Singapore Finalizes ISSB-Aligned Climate Reporting Rules, Adjusts Scope 3 Timeline

by | Sep 25, 2024 | Accounting, Income Tax, Tech News

Singapore Exchange Regulation (SGX RegCo) has confirmed the integration of the IFRS Sustainability Disclosure Standards (ISSB Standards) into its mandatory climate reporting framework for listed issuers. The decision follows a public consultation revealing strong market support but also significant challenges concerning Scope 3 greenhouse gas (GHG) emissions reporting.

Key Decisions Announced

  1. Mandatory ISSB Adoption: SGX RegCo will proceed with incorporating the ISSB Standards S1 (General Requirements) and S2 (Climate-related Disclosures) into its Listing Rules. This mandates climate-related disclosures for all SGX-listed issuers, moving beyond initial proposals for sector-specific application.
  2. Revised Scope 3 Implementation: Responding to industry feedback, SGX RegCo has abandoned its initial proposal for mandatory Scope 3 GHG emissions reporting for all issuers starting in 2026. Significant concerns, particularly from smaller issuers, were raised regarding the complexity, evolving methodologies, and data availability challenges associated with Scope 3 measurement.

Consultation Feedback Highlights

  • Broad Support: Respondents overwhelmingly endorsed the move to mandatory climate disclosures based on the ISSB Standards across the entire market.
  • Scope 3 Challenges: Despite the ISSB Standards providing a one-year transition relief for Scope 3 disclosures, many respondents, especially smaller entities, highlighted the practical difficulties and potential costs involved. The lack of standardized methodologies and reliance on value chain data were cited as major hurdles.
  • Capacity Concerns: Smaller issuers expressed concerns about resource constraints and the need for more time and support to develop robust Scope 3 reporting capabilities.

Updated Implementation Plan

While mandatory Scope 3 reporting for all issuers in 2026 is off the table, SGX RegCo has outlined a revised expectation:

  • Large Issuers Lead: Large issuers (defined by market capitalization) will now be expected to commence reporting on their Scope 3 GHG emissions for financial years beginning on or after 1 January 2026.
  • Focus on Phasing: This revised approach indicates a phased implementation, prioritizing larger entities with presumably greater resources first, while allowing more time for smaller issuers and the market infrastructure (methodologies, data access) to mature.

SGX RegCo will proceed with formal rule amendments to embed the ISSB Standards S1 and S2 into the SGX Listing Rules. Detailed implementation guidance, including the specific criteria defining “large issuers” for the Scope 3 expectation and effective timelines, is anticipated in the final rule amendments.

Source: SGX RegCo, 23 September 2024.