SINGAPORE - A committee formed by two of Singapore’s top regulators is seeking public feedback on making disclosure of climate-related financial information mandatory for listed and large non-listed companies.

The public consultation on the recommendations made by the Sustainability Reporting Advisory Committee (SRAC) will run from July 6 to Sept 30, 2023.

The public consultation documents can be accessed via the Reach portal here.

The SRAC recommendations will require listed companies to lead the way and report climate-related disclosures (CRDs) that align with globally recognised standards set by the International Sustainability Standards Board (ISSB) from financial year 2025.

The mandatory CRDs by large non-listed companies with annual revenue of at least $1 billion will start from financial year 2027.

A review is recommended in 2027 with a view to mandate reporting by large non-listed companies with annual revenue of at least $100 million by around financial year 2030.

SRAC was set up by the Accounting and Corporate Regulatory Authority (Acra) and Singapore Exchange Regulation (SGX RegCo), with support from the Ministry of Finance, to advise on the road map for sustainability reporting by companies.

The industry-led committee was formed in June 2022, and also looked at the suitability of international sustainability reporting standards for implementation in Singapore, such as those by the ISSB.

ISSB was formed in 2021 at the COP26 climate change conference in Glasgow to develop standards that will result in a high-quality, comprehensive global baseline of sustainability disclosures focused on the needs of investors and the financial markets.

“The recommendations of SRAC aim to uphold Singapore’s attractiveness as a global business hub while contributing to our national agenda on sustainable development under the Singapore Green Plan 2030,” Acra and SGX RegCo said in a joint statement on Thursday.

Several studies have shown that a significant majority of multinational corporations will weed out vendors in their supply chains that endanger their carbon transition plans.

Hence, SRAC believes that Singapore companies have a US$146.6 billion (S$198 billion) business opportunity – as estimated by a Standard Chartered global study – if they are able to demonstrate they can measure, manage and disclose greenhouse gas emissions.

Currently in Singapore, CRDs consistent with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) is mandatory for listed companies in the financial, food and forest products and energy sectors.

Listed companies in materials and buildings, and transportation industries must do the same from 2024. All other listed companies are required to apply TCFD recommendations on a comply-or-explain basis.

“Bolder climate action and transparency in reporting can become a key competitive advantage, and present new business growth and opportunities,” the joint statement noted. “These recommendations will prepare companies to meet stakeholder expectations, including those of their customers and lenders.”

SRAC chairman Esther An said: “There is a strong business case for climate reporting, as it has helped many businesses to improve performance and create stronger competitive advantage by capturing growth opportunities.”

The committee has also recommended that listed companies include companies incorporated overseas, business trusts and real estate investment trusts.

Meanwhile, companies subjected to mandatory climate reporting should also obtain external assurance on greenhouse gas Scope 1 and Scope 2 emissions.

Scope 1 emissions are direct emissions from owned or controlled sources, while Scope 2 emissions are indirect emissions from the generation of purchased energy.

Companies could opt to make more complex CRDs, such as Scope 3 emissions, one or two years after reporting requirements kick in, the committee said.

Scope 3 emissions are all indirect emissions – not included in Scope 2 – that occur in the value chain of the reporting company, including both upstream and downstream emissions.

SRAC said the external assurance can be provided by Acra-registered audit firms and testing, inspection, certification firms accredited by the Singapore Accreditation Council – the national accreditation body that manages and promotes accreditation schemes and registration programmes.

According to SRAC recommendations, CRDs should have the same reporting and filing timelines as financial statements to facilitate timely communication to shareholders and other stakeholders.

Legal responsibilities should also be imposed on the company, its directors, and/or officers to ensure accountability for CRDs.

Ms Kuldip Gill, Acra’s assistant chief executive, said: “Trusted and consistent climate reporting is essential to drive accountability and decisive actions by companies.”

Mr Helge Muenkel, DBS Bank’s chief sustainability officer, said the purpose of sustainability disclosure is to support decision-making on climate-related goals and help transition Singapore to a low-carbon future.

SRAC said that by 2024-2025, a nationwide capacity building effort will be launched by the Green Skills Committee, set up by the Ministry of Trade and Industry, in partnership with SkillsFuture Singapore.

For a start, the committee will identify the jobs and skills required in the energy sector and for sustainability reporting and assurance and build the training framework and programmes for these jobs, it said.

Enterprise Singapore’s Enterprise Sustainability Programme can also help Singapore companies, especially small and medium-sized enterprises, to build capabilities and capture new opportunities.