SGX RegCo expects ‘quality reports’ aligned with ‘ambitious’ ISSB standards, despite feedback of slow progress

The results of a recent EY study, along with industry feedback from bodies like the Singapore Business Federation (SBF), claim that the Singapore Exchange Regulation’s (SGX RegCo) rules for mandatory climate-related disclosures are too onerous for smaller listed companies (listcos).

However, these requirements look set to stay. All SGX listcos are required to make climate-related disclosures for their financial years starting on or after Jan 1.

These disclosures must be aligned with the IFRS International Sustainability Standards Board (ISSB) standards, which were issued in June 2023.

Eliza Tan, head of the sustainable development office and IPO admissions at SGX RegCo, says the bourse regulator is “aware” that the ISSB standards are “ambitious”.

Responding to The Edge Singapore over email, Tan adds: “We are aware, for example, that smaller companies found compliance challenging due to operational realities and the ongoing economic and geopolitical uncertainties. To beef up companies’ capability and resources for the new standards, we have been working closely with industry partners to offer training.”

Tan’s response is consistent with the regulator’s stance from June, when SBF called for SGX RegCo to delay mandatory climate-related disclosure for small- and mid-cap Singapore-listed companies by up to two years.

Furthermore, a later deadline would also allow small- and mid-caps to be eligible for the Sustainability Reporting Grant by the Economic Development Board (EDB) and Enterprise Singapore (EnterpriseSG), said SBF. The grant is only applicable for reports issued before it is mandatory to do so.

SBF’s other recommendations, issued June 26, 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.

‘Not surprised’

Interestingly, SBF says it partnered with SGX RegCo for the study. Over April and May, SBF and SGX RegCo engaged “close to 40” Mainboardand Catalist-listed companies, each with a market capitalisation of below $800 million on the climate reporting requirements.

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.

The listcos surveyed told SBF that it was “quite an imposition” for them to be held to the same disclosure standards as larger listcos, “given their more limited resources”.

Hu Ching, head of the Net Zero Transition Programme at SBF, says he was “not surprised” by the feedback. “This can be attributed to their unfamiliarity with the ISSB reporting requirements, which are significantly more detailed and extensive than the Task Force on Climate-related Financial Disclosures (TCFD) framework. As a result, smaller and less-resourced entities face disproportionate pressure, making meaningful compliance especially challenging.”

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Speaking to The Edge Singapore, Hu says the prevailing sentiment may be compounded by the current global business environment. “Companies are grappling with heightened uncertainty caused by external pressures such as geopolitical tensions and trade tariffs. These external pressures demand significant attention and resources from companies, making it challenging for even the mid-caps to adopt ISSB disclosures at this time.”

Less than a month later, EY and global accountancy body CPA Australia released the third edition of the annual “Transparency in focus: State of Climate Reporting in Singapore” study, claiming just 14% of issuers here have considered ISSB standards in forming their climate-related disclosures.

After assessing 359 listcos that published sustainability reports for the financial year ended Dec 31, 2024, EY says the 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”.

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.”

Monitoring progress

Tan, in her email to The Edge Singapore on July 30, says SGX RegCo has been “regularly monitoring” companies’ sustainability reports since 2019. “We engage with companies and use insights from reviews and research including those contained in the Singapore Business Federation’s paper to inform our view of progress.”

Prior to the joint study with SBF, for example, SGX RegCo released in March a review of companies’ climate-related disclosures carried out by the Centre for Governance and Sustainability at NUS Business School.

“That review showed that companies had made muted progress in their climate reporting,” says Tan.

Of the 529 issuers whose sustainability reports were reviewed, 97% carried out climate reporting, namely by having at least one disclosure based on the TCFD recommendations. This compares to 73% in the previous review in 2023. However, only 28% of all issuers provided all 11 disclosures that the TCFD recommends.

As a precursor of sorts, the TCFD recommendations have been in place for local listcos since FY2022 and provide the basis for reporting under the ISSB standards.

The ISSB standards build on the four core themes of the TCFD recommendations — governance, strategy, risk management and metrics and targets — but demand more detailed information.

EY, in its study of Singapore’s listcos, says disclosures pertaining to the step-up requirements under the ISSB standards, such as cross-industry climate metrics and quantification of financial effects, remain limited.

Market consultation

In her responses, Tan points to how SGX RegCo consulted the market in early 2024 before incorporating the ISSB standards into its sustainability reporting rules.

The consultation, which closed on April 5, 2024, saw responses from 52 participants, of which 31 agreed to be named. They include Temasek Holdings, CapitaLand Investment and its REITs, Singapore Telecommunications (Singtel), Jardine Cycle & Carriage, Food Empire Holdings and the big four accounting firms.

Tan tells The Edge Singapore that two small-cap issuers also gave feedback then: property developer Goodland Group and pharmaceutical and consumer healthcare group Hyphens Pharma.

According to Tan, SGX RegCo separately engaged with 45 small-cap issuers on the consultation, and “support for the proposed rule changes was broad”. “Consequently, SGX RegCo announced that all issuers must start disclosing Scope 1 and Scope 2 emissions beginning with FY2025.”

Broadly, 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.

However, respondents raised concerns over disclosing “more challenging metrics”, such as Scope 3 emissions, says Tan. These refer to emissions arising from the company’s upstream and downstream value chain. In total, there are 15 categories within Scope 3, and most companies have only begun reporting on category 6 — emissions arising from business travel.

In fact, a July 2024 study by Schneider Electric and the Institute of Singapore Chartered Accountants (ISCA) found that some 94% of over 500 senior business leaders here had not accounted for Scope 3 emissions.

Hence, SGX RegCo announced in September 2024 that it would “review issuers’ experience and readiness” before establishing the roadmap for Scope 3 emissions reporting, says Tan.

“Ultimately, we want companies — regardless of their size or industry — to produce quality reports that are accurate and useful for investors and other stakeholders,” says Tan. “In general, large-cap companies have the resources and skills to produce better-quality reports aligned with the latest international standards; the smaller companies can learn from them.”

SGX RegCo “expects companies to keep progressing with their reports in terms of scope of disclosure, the level of detail and their alignments with the latest international standards”, she adds. “Where we find that a company has fallen short or regressed, we will directly engage with its board and management to understand their circumstances and work with them to close the gap.”

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