A phased approach to sustainability reporting will extend to large non-listed firms by 2027.
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 be based on local reporting standards 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 outlined the Finance Ministry’s spending plans for the upcoming year.
This phased implementation of sustainability reporting for businesses comes after a public consultation 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 “carefully considered the public feedback” before deciding 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 report 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 take effect two years after the mandatory reporting requirements kick in.
Scope 1 covers a company’s direct emissions, such as those from manufacturing facilities or company vehicles, while scope 2 refers to indirect emissions generated from the purchase of electricity.
There is also scope 3 emissions, which typically refers to indirect emissions across a company’s value chain, such as from purchased goods and services, business travel, commuting, waste disposal, and water consumption.
While scope 3 disclosure will provide a comprehensive view of a company’s emissions, Mr Chee said a phased approach would be better to allow companies to prepare for these requirements.
Thus, 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 develop the capabilities for such disclosures and will not be required to disclose scope 3 emissions until 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 yet been made on 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 acknowledged that some companies may have already started sustainability reporting using other internationally recognized standards and frameworks.
These firms will be given a three-year transitional period, during which they will be exempt from the new requirements.
Overall, the government is stepping up efforts to support both 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 the launch of Tender Lite, a new category of government tender with fewer and simpler conditions, which will be available starting in April.
Tender Lite was first mentioned by Mr Chee last year as a way to make government contracts more accessible to 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 percent 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 reduce the number of contract conditions by about 20 percent.
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 Tender Lite.
“This will reduce the cost on businesses and the risk they bear when taking part in Tender Lite tenders,” said Mr Chee.
