OUT of 362 Singapore-listed companies, 346 – or 96 per cent – have commenced climate-related disclosures for the financial year ended Dec 31, 2023, according to a report by professional services organisation EY and accountancy body CPA Australia.
This is an increase from 240 companies doing so in FY2022, out of 370, which translates to 65 per cent.
This follows SGX’s rules that require all Singapore-listed companies to incorporate climate-related disclosures into their sustainability reports on a “comply or explain” basis, starting from FY2022.
Based on recommendations by the Task Force on Climate-related Financial Disclosures (TCFD), companies are to report on four key areas – governance, strategy, risk management, and metrics and targets.
From FY2023, climate reporting will be mandatory for issuers in the financial, agriculture, food and forest products, as well as those in energy industries.
For issuers in industries slated for mandatory reporting in FY2023, nearly 100 per cent have provided some form of climate-related disclosures.
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Even for non-mandated industries, there was also a significant improvement – to 93 per cent in FY2023, from 56 per cent in FY2022, said the report.
The data is based on a study called Transparency in focus: State of Climate Reporting in Singapore by EY and supported by CPA Australia.
The study, which is in its second year, analysed data from 362 Singapore-listed companies with financial year-end on Dec 31, 2023, and whose sustainability reports were published by May 31 this year.
Compared to the first edition, this study found that more companies are seeking external assurance on their climate-related data – from 23 that did so in FY2022 to 38 in FY2023.
It also found that more companies are disclosing climate-related risks and opportunities this year – 87 per cent have described climate-related risks and opportunities in their FY2023 report, a slight increase from 80 per cent that did so the year before.
For those that are in the FY2023-mandated industries, more than 95 per cent have done so, up from 77 per cent in FY2022.
In terms of climate-related opportunities, 65 per cent have disclosed in this year’s reports, up from 47 per cent last year.
The study also revealed that 21 per cent of issuers have committed to net-zero greenhouse gas emissions, of which 32 per cent have embarked on disclosures of their transition plans.
Despite the improvements, EY climate change and sustainability services partner Nhan Quang said transition plans issued by some companies “need to go beyond broad-based statements”.
The disclosures should include an implementation plan with time-bound actions that are linked to interim targets and metrics to monitor progress, as well as any capital deployments required to realise that plan, she noted.
This detailed plan would also be in line with IFRS S2 climate-related disclosures, which are part of the International Sustainability Standards Board (ISSB) standards for climate reporting.
ISSB launched these standards in June last year for a new global baseline of sustainability disclosures, the first of its kind aimed at meeting the needs of capital market participants, including investors and regulators.
The two standards, known as S1 and S2, fully incorporate TCFD’s recommendations.
S1 sets general requirements for how a company should disclose information about its sustainability-related risks and opportunities, while S2 focuses on climate-related ones.
These standards may soon be incorporated into SGX’s sustainability reporting rules for climate-related disclosures – Singapore Exchange Regulation (SGX RegCo) in March issued a public consultation paper proposing that all SGX-listed issuers will provide climate-related disclosures aligned with the ISSB standards from FY2025.
Said EY’s Quang: “While we are glad to see encouraging year-on-year improvements in climate-related disclosures among SGX-listed companies, more needs to be done – and done quickly – to stay ahead of proposed ISSB-aligned climate disclosures requirement in SGX RegCo’s public consultation paper.”
