Singapore listcos must report direct and indirect greenhouse gas emissions from FY2025

SINGAPORE-LISTED companies must start reporting their Scope 1 and Scope 2 greenhouse gas (GHG) emissions from the 2025 financial year, according to an enhanced sustainability reporting regime announced by the Singapore Exchange Regulation (SGX RegCo).

Scope 1 covers an entity’s direct emissions; Scope 2 covers indirect emissions from the generation of the electricity purchased to power a company’s operations.

SGX RegCo on Monday (Sep 23) said it will start adopting the latest standards developed by the International Sustainability Standards Board (ISSB), a global accounting standards body, into its sustainability-reporting regime.

The decision comes after the regulator received “broad support” for incorporating the ISSB-issued International Financial Reporting Standards Foundation (IFRS) Sustainability Disclosure Standards from respondents to a public consultation held earlier this year.

However, listed companies here will need to disclose the other primary components of a sustainability report, such as their sustainability-reporting framework and board statement, only from FY2026 onwards. This is expected to provide them time to focus on reporting climate-related disclosures first.

Currently, issuers report the primary components of a sustainability report on a “comply-or-explain” basis. If they do not include a given primary component in their sustainability report, they must state what it does instead and the reasons for doing so.

Based on feedback received from the public consultation, SGX RegCo will now require issuers that do not conduct external assurance on their sustainability reports to issue these disclosures together with their annual reports from FY2026.

For issuers who have conducted external assurance, they are required to issue their sustainability reports no later than five months after the end of the financial year.

In both instances, issuers need to ensure that sustainability reports are available on their respective company websites as well as SGXNet, a Web-based platform for SGX-listed issuers.

According to SGX RegCo, publishing the sustainability report together with the annual report will “allow for an integrated view of an issuer’s performance”.

While SGX already mandates that listed companies make climate-related disclosures, they are permitted to use other internationally recognised standards, such as those developed by the Global Reporting Initiative, another standards-setting body.

Consultation feedback

SGX RegCo had held the consultation on incorporating ISSB standards after authorities announced that listed companies in Singapore will be required to make climate-related disclosures according to standards by the ISSB from FY2025.

A majority of the respondents supported the move for all issuers to carry out mandatory climate-related reporting as opposed to the current requirement for only certain sectors to do so.

At the same time, they pointed out challenges, especially for smaller issuers, regarding the evolving measurement and reporting methodologies for Scope 3 GHG emissions – or indirect emissions arising from their supply chains. This is despite the one-year transition relief for the disclosure of Scope 3 GHG emissions in the IFRS Sustainability Disclosure Standards.

Thus, SGX RegCo stated that it will review issuers’ experience and readiness before establishing the implementation road map for reporting Scope 3 GHG emissions, and will provide ample notice to issuers prior to the effective date.

The regulator’s current plan is to “prioritise” larger issuers by market capitalisation with the intention that they report Scope 3 GHG emissions from FY2026.

Enhancing SGX’s sustainability-reporting regime

In a statement by SGX RegCo, Tan Boon Gin, the regulator’s chief executive officer, noted that the changes to rules reflect the culmination of the efforts of the Sustainability Reporting Advisory Committee (SRAC) to prepare issuers for a low-carbon future.

The SRAC was set up by the Accounting and Corporate Regulatory Authority and SGX RegCo in June 2022 to advise on the road map for advancing sustainability reporting by companies in Singapore.

“The disclosure of Scope 1 and Scope 2 GHG emissions is an important step to enable larger issuers to report their Scope 3 GHG emissions. SGX RegCo, on our part, will continue to facilitate capacity-building to assist issuers on their climate-reporting journeys,” Tan noted.

Lim Tuang Lee, assistant managing director for capital markets at the Monetary Authority of Singapore, added that the changes mark “a positive step towards more globally consistent and comparable sustainability-related disclosures, which will enable SGX-listed companies to demonstrate resilience against climate risks as well as seize opportunities in our transition to a low-carbon economy”.

Png Chin Yee, Temasek International’s chief financial officer, pointed out that such reliable, consistent, and comparable information is required by investors to inform capital allocation decisions.

“While we recognise the inherent complexities and challenges associated with Scope 3 measurement, addressing Scope 3 emissions is critical for all stakeholders to move the economy towards net zero,” she added.

Fang Eu-Lin, a member of the SRAC and the sustainability and climate change practice leader at PwC Singapore, as well as the chairperson of the sustainability and climate change committee of the Institute of Singapore Chartered Accountants, regards the enhanced sustainability reporting regime as “thoughtfully deliberated”.

“While these are enhanced requirements, I am also heartened by the capacity-building materials and training that have been developed in the ecosystem, with more to come. Preparers should look out for such support to help build further muscles for sustainability reporting and gain its potential benefits,” she said.

SGX RegCo, in its response paper to comments on the consultation paper, also highlighted that issuers “typically go above the minimum requirements and aim for best practice in sustainability disclosures”.

To support SGX in building the climate-reporting capacity of board directors of listed companies, the Singapore Institute of Directors (SID) together with the bourse is launching the Advanced Programme on Sustainability for Listed Entity Directors programme, with KPMG as a knowledge partner.

“The programme will help directors gain knowledge in sustainability governance, equip them with skills to align sustainability goals with business objectives, and prepare them to meet regulatory changes including sustainability reporting based on the IFRS Sustainability Disclosure Standards,” said Adrian Chan, vice-chair at SID.