How Singapore issuers can accelerate their climate reporting journey

How Singapore issuers can accelerate their climate reporting journey

Singapore issuers have progressed in climate-related disclosures but can do more quickly to stay ahead of climate reporting regulations.

In brief
  • An EY-CPA Australia study found that almost all Singapore issuers have commenced their climate-related disclosures in FY 2023.
  • More can be done to accelerate their climate reporting journey for regulatory compliance.
  • This requires a shift toward a mindset of leveraging climate reporting to help gain a strategic advantage.

From FY 2022, all listed issuers on the Singapore Exchange (SGX) are required to report on climate-related disclosures (CRD) on a “comply or explain” basis using the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Issuers in the agriculture, food and forest products, energy, and financial industries (FY 2023 mandated industries) are required to provide mandatory CRD as part of their annual sustainability reporting from FY 2023, followed by materials and buildings and transportation in FY 2024 (FY 2024 mandated industries) (collectively known as mandated issuers).

As the TCFD fulfilled its remit and disbanded in 2023, the IFRS Foundation has taken over the monitoring of companies’ progress in CRD with the launch of the International Sustainability Standards Board (ISSB) standards. These include IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures (IFRS S2). The IFRS S2 encompasses four core components that build on the 11 recommendations published by the TCFD.

To accelerate action against climate change in Singapore, the Sustainability Reporting Advisory Committee (SRAC) has recommended for all listed issuers to report on ISSB-aligned CRD, including Scope 1 and Scope 2 greenhouse gas (GHG) emissions, from FY 2025.

A recent EY-CPA Australia study analyzes Singapore issuers’ disclosure performance against the TCFD framework and provides insights on how companies are addressing the new IFRS S2 requirements and ways to enhance disclosures. It examines SGX-listed issuers with a financial year-end of 31 December 2023 and whose sustainability reports were issued on or before 31 May 2024. Specifically, the study looks at 346 sustainability reports with disclosures that meet at least one TCFD recommendation by companies that have commenced climate reporting efforts.

Transparency in focus: state of climate reporting in Singapore (Second edition)

This EY-CPA Australia report provides insights into the current state of climate reporting by issuers in Singapore.
                                                                               
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Key findings

Overall 
  • In FY 2023, 346 companies commenced their CRD, an increase of 44% from the 240 companies covered in the study for FY 2022.
Mandated industries
  • Nearly 100% of issuers slated for FY 2023 mandatory reporting have provided some form of CRD.
  • However, only about 28% of issuers in the FY 2023 mandated industries have made disclosures against all 11 TCFD recommendations.
  • The remaining FY 2023 mandated issuers cover eight of the TCFD recommendations on average.
Governance
  • Singapore mandated issuers have consecutively exceeded the global average in the coverage of TCFD recommended disclosures in FY 2022 and FY 2023, reflecting strong corporate governance practices locally.
  • Fifteen percent of issuers have incorporated environmental, social and governance performance into remuneration policies in FY 2023.
Strategy
  • More than 95% of the issuers in the FY 2023 mandated industries have described climate-related risks and opportunities in their FY 2023 reports (FY 2022: 77%).
  • Sixty-five percent of issuers in FY 2023 (FY 2022: 47%) have disclosed climate-related opportunities.
  • Forty-seven percent of issuers in FY 2023 (FY 2022: 32%) have commenced scenario analysis.
  • Twenty-one percent of issuers have committed to net-zero goals, of which 32% have embarked on disclosures of their transition plans in FY 2023.
Risk management
  • Ninety-nine percent of issuers in the FY 2023 mandated industries have described the processes for identifying and assessing climate-related risks in FY 2023 (FY 2022: 76%).
Metrics and targets
  • Thirty-eight percent of issuers, amounting to 131 companies, have disclosed Scope 3 GHG emissions in FY 2023 (FY 2022: 60 issuers).
Internal review and external assurance
  • Eighty-five percent conducted internal reviews of their sustainability reporting process.
  • Eleven percent of issuers have performed external assurance on their company’s sustainability information in FY 2023. This represents a 65% increase in the number of issuers having external assurance on sustainability information, from 23 in FY 2022 to 38 in FY 2023.
  • Of the issuers that had external assurance on their sustainability information, 87% covered GHG emissions in their scope of assurance and 89% had limited external assurance.
How Singapore issuers can accelerate their climate reporting journey

How EY can Help

While the latest EY-CPA Australia study found encouraging year-on-year improvements in issuers’ CRD, more needs to be done quickly to stay ahead of the proposed ISSB-aligned climate disclosures requirement in SGX RegCo’s public consultation paper. Issuers should consider taking several core actions to accelerate their climate reporting journey. These include shifting from a mindset of mere compliance to one that leverages climate reporting to help gain a strategic advantage, building confidence in climate-related financial data through collaboration and integrating governance practices for climate-related data.

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    Summary 

    All SGX-listed issuers are required to report on climate-related disclosures on a “comply or explain” basis using TCFD recommendations from FY 2022. A recent EY-CPA Australia study found that Singapore issuers have improved in such disclosures, yet more needs to be done quickly. They can accelerate their climate reporting journey by shifting to a mindset of leveraging climate reporting to help gain a strategic advantage, building confidence in climate-related financial data through collaboration and integrating governance practices for climate-related data.

    About this article

    Photographic portrait of Ken ong
    Ken Ong

    Partner, Assurance, Ernst & Young LLP

    Audit experience across diverse sectors. Knowledgeable in Singapore Financial Reporting Standards, IFRS and US GAAP. Enjoys taking his two golden retrievers for runs along the beach.
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    Sustainability
    Climate-related reporting
    Nonfinancial reporting
    Sustainable Impact Hub
    Real estate, hospitality and construction

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