Singapore will require all listed firms to make climate-related disclosures from financial year 2025, followed by large non-listed firms two years after that.
SINGAPORE: All listed companies in Singapore will be required to make climate-related disclosures starting from the financial year (FY) of 2025, said Minister for Transport and Second Minister for Finance Chee Hong Tat on Wednesday (Feb 28).
Such disclosures will have to be done based on local reporting standards that are aligned with the International Sustainability Standards Board, a global accounting standards body.
The new requirement will also apply to large non-listed companies – defined as having annual revenues of at least S$1 billion (US$0.74 billion) and total assets of at least S$500 million – from FY2027, Mr Chee announced, as he laid out the Finance Ministry’s spending plans for the year ahead.
This phased implementation in sustainability reporting for businesses comes after a public consultation put out by the Sustainability Reporting Advisory Committee last year.
The committee was jointly formed by the Accounting and Corporate Regulatory Authority (ACRA) and the Singapore Exchange Regulation to advise on a climate reporting roadmap for Singapore-incorporated companies.
Speaking in parliament, Mr Chee said the government has “considered the public feedback carefully” before making the decision to introduce mandatory climate disclosures in phases.
He noted that other jurisdictions, such as the European Union and New Zealand, have introduced similar requirements for both listed and non-listed firms.
Currently, only listed firms in five prioritised industries, such as financial and energy, are required to provide full climate-related disclosures. Those in the materials and buildings, as well as transportation industries started doing so from this year, while others make disclosures on a “comply-or-explain” basis.
Under the new rules, both listed companies and large non-listed companies will also be required to obtain external limited assurance, or independent verification, on their scope 1 and scope 2 emissions. This will kick in two years after the mandatory reporting requirements take effect.
Scope 1 covers a company’s direct emissions such as manufacturing facilities or company vehicles, while scope 2 covers indirect emissions generated from the purchase of electricity.
There is also the so-called scope 3 emissions, which typically refers to indirect emissions from entities up and down a company’s value chain. These can include purchased goods and services, business travel, commuting, waste disposal and water consumption.
While scope 3 disclosure will provide a holistic view of a company’s emissions, Mr Chee said a phased approach in this case will be better so as to take into account “readiness of the companies before introducing such requirements”.
Hence, only listed companies will be required to disclose their scope 3 emissions from FY2026.
Non-listed firms, including large ones, will need more time to build up capabilities for such disclosures so they will not be required to do so before FY2029, the minister added.
“We will consider the industry’s readiness and implementation experience from listed companies, before deciding when to require scope 3 disclosures for non-listed companies,” Mr Chee told the House.
“Companies will be given at least two years notice if the decision is to proceed with scope 3 disclosures,” he added.
Mr Chee also noted that a decision has not been made whether to extend the new mandatory climate reporting rules to smaller non-listed firms.
“ACRA will review in 2027 whether to extend the requirements to smaller non-listed companies,” he said, adding that authorities will give companies “sufficient notice” in advance.
Meanwhile, the government also recognised that some companies may have started sustainability reporting using other internationally recognised standards and frameworks.
These firms will be given a three-year transitional period, during which they will be exempted from the new requirements.
Overall, the government is stepping up efforts to support big and small companies through the green transition, including support to develop sustainability reporting and assurance competencies, said Mr Chee.
More details on the support measures will be provided by the Ministry of Trade and Industry.
HELPING SMES BID FOR GOVERNMENT CONTRACTS
In his speech, Mr Chee also announced that Tender Lite, a new category of government tender with fewer and simpler conditions, will be launched from April.
Tender Lite was first mentioned by Mr Chee last year as a way to make government contracts more accessible for small and medium-sized enterprises (SMEs).
This will cover tenders of up to S$1 million for general goods and services.
“With quotations and Tender Lite, around 90 per cent of government contracts will be subject to simpler procurement conditions, which will benefit our SMEs,” said Mr Chee.
Under this new category, the Finance Ministry will cut the number of contract conditions by about 20 per cent.
In addition, the government will “share risks with businesses, while maintaining public accountability”. This will be done by removing the requirements for security deposits and liquidated damages by default under the new Tender Lite.
“This will reduce the cost on businesses and the risk they bear when taking part in Tender Lite tenders,” said Mr Chee.
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