With the climate crisis pushing further to the forefront of social, economic, and industrial global policy by the day, Singapore appears set to introduce mandatory sustainability reporting in line with new guidelines produced by the ISSB (International Sustainability Standards Board) earlier this month. The climate disclosures would apply to listed companies from as early as FY2025, with large non-listed companies following by FY2027.
This would be among the first mandatory climate-related disclosure policies in Asia, and for non-listed companies with revenue exceeding SG$1 billion (750million USD), would be the first of its kind. The policy would affect over 1000 companies, with a review scheduled for 2027 that could see the revenue threshold lowered to include a further 2,200 businesses. The move is likely timed to prepare for the fact that many Singapore-based companies with significant operations in the European Union will have to comply with reporting rules according to the CSRD (Corporate Sustainability Reporting Directive) by 2028, which are far stricter due to their double materiality approach; essentially measuring a firm’s impact on the environment, not just the impact of sustainability factors on their financial position.
Being a World Leader
The decision shows that Singapore is serious about being a leader not only in industry and economic growth but in taking on the responsibility of tackling sustainable corporate practices in the uncertain business landscape of the climate crisis.
A committee formed by Singapore’s ACRA (Accounting and Corporate Regulatory Authority) and SGX RegCo (Singapore Exchange Regulation) is currently seeking feedback on the recommendations, with the public consultation concluding in September. The final recommendations are set to be finalised by 2024. Mandatory climate reporting already came into effect this year for listed companies in the financial, agricultural, food and forest products, and energy industries, and it will be required for materials, buildings and transportation industries in FY2024.
Assistance and Transitioning
To assist in the transition to more sustainable corporate practices, another statutory Singaporean body, Enterprise Singapore, has set aside SG$ 180 million (135million USD), to support local companies, particularly SMEs, to build their capabilities with regard to managing carbon emissions and sustainability reporting.
However, companies in the first year of reporting would not be required to disclose their scope 3 greenhouse gas emissions, which often account for the majority of a company’s climate impact. This measures, designed to give companies more time to streamline their reporting processes and understand the complexities of transition, means that the material data for a particular company’s carbon footprint is unlikely reliable until the second or third year of reporting.
Regulatory Support
Singapore’s other regulatory and governmental bodies are also throwing support behind the proposal, with the Monetary Authority Singapore (MAS) calling it an ‘important step’ towards fully adopting climate reporting standards domestically, and the central bank promising to take into account the SRAC’s feedback in their own forthcoming proposals.
The proposal comes alongside the ongoing effort of the ‘Green Plan 2030’ which is being spearheaded by multiple government agencies including the Ministry of Sustainability and the Environment, the Ministry of Trade and Industry, and the Ministry of National Development. The Green Plan sets out several ambitious targets for businesses and citizens, including the planting of 1 million new trees.
Enterprise Singapore is also providing new courses for businesses on Decarbonisation and Sustainable finance, which have been on offer since April of this year, fostering wider business participation in the national effort towards sustainability. SGX RegCo also intends to work with partners across Singapore (ACRA, GRI, Singapore Institute of Directors etc) to deliver training for company directors and those preparing sustainability reports, to ensure accurate and streamlined adoption of sustainable practices.
With businesses diversifying their sustainability efforts and governments backing the transition towards net zero by 2050, the business case for climate reporting is only getting stronger. Esther An, chairperson of the SRAC stated that reporting had helped businesses gain a ‘stronger competitive advantage’ in sustainable growth, allowing for investment and opportunity to be not just financially beneficial, but environmentally positive too.
Melchers in Singapore
Melchers Singapore Branch was established in 1954 to coordinate Melchers’ trading activities in Southeast Asia. Due to the rapid economic development in the region, affiliated and subsidiary companies within Southeast Asia were set up to cope with the corresponding increased trading activities. Today, the Singapore office has expanded its business activities across Asia inclusive of Greater China. Established in 1806, and with more than 150 years of experience in East Asia, Melchers is trusted by many international brands and producers to be their “feet on the ground” in this region’s diverse markets, drawing on deep local networks and knowledge, and combining them with dynamic business services and trade infrastructure, to create powerful synergies that deliver results for your business.
