Singapore has become the first jurisdiction to announce when it will apply the ISSB’s climate reporting standards, just a week after their release.
The announcement, released today by the island state’s accounting and listing regulators, will require public companies to start making climate-related financial disclosures from 2025. Private companies reporting annual revenues of at least $740 million will follow suit in 2027.
It is up to individual countries to decide when and how to apply the voluntary ISSB framework, but Singapore’s proposals are consistent with the timeframe set out by the accounting body. The ISSB climate modules are effective from January 2024, which means the earliest reports will be seen in 2025.
The roadmap was developed by an industry-led advisory panel set up specifically to provide feedback on the suitability of international ESG reporting standards for Singapore. Members include representatives from BlackRock, local lender DBS, Temasek and PwC.
A corresponding consultation on the plans, which is still in draft form, has been launched by the Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo).
A number of jurisdictions have formed similar bodies to adapt the ISSB standards for local use, such as the Sustainability Standards Board of Japan, Nigeria’s Technical Readiness Working Group and the UK’s Sustainability Disclosure Technical Advisory Committee, but are yet to announce a formal due date.
Singapore’s approach also has a considerably wider scope than what is being suggested in Australia, for example, where rules will apply to “a relatively limited group of very large entities that expands over two years to apply to progressively smaller entities”.
Reporting companies in Singapore have been told that they need to obtain external assurance for Scope 1 and 2 emissions two years after they begin reporting in 2027, with the same requirements kicking in for large private companies in 2029. Auditors will need to be certified by ACRA.
However, companies have the flexibility of reporting Scope 3 emissions two years after they first start making climate disclosures “to allow more time to prepare”.
“Trusted and consistent climate reporting is essential to drive accountability and decisive actions by companies. It will also rally companies towards contributing to Singapore’s net-zero emissions commitments, expediting our transition to a green economy,” said ACRA’s assistant chief executive Kuldip Gill.
Singapore’s central bank has separately revealed that it has set aside about 2 percent of its portfolio, which amounts to slightly over $5.9 billion, for its climate transition programme.
“We have done this by tilting part of the equities portfolio towards less carbon-intensive companies that are more aligned with the low-carbon transition, rather than by excluding any entire carbon-intensive sector,” said the Monetary Authority of Singapore (MAS) managing director Ravi Menon at a media briefing yesterday.
“We will scale up our climate transition programme as we gain confidence in the effectiveness of the climate indices we have used to tilt our equities portfolio.”
Menon also noted that MAS has integrated climate considerations into its selection process for external fund managers.