ACRA, SGX RegCo respond to feedback from consultation on Sustainability Reporting Advisory Committee recommendations: Mandatory climate reporting for listed issuers and large non-listed companies

12 March 2024

On 28 February 2024, the Accounting and Corporate Regulatory Authority (“ACRA”) and Singapore Exchange Regulation (“SGX RegCo”) published details of the mandatory climate reporting requirements for listed issuers and large non-listed companies in Singapore.

Mandatory climate reporting requirements

Listed issuers

From financial year (“FY”) 2025, all listed issuers will be required to report and file annual climate-related disclosures (“CRD”), using requirements aligned with the standards (“ISSB Standards”) issued by the International Sustainability Standards Board (“ISSB”).

Non-listed companies

From FY 2027, non-listed companies (“NLCos”) with annual revenue of at least S$1 billion and total assets of at least S$500 million (“Large NLCos”) will be required to do the same. ACRA will review the experience of listed issuers and Large NLCos before introducing reporting requirements for other companies.

Timeline

The timeline for the implementation of mandatory CRD is summarised as follows:

Timeline for requirements	Listed issuers	Large NLCos
CRD, including Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions	FY 2025	FY 2027
CRD for Scope 3 GHG emissions	FY 2026	No earlier than FY 2029
External limited assurance on Scope 1 and Scope 2 GHG emissions	FY 2027	FY 2029

Rationale

The introduction of mandatory CRD is part of the Government’s efforts to help companies strengthen capabilities in sustainability, and to ride the green transition. ACRA and SGX RegCo note that as the green momentum intensifies, companies that are able to provide CRD could benefit from access to new markets, customers, and financing.

Background

ACRA and SGX RegCo set up the Sustainability Reporting Advisory Committee (“SRAC”) to help develop a roadmap that aims to uphold Singapore’s attractiveness as a global business hub while contributing to the national agenda on sustainable development under the Singapore Green Plan 2030. On 6 July 2023, ACRA and SGX RegCo published a public consultation paper on the recommendations of SRAC to advance climate reporting in Singapore for both listed issuers and non-listed Singapore companies.

In their response published on 28 February 2024, ACRA and SGX RegCo stated that they have accepted SRAC’s recommended roadmap with some refinements.

Companies required to report CRD and applicable reporting standard

Listed issuers

All listed issuers will have to report and file CRD, including Scope 1 and Scope 2 GHG emissions, from FY 2025. “Listed issuers” are issuers of equity securities listed on Singapore Exchange Securities Trading Limited, comprising Singapore-incorporated and foreign-incorporated companies, business trusts, investment funds (excluding exchange traded funds), and real estate investment trusts.

Listed issuers will be required to report Scope 3 GHG emissions from FY 2026.

Large NLCos

Large NLCos will have to report and file CRD, including Scope 1 and Scope 2 GHG emissions, from FY 2027. Following feedback, the definition of “Large NLCos” has been revised to include an additional size criterion (i.e. total assets of at least S$500 million), beyond the annual revenue criterion of S$1 billion as originally proposed by SRAC.

The annual revenue and total assets thresholds for NLCos are:

• measured using company-level financials, unless the NLCo is a parent, in which case, both criteria are measured based on group-level financials; and
• assessed based on the financials for two FYs immediately preceding the current FY, unless the company (i) has not reached its third FY after incorporation, or (ii) is in the first or second FY when the proposed reporting obligations commence, in which case, both criteria are assessed based on the current FY.

ACRA will exempt from mandatory reporting Large NLCos with parent companies that are reporting CRD under the following circumstances:

• A large NLCo whose parent company reports CRD using ISSB-aligned local reporting standards or equivalent standards (e.g. European Sustainability Reporting Standards) will be exempted from reporting and filing CRD with ACRA, subject to certain conditions.
• A large NLCo whose parent company reports CRD using other international standards and frameworks (such as the Global Reporting Initiative Standards and the Task Force on Climate-related Financial Disclosures recommendations) will be exempted from reporting and filing CRD with ACRA for a transitional period of three years, from FY 2027 to FY 2029. ACRA will review whether to extend the transitional period, depending on global developments relating to the adoption and recognition of other standards and frameworks.

As international sustainability disclosure standards and frameworks are continually evolving, ACRA will issue guidance on the standards and frameworks deemed equivalent and those that will be accepted during the transitional period to guide implementation. Feedback on the exemption pathways will be sought during the consultation on the Bill to amend the Companies Act 1967 (“CA Bill”).

Large NLCos will not be required to report Scope 3 GHG emissions any time earlier than FY 2029. The timing for Large NLCos will be confirmed after ACRA has reviewed the reporting experience of listed issuers. ACRA will provide at least two years’ notice for Large NLCos to prepare for the reporting. NLCos are however encouraged to ramp up their capabilities and voluntarily report Scope 3 GHG emissions in anticipation of heightening market pressure on companies to make such disclosures. NLCos with substantial activity in the European Union (“EU”) may also be subject to the EU’s sustainability reporting requirements from 1 January 2028, which requires Scope 3 GHG emissions disclosures.

Other NLCos

ACRA will conduct a review around 2027 to consider whether the CRD reporting requirements should be expanded to other NLCos by around FY 2030.

External assurance

Listed issuers will be required to conduct external limited assurance on their Scope 1 and Scope 2 GHG emissions from FY 2027, while Large NLCos will be required to do so from FY 2029.

The assurance should be provided by ACRA-registered audit firms or Testing, Inspection, Certification firms accredited by the Singapore Accreditation Council.

The assurance is to be conducted based on:

• a Singapore standard equivalent to ISSA 5000 (General Requirements for Sustainability Assurance Engagements); or
• SS ISO 14064-3 Greenhouse gases - Part 3 (Specification with guidance for the verification and validation of greenhouse gas statements).

In their response, following feedback relating to the differences between the two assurance standards, ACRA and SGX RegCo said that they will study the standards and bridge critical gaps, if any, during the CA Bill consultation. They will also explore the feasibility of standardising the assurance report to enhance understanding of the audit work performed by all users.

Reporting and filing

ACRA and SGX RegCo agree with SRAC’s recommendation that the existing reporting and filing timelines for financial statements in the Companies Act 1967 should be applied to CRD, together with the mechanism to apply for extension of time.

SGX RegCo has since launched a public consultation on the detailed listing rule amendments to adopt the ISSB Standards. This includes retaining the existing sustainability reporting timeline for listed issuers for FY 2025, and requiring CRD to be issued at the same time as annual reports from FY 2026, in accordance with the ISSB Standards.

SRAC’s recommendation that CRD should be filed in a digital structured format to facilitate the consumption of data has also been accepted. ACRA and SGX RegCo are working with the Monetary Authority of Singapore and other stakeholders with the view to integrating the filing process and data fields of CRD. There will be a consultation on the proposed data fields after the information needs of users and the available digital taxonomies have been studied.

Listed issuers can include CRD in a separate report, or as part of the annual report. If CRD is included in a separate report, both reports must be published at the same time.

Other legal requirements

SRAC recommended that the existing legal requirements related to financial reporting should be imposed on climate reporting, except for internal controls that should be encouraged. ACRA and SGX RegCo accept the recommendation.

Some respondents were of the view that sanctions for climate reporting should not be placed on an equal footing with those for financial reporting, while others suggested a phased approach to sanctions. Following feedback, ACRA said that they will consult on the proposed approach during the CA Bill consultation.

Reference materials

The following materials are available on the ACRA website www.acra.gov.sg and the Singapore Exchange website www.sgx.com:

• Press release: Climate reporting to help companies ride the green transition
• Turning Climate Ambition into Action in Singapore: Response to the Public Consultation on Sustainability Reporting Advisory Committee’s Recommendations
• Infographic on Climate Reporting and Assurance Roadmap in Singapore