THE Singapore Exchange Regulation (SGX RegCo) is seeking feedback from the market on how to incorporate standards developed by the International Sustainability Standards Board (ISSB), a global accounting standards body, into its reporting rules on climate-related disclosures for listed companies.

The regulator is also proposing to make it mandatory for companies to report the primary components of a sustainability report, such as their sustainability reporting framework and targets.

The consultation, which opens on Thursday (Mar 7), comes after the authorities announced last week that listed companies in Singapore would be required to make climate-related disclosures according to standards by the ISSB from FY2025.

Listed companies are already required by SGX to make climate-related disclosures, but they are allowed to use other internationally recognised standards, such as those developed by the Global Reporting Initiative, another standard-setting body.

In a statement by SGX RegCo, Tan Boon Gin, the regulator’s chief executive officer, noted that SGX-listed issuers have improved their sustainability reporting over the years. “The ISSB standards have since been launched globally to meet demand for more consistent and comparable disclosures. We want to help issuers report based on these new standards, so that they are ready for a low-carbon future,” he said.

Among other things, the regulator is proposing that from FY2025, climate-related disclosures following ISSB standards would include information on a company’s value chain, as well as its processes to identify and monitor climate-related risks and opportunities. (*see amendment note)

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SGX RegCo is also proposing that issuers disclose their Scope 1 and Scope 2 greenhouse gas emissions, and how they measure these, in FY2025. Scope 1 covers the entity’s direct emissions; Scope 2 covers indirect emissions from the generation of the electricity purchased to power the company’s operations.

SGX RegCo also suggested that from FY2026, issuers disclose applicable categories of Scope 3 emissions, which are the indirect emissions arising from their supply chains.

The regulator is also proposing that these reports be issued with issuers’ annual reports from FY2026.

SGX RegCo said in its consultation paper that the proposed change will encourage the reading of companies’ sustainability reports in conjunction with their financial information, so investors can make informed investment decisions. Currently, issuers need to issue sustainability reports annually. They may do so no later than four months after the end of the financial year, or no later than five months after the end of the financial year if they have had an independent evaluation done on the report.

On its suggestion to make the reporting of primary components mandatory, SGX RegCo said that listed issuers have “progressed” and made improvements in sustainability reporting since 2011, when SGX-listed issuers could undertake to carry out on a voluntary basis.

The primary components in a sustainability report comprise, among other things, Environmental, Social, and Governance (ESG) factors material to the company, the company’s climate policies and practices, its sustainability targets and reporting framework, as well as the board’s statement on the company’s sustainability practices.

Currently, the primary components of a sustainability report are required to be reported on a “comply-or-explain” basis. This means that if an issuer does not include a given primary component in its sustainability report, it must state what it does instead and the reasons for doing so.

The regulator said in its consultation paper that under a mandatory regime, issuers will still be able to tailor their sustainability disclosures to their own circumstances; for example, they can choose the Environmental, Social, and Governance factors most material to them and set their own targets.

The consultation paper is available on the SGX website.

Consultation will be open until Apr 5.

*Amendment note: An earlier version of this article incorrectly stated that climate-related disclosures following ISSB standards would include information on a company’s valuation change. It is in fact information on a company’s value chain. The article above has been revised to reflect this.