In 2024, the rules for sustainability reporting within Singapore could change dramatically.
Earlier this year, the Sustainability Reporting Advisory Committee (SRAC) looked into improving the country’s process for sustainability reporting—an effort that came on the heels of the International Sustainability Standards Board (ISSB) announcing their inaugural pair of sustainability reporting standards.
For context: as part of its work, SRAC assists with planning for the broader adoption of sustainability reporting among companies in Singapore.
The roadmap they're helping craft has two main objectives: maintaining the city-state’s position as a prominent hub for global business, and bolstering the country's commitment to the sustainable development goals outlined within the Singapore Green Plan 2030.
Let’s examine the details of SRAC’s proposals, and evaluate the potential impact on Singapore-based businesses.
Who made these proposals?
The proposals were made by SRAC. For context, SRAC was established by both the Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo)—two organizations that provide guidance for advancing sustainability reporting practices among companies in Singapore.
In particular, SRAC was created to fulfill several goals: developing the roadmap mentioned above, and assessing how international sustainability reporting standards could be implemented within the country.
How would this impact sustainability reporting for Singapore-based companies?
Climate-related disclosures: For climate-related disclosures (CRD), reporting would have to be aligned with the newly-released ISSB standards.
Assurance: External Limited Assurance would be needed for Scope 1 and 2 greenhouse gas (GHG) emissions. This would occur 2 years after mandatory reporting kicks in (FY2027 for listed companies). Currently, there is no requirement for assurance—issuers only need to declare if a report was assured (or not), and the scope of assurance.
Climate risk metrics: Climate-related disclosures, which include climate risk, would have the same reporting and filing timelines as financial statements to facilitate timely communication to shareholders and other stakeholders.
When would the new requirements start?
For SGX-listed companies, these proposals are slated to take effect starting in FY2025.
If your company is not listed on SGX but generates at least $1 billion in revenue, then the proposals are expected to come into play from FY2027. Also, if your company is not listed and falls within the revenue range of $100 million to under $1 billion, these plans are anticipated to be implemented around FY2030.
What we think about the proposals
Given the urgency of the climate crisis, we feel that the proposed changes are a step in the right direction, and that they can be built upon to hasten progress toward net zero.
Across the world, our collective effort when it comes to achieving the Paris Agreement’s goal of limiting global warming to 1.5 degrees isn’t where it needs to be.
As a result, we feel strongly about the need for immediate action by companies within the private sector and see emission disclosures as a vital way for organizations to understand their climate risks, and make important business decisions related to decarbonization.
Our hope is that more non-listed companies with revenues of at least $250 million will start sustainability reporting from FY2026. For organizations with $50 million or more in revenue, we suggest advancing the review to early 2026 and making reporting mandatory from FY2028.
We also propose limiting relief for Scope 3 GHG emissions to one year, which would align with both the ISSB standards and ESRS framework, as we believe that understanding value chain emissions is crucial for companies to manage climate risks and opportunities.
Businesses should also be encouraged to assess their Scope 3 emissions as soon as possible, as this is very likely to be the part of the value chain where their largest exposure to climate risk lies.
Concerning assurance, we propose subjecting Scope 1 and 2 emissions to reasonable assurance for large accelerated filers, starting in FY2028 for listed issuers.
We also take the view that it’s not feasible to reasonably assure Scope 3 GHG emissions—this is due to the flexible nature of evolving standards and the wide variation of input information that can be used to generate emission results. Hence, for other climate-related disclosures, limited assurance should be conducted instead.
Of course, we’re keenly aware of both the level of preparation and support that companies need when it comes to making GHG emission disclosures.
However—in line with our mission and work—we believe that emissions reporting can be carried out in a way that’s remarkably seamless, and that Singapore has the expertise, solutions, and tools to significantly streamline and improve the decarbonization journey for companies.
What can Singapore-based companies do to prepare for these proposed changes?
Here are 5 recommendations to help businesses in Singapore proactively prepare for the potential changes in sustainability reporting regulations:
1. Start measuring your emissions
To better position themselves for the proposed changes, we recommend that Singapore-based companies begin putting in place processes to measure emissions in ways that align with the ISSB standards. This includes identifying their Scope 1, 2, and 3 emissions, as well as climate risk metrics, and devising a plan for disclosure and emission reduction. This would then be best supported with a larger, more comprehensive strategy that embeds sustainability into the business’s operations and decision-making.
2. Invest in data collection and reporting infrastructure
Companies should invest in data collection and reporting infrastructure to ensure accurate and timely reporting of emissions and climate-related disclosures. This may involve upgrading systems and putting in place new procedures to meet the proposed requirements. At Unravel Carbon, we recently launched a new feature that was designed to enhance the process that teams employ when it comes to emissions reporting.
3. Engage with stakeholders
To address these proposed changes effectively, companies should engage with stakeholders, including shareholders, customers, and employees, to communicate their sustainability efforts and inquire about feedback on their disclosure and reduction strategies.
4. Seek professional assurance services
Companies should plan ahead to engage professional assurance services for their Scope 1 and 2 GHG emission reports, as this would become mandatory two years after the initial reporting requirement for listed companies (FY2027). Preparing in advance will ensure a smooth transition to adherence.
5. Monitor regulatory updates
Given the evolving nature of sustainability reporting regulations, companies should establish a mechanism to monitor regulatory updates and adapt their reporting strategies accordingly. Staying informed and flexible will be helpful in meeting future requirements and maintaining compliance.
Though SRAC’s proposals are yet to be finalized, it remains imperative for Singapore-based companies to remain informed of the modifications to sustainability reporting that are currently under review, and that could soon come into effect.
By proactively taking measures now, businesses can strengthen their readiness to fulfill new obligations that may be required of them in the near future.
Simultaneously, companies should also be assessing ways to adopt sustainability as a strategic imperative—an approach that will enable organizations to be nimble when it comes to adapting to industry movements, while also ensuring that risks are managed and that opportunities are realized.
Over time, as businesses continually evaluate and improve their sustainability reporting procedures, we can expect to see the beneficial impact of these efforts on the pace of decarbonization within Singapore's economy, and at the global level as well.
To learn more about how we help companies prepare for potential changes to sustainability reporting, get in touch with us here.