Singapore Exchange Regulation publishes response to the public consultation on mandatory climate-related reporting requirements

On 23 September 2024, the Singapore Exchange Regulation (SGX RegCo) published amendments to the SGX-ST Listing Rules (Mainboard) (the Mainboard Rules) and the SGX-ST Listing Rules (Catalist) (the Catalist Rules, together the Listing Rules) to incorporate the International Sustainability Standards Board (ISSB) standards into its sustainability reporting rules (see SGX RegCo press release). This is in response to the public consultation launched in March 2024 (see our previous client alert). 

Key changes to Listing Rules effective from FY2025

The key changes to the Listing Rules, which apply to listed companies in Singapore, are: 

Mandatory disclosure of Scope 1 and Scope 2 GHG emissions: All issuers must report Scope 1 and Scope 2 greenhouse gas (GHG) emissions from FY2025; 

Incorporation of ISSB standards: From FY2025, all issuers will be required to provide climate-related disclosures (CRDs) incorporating the climate-related requirements in the ISSB’s sustainability disclosure standards – IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures (the ISSB Standards). SGX RegCo has said that the “baseline requirement” is for issuers to disclose information on climate-related risks and opportunities that apply all the requirements in IFRS S2 (other than the disclosure of Scope 3 GHG emissions), and consequently apply the climate-relevant provisions in IFRS 1.

Other primary components of sustainability report: The other primary components of a sustainability report (excluding CRDs) are to be disclosed on a “comply or explain” basis for FY2025, and on a mandatory basis from FY2026. These primary components, which are set out in the Listing Rules and are based on recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), include (i) material ESG factors; (ii) policies, practices and performance; (iii) targets; (iv) sustainability reporting framework; and (v) board statement and associated governance structure for sustainability practices.

Reporting timeframe: Issuers that do not conduct external assurance on their sustainability reports must issue their sustainability reports together with their annual reports from FY2026, while issuers that conduct external assurance on their sustainability reports will, as a transitional measure, have up to five months from the end of their financial year to issue their sustainability reports. This transitional measure will be subsequently reviewed by SGX RegCo. 

SGX RegCo to review disclosure of Scope 3 GHG emissions 

In response to the challenges highlighted by the respondents to the March consultation on disclosure of Scope 3 GHG emissions, SGX RegCo have said that they will review listed companies’ experience and readiness before establishing the implementation roadmap for reporting Scope 3 GHG emissions. This represents a step back from SGX RegCo’s initial proposal for all issuers to disclose applicable categories of Scope 3 GHG emissions from FY2026. 

However, SGX RegCo intends to prioritise larger issuers by market capitalisation such that these issuers report Scope 3 GHG emissions from FY2026. While SGX RegCo has not released related details, they have stated that “ample notice” will be given to issuers before reporting requirements come into effect. 

Future consultations for other sustainability-related disclosures 

SGX RegCo will review the application of the ISSB Standards for disclosure of sustainability-related information beyond climate-related disclosures (e.g. biodiversity, human capital, etc.) in due course. Separate public consultations will also be conducted to implement IFRS S1 beyond climate-related disclosures.