Singapore Expands Mandatory Climate Reporting to More Industries in 2024

The Singapore Exchange (SGX) will begin mandating more industries to submit environmental, social, and governance (ESG) reports for the 2024 financial year. For 2023, climate reporting was made mandatory for businesses engaging in the financial, agriculture, energy, food, and forest products industries.

This has now been extended to the materials buildings, and transportation industries for 2024.

Focus on ESG factors for businesses in Southeast Asia remains at a relatively early stage compared to global markets. However, there has been increasing awareness and adoption of ESG-related policies across regional governments.  

Southeast Asia is one of the most vulnerable regions to climate change and faces numerous challenges from rising sea levels to droughts and heatwaves.

What is included in the sustainability report?

The sustainability report must include the following components:

1. Material ESG factors;
2. Climate-related disclosures;
3. Policies and targets;
4. Sustainability reporting framework;
5. Board statement and governance structure for sustainability practices.

Material ESG factors

The company should review the ESG factors concerning the business value chain and its interaction with the physical environment and social community. The company must review what ESG factors significantly impact business continuity i.e. the steps involved in creating a product or service.

Climate-related disclosures

The business should provide climate-related disclosures that are in line with the recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD). These disclosures are the climate-related risks and opportunities that can impact the company’s financial performance.

The TCFD has issued both sector-specific and general guidelines on implementing the TCFD recommendations.

Policies and targets

The company should outline its targets, performance, and practices related to ESG factors in the sustainability report.

Targets should be set for short-, medium-, and long-term timeframes. Company policies related to ESG factors should provide descriptive and quantitative information about the company’s performance in these areas during the reporting period.

Sustainability and reporting framework

The business should select a suitable sustainability reporting framework tailored to its industry and business model. The business should choose a reporting standard that is internationally recognized as it enables easier comparisons with peer companies either in Singapore or worldwide.

Once a framework is chosen, the business should maintain consistency in adhering to that framework from year to year, as it helps the business to improve its reporting practices.

Board statement

The Board of Directors will play a critical role in overseeing the sustainability issues within the company.

The board is tasked with identifying the ESG factors that are significant to the company’s business and is responsible for managing and monitoring these ESG factors. Overall, this guidance emphasizes the Board’s vital role in considering sustainability as an integral part of the company’s strategy and success.

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