Mandatory climate reporting for listed and large non-listed companies in Singapore

On 28 February 2024, the Accounting and Corporate Regulatory Authority of Singapore (ACRA) and the Singapore Exchange Regulation (SGX Regco) provided details on mandatory climate reporting that will be implemented for all listed issuers and large non-listed companies in Singapore, following the public consultation held in 2023 (see ACRA’s press release).

In a nutshell:

• from FY2025, all listed issuers (including those incorporated overseas, business trusts and real estate investment trusts) must report and file annual climate-related disclosures (CRDs), using requirements aligned with the International Sustainability Standards Board (ISSB) standards; and
• from FY2027, large non-listed companies must provide CRDs, which will be filed with ACRA. A large non-listed company is defined as one with annual revenue of at least S$1 billion and total assets of at least S$500 million for two financial years immediately preceding the current financial year. This is a higher benchmark than initially proposed at the public consultation stage, where a large non-listed company was proposed to be defined as one with annual revenue of at least S$1 billion. 

For further information on the ISSB global sustainability disclosure standards see our previous blog post.

Significant change from the current regime

This marks a significant change from the current regime, under which:

• climate reporting is mandatory only for listed issuers in certain specific sectors (i.e. (i) financial; (ii) agricultural, food and forest products; (iii) energy; (iv) transportation; and (iv) materials and buildings);
• all other listed issuers must include climate reporting in their sustainability reports on a “comply or explain" basis only; and 
• non-listed companies are not subject to climate reporting requirements.

Timeline for implementation of new requirements

These mandatory CRDs will be introduced in a phased approach as follows:

Exemptions for large non-listed companies with parent companies that report CRD

ACRA will exempt large non-listed companies where its parent company is already making CRDs under the following circumstances: 

• a large non-listed company whose parent company reports CRDs using ISSB-aligned local reporting standards or equivalent standards (e.g. the European Sustainability Reporting Standards) will be exempt from reporting and filing CRD with ACRA, subject to certain conditions being fulfilled (e.g. the large non-listed company’s activities are included within the parent company’s report, which is available for public use); and 
• a large non-listed company whose parent company reports CRDs using other international standards and frameworks (e.g. the Global Reporting Initiative Standards, Task Force on Climate-related Financial Disclosures (TCFD) Recommendations), will be exempt from reporting and filing CRDs with ACRA (subject to the same conditions as per point 1 above) for a transitional period of three years (from FY2027 to FY2029). ACRA will review whether to extend the transitional period, depending on global developments on the adoption and recognition of other standards and frameworks. This transitional period was not included in the initial consultation and has been introduced in view of feedback received from the public.

ACRA will issue further guidance on the standards and frameworks deemed equivalent and those that will be accepted during the transitional period, in order to guide implementation. 

External assurance requirements

All listed issuers will be required to conduct external limited assurance on their Scope 1 and 2 GHG emissions from FY2027. Large non-listed companies will be required to do so from FY2029.

The external assurance must be provided by a registered climate auditor, which can be an ACRA-registered audit firm or a testing, inspection and certification firm accredited by the Singapore Accreditation Council (SAC). External assurance will be conducted based either on a Singapore standard equivalent to ISSA 5000 (General Requirements for Sustainability Assurance Engagements) that is being developed by the International Auditing and Assurance Standards Board (IAASB), or SS ISO 14064-3, which is Singapore’s identical national adoption of ISO 14064-3.

What’s next?

Potential application to smaller non-listed companies: ACRA will conduct a review in 2027 on the experiences of listed and larger companies, before deciding whether similar climate reporting obligations will be subsequently extended to smaller, non-listed companies. In the meantime, companies not subject to mandatory reporting can voluntarily file their climate reporting if they have prepared it in accordance with the prescribed CRD requirements.

Funding for companies to meet new CRD requirements: The Singapore Government has announced the launch of a new Sustainability Reporting Grant for large companies with annual revenues of S$100 million and above. It will cover up to 30 per cent. of qualifying costs, capped at S$150,000 per company, for the preparation of a company's first sustainability report. While small and medium-sized enterprises (SMEs) are not subject to the new rules, a separate programme will also be set up to support and fund sustainability reporting by SMEs.

Upcoming consultation on the amendment of the Companies Act 1967: ACRA will launch a public consultation on an upcoming bill proposing amendments to the Companies Act 1967 to implement the above changes, particularly as they apply to large non-listed companies.

Ongoing consultation on integration of ISSB standards into listing rules: SGX Regco has published a consultation paper on 7 March 2024, detailing the steps to be taken to incorporate the ISSB standards into its sustainability reporting rules for CRDs. These will apply to listed companies in Singapore. The consultation closes on 5 April 2024. For further information on the SGX consultation, see our blog post. 

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2024 will be a critical year in the implementation of various sustainability disclosure regimes across the globe and we are seeing countries across Asia proposing plans to adopt the ISSB sustainability standards, including Hong Kong SAR (see our previous blog post) and Malaysia (see our previous blog post). 

With this latest announcement, Singapore is a front runner in Asia’s ESG disclosure landscape.