Singapore Mandates Greenhouse Gas Reporting, Starting in the 2025 financial year, all listed companies in Singapore will be required to report their greenhouse gas emissions, focusing on two key areas.
Scope 1 covers emissions from sources controlled or owned by the company. Therefore, this would include all combustion activities using fossil fuel from company-owned vehicles, company-provided heating, and industrial activities. The Singapore Exchange communicated this demand in a statement dated September 23.
The second area concerns Scope 2 emissions, which are indirect emissions resulting from the generation of purchased electricity, steam, heating, or cooling consumed by the company.
Aligning such disclosures on climate with IFRS Sustainability Disclosure Standards to be issued by the International Sustainability Standards Board will also be necessary. That is in addition to the recommendations of the task force on climate-related financial disclosures, which SGX already began implementing from the 2022 financial year.
The move to mandatory reporting is a big step forward toward holding all companies responsible for their environmental impact, irrespective of sector. SGX said that it will give firms advance notice before requirements are enforced and will expand reporting of all emissions by FY 2026.
Such a move on the part of SGX is indicative of an increasingly more significant requirement for more transparency and accountability over environmental effects. For Scope 3 disclosures, which involve all indirect emissions in the value chain, Scope 3 is exempted only after one year of its publication of this report. Smaller firms and also businesses complained about this factor as they felt that it would be difficult to align their measurement and reporting methodologies regarding this category.
Given these new challenges, the readiness of the firms will be assessed by SGX before finalizing the timeline of Scope 3 disclosures. Greater companies will be targeted from FY 2026 as that will give them enough preparatory time.
MiFID II and AIM Only tensions may force the rewiring of market infrastructures, I said but the Monetary Authority of Singapore put this into perspective saying the new requirements are designed to promote consistent sustainability-related disclosures among SGX-listed firms to better face climate-related risks and capitalize on emerging opportunities.
The commission will make further requirements for sustainability reporting in FY2026 to motivate users to apply these newly required disclosures on climate change in FY2025. Those organizations that decide not to obtain external assurance are going to issue their sustainability reports at the same time as annual reports are made public. Reports by companies seeking assurance will be published five months after the end of the financial year. This will allow companies the ability to assess their independent sustainability data and give them time, as well.
Industry players have welcomed the move. They say further efforts are needed towards the completeness of Scope 3 reporting. According to Temasek International’s chief financial officer, Png Chin Yee, “Addressing Scope 3 emissions is critical for all stakeholders to move the economy toward net zero.”.
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Haider Shah