LARGE non-listed companies will be required to make climate disclosures from the 2027 fiscal year, in a move by the government aimed at equipping Singapore companies with the capabilities to ride the transition to a low-carbon economy, Second Minister for Finance Chee Hong Tat said on Wednesday (Feb 28).

Disclosures from large non-listed companies – defined as those with an annual revenue of at least S$1 billion and total assets of at least S$500 million – have to be aligned with the standards developed by a global accounting standards body called the International Sustainability Standards Board (ISSB).

Singapore will join the European Union, the United Kingdom and New Zealand in rolling out mandatory climate-related disclosures on non-listed companies, and be the first country in Asia to do so.

From FY2025, the ISSB standards will apply to listed companies, which are already required to make such disclosures by the Singapore Exchange, although they have been able to use other internationally recognised standards, such as those developed by the Global Reporting Initiative, another standard-setting body.

The decision by the government to mandate climate-reporting aligned with ISSB standards for listed and non-listed companies comes more than six months after it was first proposed in July 2023 by a committee led by the Accounting and Corporate Regulatory Authority (Acra).

A public consultation on the idea was then launched. It concluded last September.

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For a start, all affected companies would have to report their Scope 1 and Scope 2 emissions, along with other climate-related information.

Scope 1 covers the entity’s direct emissions, and Scope 2 covers indirect emissions from the generation of the electricity purchased to power the company’s operations.

Listed companies will also have to conduct “external limited assurance” on their Scope 1 and Scope 2 emissions from FY2027; large non-listed companies will have to do so from FY2029.

External limited assurance refers to having an independent third-party evaluating the data published in companies’ sustainability reports.

Listed companies will have to start disclosing their Scope 3 emissions from FY2026. These are the indirect emissions arising from their supply chains.

Given that more time may be needed to build capabilities for Scope 3 emission disclosures, large non-listed companies will not be required to disclose those emissions before FY2029.

Speaking in Parliament during the Ministry of Finance’s Committee of Supply debate, Chee said: “We will consider the industry readiness and implementation experience from listed companies before deciding when to require Scope 3 disclosures for non-listed companies. 

“Companies will be given at least two years’ notice if the decision is to proceed with Scope 3 disclosures.”

For companies that are already disclosing climate or sustainability reports aligned with international standards other than ISSB’s, Chee said they will be exempted from meeting the new requirements during a three-year transitional period.

This three-year transitional period will also apply to large non-listed companies that belong to a parent company which makes climate disclosures using other international standards.

Acra will review whether to extend the transitional period. Its decision will depend on global developments relating to the adoption and recognition of other standards and frameworks.  

A large non-listed company whose parent company publishes an ISSB-aligned sustainability report need not make such disclosures, as long as its activities are included in the parent company’s report.

Chee also announced that Acra will conduct a review in 2027 of whether these requirements could be extended to smaller, non-listed companies.

“We have not made a decision on this. Acra will give companies sufficient notice before introducing any requirements,” he added.

Singapore Exchange Regulation will separately conduct a public consultation on the rule amendments needed to implement these climate-reporting requirements for listed issuers.