roadmap designed to help them meet more stringent climate-related disclosures mandated by the local bourse.
The Institute of Singapore Chartered Accountants (ISCA) and Singapore Exchange Regulation (SGX RegCo) have published the 24-page “Roadmap to navigate SGX's climate reporting timelines”, which aims to help non-STI issuers meet the climate-related requirements of the IFRS Sustainability Disclosure Standards (ISSB Standards).
The roadmap, published Nov 12, assumes that issuers are already reporting climate data in alignment with the precursor Task Force on Climate-related Financial Disclosures (TCFD) framework, which SGX RegCo made mandatory for all issuers from FY2022 on a “comply or explain” basis.
The document outlines the “key incremental disclosures” required for issuers to build on their TCFD-aligned climate-related disclosures to comply with the requirements in the ISSB Standards.
Some gaps highlighted in the roadmap include processes to identify, assess, prioritise and monitor climate-related risks; disclosures around the effects of climate-related risks and opportunities on strategy and decision-making; and issuers’ climate-related transition plans.
In addition, it also highlights common gaps identified in a review of local issuers’ sustainability reports conducted in 2024 by SGX RegCo and the National University of Singapore Business School Centre for Governance and Sustainability.
“Through the roadmap, users can also see that climate reporting is not an isolated process. Instead, it is closely interwoven with the essential process of integrating climate-related considerations into the entity’s business strategy and future-proofing its business,” reads the document’s preface. “The ability of the entity to effectively manage its climate-related risks and opportunities is also of significant interest to investors and lenders.”
A page from the roadmap with a three-year overview of key objectives
See also: ACRA and SGX RegCo extends timelines for climate reporting requirements
Extended timeline
The International Sustainability Standards Board (ISSB) released the IFRS S1 and S2 standards in June 2023, which sets out how companies should disclose information about their climate-related risks and opportunities that could affect their financial performance.
SGX RegCo adopted the standards in September 2024, mandating that all issuers must comply from FY2025.
The new roadmap comes nearly three months after SGX RegCo extended the climate reporting timeline for issuers by up to five years.
Under the revised timeline, non-STI issuers must report their Scope 1 and 2 emissions from their current FY2025 starting on or after Jan 1.
The bourse regulator has split the local issuer universe into three groups: STI constituents, non-STI constituents with a market capitalisation of $1 billion and above, and non-STI constituents with a market cap below $1 billion.
See also: SGX RegCo’s climate reporting extension ‘very generous’, say experts
Non-STI constituent issuers with a market capitalisation of $1 billion and above will be required to report climate-related disclosures beyond Scope 1 and 2 emissions based on the ISSB Standards from FY2028, with the exception of Scope 3 emissions, which will be voluntary until further notice. The remaining non-STI constituents will follow from FY2030.
Scope 1 refers to direct emissions occurring from sources that are owned or controlled by the company, while Scope 2 refers to indirect emissions from the generation of purchased electricity consumed by the firm’s properties and offices.
Scope 3 refers to emissions arising from the company’s upstream and downstream value chain, such as business travel and investments.
Early preparation
Although Scope 3 emissions reporting will not be mandatory until further notice, ISCA and SGX RegCo say preparers of sustainability reports “should begin the process early” to safeguard against “potential liabilities arising from future resource scarcity, environmental regulations, changing consumer preferences [and] scrutiny from investors and shareholders”.
Staying on top of Scope 3 emissions report also presents opportunities, such as driving innovation in supply chain management and product design, and increasing sales and customer loyalty, say ISCA and SGX RegCo.
To begin the process, preparers could take stock of their Scope 3 emissions by estimating emissions from each of the 15 categories of Scope 3 emissions, they add. This will involve engaging suppliers and partners outside the entity through internal departments, such as procurement and logistics; and using less-specific data like proxy data or rough estimates.
Each category can then be examined, and preparers can determine whether to further refine the emission estimates, say ISCA and SGX RegCo.
SGX RegCo says the time extension allows non-STI constituents to build up data collection processes and learn from larger companies who have started to produce ISSB-based climate-related disclosures.
“As this approach suggests, climate reporting is a whole-of-ecosystem effort. We hope that the roadmap will help align the ecosystem in supporting non-STI constituents and large non-listed companies in building the required capabilities within the allotted timeframe.”
Tables: Screengrabs/ISCA, SGX RegCo
Read more about how Singapore is adopting the ISSB Standards:
S’pore ‘not at all’ softening commitment to sustainability reporting: Ravi Menon (September)
SGX RegCo’s climate reporting extension ‘very generous’, say experts (September)
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)
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)
