SMEs should prepare early for a future when sustainable reporting is mandatory: Enterprise SG
The statutory board is encouraging such enterprises to also start decarbonising their business operations
SMALL and medium-sized enterprises (SMEs) in Singapore should start taking steps in disclosing their sustainability metrics, even though they are currently not obligated by regulations.
That is because the day will come when sustainability reporting is mandatory for SMEs, and it may come “sooner rather than later”, said Enterprise Singapore chairman Lee Chuan Teck.
“It’s not because the Singapore government wants the SMEs to do so. Because your customers, (those) overseas especially, will increasingly demand that. And so it’s important for you to start thinking about how you want to do that, and start doing so, starting with a simple form of reporting, and then evolve from there,” he said at a sustainability forum organised by UOB on Tuesday (Jul 2).
“We really want SMEs to start on this reporting journey. I think it will happen sooner rather than later,” said Lee.
While Singapore does not currently have such requirements for SMEs, Lee noted that plans are already in place in overseas markets, such as in the European Union, to implement regulations that will require local SMEs exporting to the EU market to do so.
When the government here was deliberating on making climate disclosures mandatory, the issue of whether SMEs should likewise fall within the regulatory ambit also came up, said Lee.
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It eventually felt that the burden on SMEs would be quite substantial in the current environment, and hence did not go forward with it.
The Business Times reported in January this year that manufacturing SMEs, which are suppliers to large manufacturers, see “no urgency” to start reporting their carbon emissions, as their customers are not pushing them for such data.
Currently, only listed companies are required by the Singapore Exchange to make sustainability or climate-related disclosures, including environmental, social and governance factors material to their business.
It was announced earlier this year that mandatory climate disclosures will be extended to large non-listed companies – defined as those with an annual revenue of at least S$1 billion and total assets of at least S$500 million – from the 2027 fiscal year.
Their disclosures have to be aligned with the standards developed by a global accounting standards body called the International Sustainability Standards Board. These standards will also apply to listed companies from FY2025.
In addition to kicking off their sustainability reporting journey, Lee also encouraged SMEs to start decarbonising their business operations as this will eventually give them a competitive advantage.
While this advantage may not be discernible today as consumers are price-sensitive and might not be willing to pay more for sustainable products, he believes this will eventually change as the effects of global warming are felt more acutely.
“So don’t wait too long, because your abatement journey cannot be achieved overnight. It takes a while. In some instances, it takes years. So better to start today, prepare yourselves for the day when consumers and even governments start to require you to be sustainable,” Lee said.
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