‘Not doing nothing’: Some smaller listcos using extension to get up to speed with climate reporting
They hail the five-year extension in mandatory disclosures as a reprieve, saying that this will help them produce more meaningful sustainability reports
[SINGAPORE] Conducting gap analyses in climate reporting; developing an implementation road map; sourcing for new vendors and suppliers – these are what some small and mid-sized listed companies said they will be doing with the recent five-year extension in mandatory climate disclosures.
“The delay or the extended timeline doesn’t mean that we are going to just do nothing over the next few years. It simply means we (will be) better prepared – not just in terms of the process, but also in changing how we look into sustainability and how we incorporate sustainability in our business,” said William Ng, chairman and managing director of business analytics company Audience Analytics.
The Accounting and Corporate Regulatory Authority and Singapore Exchange Regulation announced two weeks ago that most climate reporting requirements for small and mid-sized listed companies – defined as non-constituents of the Straits Times Index (STI) with a market capitalisation below S$1 billion – will be pushed back by five years to FY2030.
The extension follows a recommendation by the Singapore Business Federation in June.
The umbrella association of businesses had asked for a one-year to two-year delay in compliance by listed small and mid-sized companies, citing feedback that the majority were not confident in meeting the original timeline of aligning their climate-related disclosures with standards from the International Sustainability Standards Board (ISSB) from January 2025.
Non-STI constituents with a market capitalisation of S$1 billion and above will have to comply from FY2028, while STI constituents will need to stick to the original timeline.
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STI constituents will also have to report their indirect emissions resulting from their supply chain – known as Scope 3 emissions – from FY2026.
While Scope 3 reporting requirements remain voluntary for the rest of the listed companies, they will still have to report operation emissions (Scope 1) and those arising from the use of electricity (Scope 2) from this financial year.
Preparing for ISSB reporting
Smaller listed companies hailed the five-year extension as a reprieve, saying that this will help them produce more meaningful sustainability reports, and they will not just be “ticking checkboxes”.
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Veronica Lai, the chairman of Thakral’s sustainability committee, said that the real estate and lifestyle company will use the time extension to identify its ISSB gaps, and “put in place actionable plans to bridge those gaps”.
The company will also have headroom to build expertise and to set up proper processes, especially in carbon accounting and reduction initiatives.
“We want to build a strong foundation for meaningful and thoughtful climate disclosures to our stakeholders,” she added.
Thakral is also looking to conduct assessments on double materiality and Scope 3 emissions, which refer to indirect emissions resulting from one’s supply chain.
Audience Analytics’ Ng said his company will take the time to source for new venue partners and other vendors that are aligned with sustainability.
“You cannot tell them, ‘Sorry, in the next three months if you don’t have this, we will drop you.’ We don’t have alternatives. So we need those years to prepare our entire supply chain,” he said.
While automotive parts distributor Tye Soon has engaged an external consultant to support its sustainability reporting, and is on track to meet the climate reporting requirements by the original timeline, managing director David Chong said that will definitely increase the company’s compliance costs.
The delay now gives his company time to make climate disclosures in phases – starting with those which requires lesser effort, and then ratcheting it up over the next few years.
He said disclosures relating to occupational health and safety, economic performance and corporate governance are probably the disclosures that Tye Soon would like to prioritise.
“We will work very closely with our consultant. I think consultants will be able to give us a view – ‘If you do this faster, the benefits are these. If you do that slower, the non-benefits would be like these.’ We hope to hear from them as well,” said Chong.
Lacking resources and capabilities
Smaller listed companies have cited various constraints, such as lacking the manpower, expertise and financial resources to meet the original timeline set by regulators.
SGX RegCo announced in September last year that ISSB-aligned climate disclosures will be mandatory for financial years starting from January 2025, which means companies have to produce their sustainability reports to meet these new requirements next year.
“These compressed timelines unfortunately do not afford sufficient time for companies to prepare, comply and thereafter apply for the grant pragmatically… Given that the ISSB standards are relatively new, many businesses will require more time and resources to build the needful capabilities towards meaningful compliance,” said Lai.
Ng also questioned the rationality of overburdening small listed comapnies that have low emissions with the same level of reporting requirements as large, high-emitting companies.
“(There is the question) of whether, number one, it is material enough to our business. And number two, whether it’s even proportionate to ask an office-bound service-oriented business with fewer than 100 employees, to do a full-blown ISSB report,” he added.
In addition, companies now have to navigate issues arising from tariffs imposed by the United States, which have caused global economic uncertainty.
This is exacerbated by most smaller listed companies not having dedicated sustainability teams, with many double-hatting or triple-hatting their sustainability duties on top of what they are already doing daily.
Grace Sai, co-founder and chief executive officer of climate-tech platform Unravel Carbon, suggested that such companies can look within for a younger employee who is passionate about sustainability, to start equipping them with internal expertise.
“You want to find the person who is not necessarily labelled in the official role. I assure you, young people are so passionate about these things, and it’s about finding that internal champion. Because once you have motivation, you learn so much faster,” she said.
“Talent issues, manpower shortages, cash flow issues – these will always be front and centre in terms of fire-fighting… (But climate risk) is part of business planning.”
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