How S-REITs can improve climate reporting to drive decarbonization

While S-REITs have outperformed global peers in climate-related disclosures, they must address gaps relating to the TCFD pillars.

In brief

• An EY-REITAS study found that Singapore REITs have shown substantial progress in climate-related disclosures.
• However, they must address gaps across the four TCFD pillars of governance, strategy, risk management, and metrics and targets to strengthen such disclosures.
• Other key actions include greater engagement with stakeholders and using technology to establish more efficient data management and reporting practices.

The Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX RegCo) have set requirements for the REIT sector in response to the evolving landscape of climate risk disclosures and increasing emphasis on sustainability. 

In December 2020, the MAS issued guidelines on environmental risk management, setting out expectations for all fund management companies and real estate investment trust managers on governance strategy, portfolio construction, risk management and disclosure of risk information. These guidelines also emphasized the role of asset managers as stewards of corporations and set standards for disclosure consistent with international reporting frameworks. Corporations were given an 18-month transition period, with compliance expected from June 2022 onward.

In December 2021, the SGX RegCo announced mandatory climate reporting for all issuers on a “comply or explain” basis, which was made effective for financial years starting on or after 1 January 2022. In July 2023, the Accounting and Corporate Regulatory Authority and SGX RegCo proposed that public and large private companies with at least S$1 billion in revenues in the country will be required to provide climate-related disclosures aligned with the newly published International Sustainability Standards Board (ISSB) disclosure standards from FY 2025 and FY 2027 respectively.

EY teams and REITAS (REIT Association of Singapore) collaborated on a report, Climate risk disclosures in real estate investment trusts (REITs): a study of Singapore REITs, which analyzes the progress made by Singapore real estate investment trusts (S-REITs) in climate risk disclosures. The report leverages the methodology in the 2022 EY Global Climate Risk Barometer to benchmark the coverage and quality of disclosures by S-REITs against global peers and best practices based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.