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Sustainability Reporting Outlook in 2024


(15 Minutes Read) This article by SI Digest provides an overview of the latest sustainability reporting advancements and examines Singapore's current landscape.  

  • Convergence of Sustainability Standards in 2023 

  • Mandatory Climate Reporting in Singapore 

  • Support to develop sustainability reporting competencies in companies 

The sustainability reporting landscape hit a significant milestone in 2023 through the formal launch of the ISSB and ESRS disclosure standards, which supports the long-awaited convergence of global sustainability standards & frameworks. The release and adoption of the two standards provide a globally consistent and reliable framework for sustainability disclosures and support users navigating through the ESG alphabet soup that was once intimidating and overwhelming to adopt. 

 

Timeline of sustainability frameworks and disclosures (IFC, 2023) 


IFRS S1 & S2 by International Sustainability Standards Board (ISSB)  

Officially launched on 26 June 2023 and effective for annual reporting periods from 1 Jan 2024, the ISSB standards represent a globally consistent and reliable framework for providing sustainability information to capital markets. Since its release, the ISSB standards have received strong support and feedback from global market participants and jurisdictions. 


  • At COP28, close to 400 organizations from 64 jurisdictions have declared their support for adopting ISSB reporting at a global level (IFRS, 2023) 

  • Several jurisdictions like Japan, the UK, and Singapore have working bodies to adapt the ISSB standards for local use. (Sustainability Standards Board of Japan (SSBJ), UK Sustainability Disclosure Technical Advisory Committee (TAC) and Sustainability Reporting Advisory Committee (SRAC)) 

  • Singapore is also the first Asian country to introduce mandatory ISSB disclosures by requiring listed issuers to report ISSB-aligned climate-related disclosures starting from FY2025 and non-listed companies from FY2027.  

 

European Sustainability Reporting Standards (ESRS) was released in July 2023 & made mandatory for large EU companies and specific others that fall under the scope of CSRD (Corporate Sustainability Reporting Directive). The formal adoption of ESRS in the EU marks a significant milestone and drives consistency and clarity for sustainability reporting in the EU. Following the ESRS, companies that fall under CSRD will report their sustainability information on a standardized and common basis, which ensures access to reliable, transparent, auditable, and comparable data.  


  • The ESRS consists of 12 standards, 2 of which are cross-cutting standards that provide general reporting concepts and overarching disclosure requirements, and 10 topical standards with specific ESG disclosure requirements. 

  • Not all companies will be required to report from 1 January 2024. The application of CSRD will take place in 4 stages, from FY2024 to FY2028.  

Phased approach of the CSRD: 

Timing 

Non-EU 

EU 

1 January 2024 

Large non-EU companies with securities listed on a regulated market in the EU and with more than 500 employees. 

Large EU “public interest entities” that are already subject to the Non-Financial Reporting Directive (“NFRD“). 

1 January 2025 

Large non-EU companies listed on a regulated market in the EU. 

Large EU companies that are not presently subject to the NFRD. 

1 January 2026 

Certain non-EU small and medium sized enterprises (“SMEs“) listed on a regulated market in the EU. 

Certain EU SMEs, small and non-complex credit institutions and captive insurance undertakings. 

1 January 2028 

Non-EU companies falling within the rules solely on account of the EU Turnover Test. 

N/A 

(Williams, 2023) 

 

Interoperability with Global Reporting Standards 

The ISSB and ESRS standards were developed in parallel to provide high interoperability. The combined efforts by the European Financial Advisory Reporting Group (EFRAG) and ISSB ensured that companies reporting under ESRS would largely report the same information as companies that use ISSB standards (EFRAG, 2023). For example, the ESRS integrated TCFD’s standards, so climate-related disclosures under ESRS and ISSB will primarily be the same. Specific consideration was also given to the definition of financial materiality, where ESRS closely aligned the definition with ISSB to focus on the needs of primary users (investors). This high-level interoperability significantly reduces the cost of reporting for companies that report using both standards. 

 

A comparison of ESRS, ISSB & SEC Climate Disclosures (Adapted from IFC, 2023 & EY, 2024) 

SEC 

ESRS 

ISSB 

Scope 

SEC registrants, 

Companies entering the US capital markets for the 1st time by conducting IPOs or being acquired by public companies 

All listed entities on EU-regulated markets, “large undertaking” EU entities and other entities that meet the conditions set out by the EU Commission 

ISSB Standards are left to the discretion of any jurisdiction that chooses to adopt them 

Coverage 

Climate-related matters 

Climate-related & other ESG matters  

S1 covers general requirements for all sustainability topics, and S2 Standard covers climate-related disclosures 

Effective Dates 

Likely to be made effective in 2026 

FY2024-FY2028, depending on the type of reporting entity subject to CSRD 

Effective from 1 Jan 2024 

Materiality (Investor/All stakeholders focused) 

Investors (Financial Materiality) 

All stakeholders (Financial & Impact Materiality) 

Investors (Financial Materiality) 

  

Mandatory Climate Reporting in Singapore 

On 28 February 2024, Singapore introduced mandatory climate reporting for listed issuers and large non-listed companies (NLCos) 6 months after a public consultation exercise by SRAC in 2023. Starting FY2025, qualifying entities will be required to report ISSB-aligned climate-related disclosures in a phased approach.  


(SGX, 2024)


These new regulations are part of Singapore’s efforts to help companies strengthen capabilities in sustainability and ride the green transition. As the green momentum intensifies, companies that provide climate-related disclosures (CRD) will benefit from access to new markets, customers, and financing (ACRA, 2024).


Singapore’s approach to mandatory climate reporting is designed to provide entities with a gradual transition and ensure sufficient support for reportable entities. With these considerations in mind, the finalized climate reporting and assurance roadmap exhibits these objectives.  


1. Singapore takes a flexible approach towards using locally prescribed CRD standards by implementing the following considerations. 


a) Entities reporting CRDs can include additional disclosures in compliance with other standards/frameworks in the same report. In some cases, entities will operate in different jurisdictions or rely on lenders that mandate the use of other standards. This rule brings a practical benefit by removing the need for entities to prepare multiple reports catering to different stakeholders.  


b) Large NLCos are exempted from reporting CRD if their parent reports CRD using ISSB-aligned local reporting standards or a deemed equivalent (ESRS). This means that large NLCos whose parents report CRDs using ESRS will be exempted from mandatory reporting, as ESRS is considered equivalent to the ISSB standards. ACRA will issue guidance for entities on the standards and frameworks that are deemed equivalent at a later date. 


2. Singapore facilitates a smoother transition towards adopting the prescribed CRD standard by providing exemptions and reliefs.  


a) Transition Reliefs – All entities subject to CRD are exempted from using local reporting standards for a transitional period of 3 years (FY25, FY26, FY27). This transitional period for large NLCos applies in FY27, FY28, and FY29. During the transitional period, reportable entities can use other international standards and frameworks like GRI and TCFD to report CRDs. Doing so allows companies to focus on basic disclosures before tackling more complex ones. 


b) Exemptions – A temporary exemption from reporting is given to large NLCos whose parents report CRDs using other standards & frameworks from FY27 to FY29. This exemption will help to “level the playing field” against fully exempted NLCos mentioned in 1b.  


3. Singapore actively builds capacity to support the implementation of mandatory disclosure and assurance requirements 


a) SGX RegCo will conduct upcoming training for directors and working-level preparers of sustainability reports. 


b) ISCA and ACRA are developing professional qualification programmes for sustainability & sustainability assurance to equip professionals with the relevant skills. ISCA and the Law Society of Singapore have also launched the Sustainability Apex Programme to build sustainability capabilities and facilitate knowledge-sharing among accounting and law firms.  


c) The Green Skills Committee (GSC) was formed to bolster the development of green skills in Singapore to meet the future demand for external assurance requirements. GSC will develop the skills plan for sustainability reporting and assurance, and work with training providers to develop training programmes to meet the skills needs for these job roles. 


The current sustainability reporting landscape in Singapore  

The Sustainability Reporting Review is a biennial study of sustainability disclosures of Singapore-listed companies, and it serves to provide a practical guide to identify strengths, areas for improvement, and share best practices (NUS, 2023b). The 2023 study strongly emphasized climate-related disclosures, and the table below summarizes its key findings.  

Areas for improvement 

Suggested Actions 

Less than a third (31%) of listcos have identified climate-related risks over the short, medium and long-term.  

Issuers should provide a detailed description of climate-related risks for each time horizon. A commonly used method is climate-related scenario analysis.  

Climate risk affects many aspects of the business, but only 39% have integrated climate change into overall risk management. Less than a quarter  

Issuers should implement a phased approach to incorporate climate-related risks into their overall enterprise risk management (ERM) strategy to ensure that they are systematically considered. 

Only 35% of issuers set long-term climate targets, and 30% provided medium-term targets. The majority (66%) set short-term targets, but issuers have to implement long-term plans to address climate change's systemic nature and align with global decarbonization goals. 

Issuers should complement short-term with medium & long-term targets. These targets should be quantitative to provide a clear and measurable framework for tracking progress. Issuers should also determine targets based on climate scenario analysis and climate science.  

A decrease in issuers linking top executive remuneration to sustainability performance. (From 26% in 2021 to 16% in 2023) 

Incorporation of such metrics is still in the early stages, and it comes with many challenges. The Financial Stability Board acknowledges that more time is needed before issuers can consistently link sustainability to executive remuneration. 

Out of 535 issuers, only 65 issuers (12%) have produced reasonably detailed climate transition plans. Additionally, only 34 transition plans have quantitative and time-based targets to track progress effectively. 

Issuers should provide climate-related targets with specific target dates.  

(NUS, 2023a) 


Although Singapore has introduced a range of resources and initiatives to support sustainability reporting, there remains room for improvement in the quality of disclosures made by companies. To help entities in producing sustainability reports, SGX’s Sustainability Knowledge Hub provides a one-stop information platform with disclosure resources.  


  • Released on 20 June 2016, SGX’s Sustainability Reporting guide provides guidance to issuers on the expected structure, contents, and the preparation of a sustainability report. 

  • Issued on 15 December 2021, SGX’s Core ESG Metrics assist issuers in disclosing a common & standard set of ESG metrics in their sustainability reports. These core metrics are aligned against global sustainability reporting frameworks to promote interoperability and consistency. 

  • On 12 September 2022, SGX and MAS jointly launched ESGenome, a no-cost digital disclosure portal to support listed companies in ESG-related disclosures, data collection, tracking and reporting. ESGenome enables companies to input ESG data in ready-made surveys and automatically generate sustainability reports that comply with SGX’s listing criteria. SRAC is currently working with other stakeholders to integrate the digital filing process and data fields of CRD with ESGenome. 

  • ESGenome is part of MAS’s Project Greenprint, which offers other key platforms like ESGpedia Registry, Data Orchestrator and Greenprint Marketplace. Project Greenprint was created to streamline the collection, access, and use of ESG data for both large and small firms.  

 

Support for Local Companies 

As Sustainability Reporting becomes increasingly prevalent, SMEs are not spared from the “trickle-down” effect from firms that are required to make such disclosures (Seow, 2023). For example, large and listed companies reporting their Scope 3 emissions (from FY26) will require SMEs to report and measure their own emissions. SMEs who fail to produce such disclosures might be unable to supply to specific vendors or reach certain market segments like multinational corporations, which could then affect their business continuity in the long run. SMEs looking to access responsible capital must also produce ESG disclosures, which responsible investors rely on when making investing decisions (Seow, 2023).  


To support SMEs in their sustainability efforts, Enterprise Singapore launched the Enterprise Sustainability Program (ESP) in October 2021 to build sustainability knowledge and provide financial support for various projects. Several initiatives under ESP include: 


  • Sustainability courses like the ESP Foundational Course to help local enterprises build awareness and knowledge of key sustainability topics. 

  • An environmental disclosure program (Enterprise SG, 2023) for Singapore enterprises that was launched in July 2023. Participating companies receive a structured framework to support their sustainability disclosures and benchmarking data on key performance indicators measured against industry peers to understand their performance better.  

  • Funding support under the Productivity Solutions Grant for sustainability projects such as carbon accounting solutions to measure Scope 1 & 2 emissions 

  • A series of Sustainability Playbooks for enterprises covering Foundational topics, Decarbonization, and sectoral-specific guides. On 21 Feb 2024, Enterprise Singapore published the latest playbook for Logistics Enterprises, which will support Singapore’s logistics companies in building green capabilities. The trickle-down effect has created an urgency for logistics companies that are part of a wider supply chain to adopt green practices, and the timely launch of this playbook will help logistics players chart and implement their sustainability efforts.  

 

The formal launch of the ISSB and ESRS standards in 2023 marks a crucial step towards the global convergence of sustainability disclosures, offering a consistent framework for companies. Singapore’s introduction of mandatory climate reporting shows the nation’s commitment towards the green transition and strengthening capabilities in sustainability. To facilitate a smoother transaction for reportable entities, a phased & flexible approach was adopted when implementing these regulations. Singapore has also taken proactive steps to help companies enhance their sustainability reporting practices through several platforms like SGX Knowledge Hub and Enterprise Singapore. However, there remains room for improvement in the disclosures made by companies, and initiatives like the Sustainability Reporting Review will help address these gaps by providing guidance, support, and insights.  


Many businesses have learned to recognize the importance of sustainability reporting in bolstering competitiveness and building long-term value. By ensuring that companies are well equipped with sustainability reporting capabilities, Singaporean companies will be able to meet investor’s expectations and stay ahead of responsible and sustainable business practices.  

 

 

This article is written by: 

  • Lam Ting Kang, a Year 2 SMU Accountancy undergraduate who co-heads the research division at SMU Sustainable Investment Club.  

 

Glossary 

Impact Materiality: Accessing how a company’s activities, products, and services impact the environment and society. (GHG emissions, water usage, labor practices) 

Financial Materiality: Accessing how a company’s activities have an impact on the company’s cash flows or enterprise value 

TCFD: Task Force on Climate related Financial Disclosures 

ESRS & CSRD: The CSRD and ESRS are closely interlinked, but they serve different purposes. The CSRD sets the legal framework of the reporting directive, while the ESRS establishes common guidelines for sustainability & climate related disclosures 

EU Action Plan: Also known as the Sustainable Finance Action Plan, is a major policy objective by the EU to channel more funding to environmentally sustainable economic activities, that play a critical role in reaching a carbon-neutral and climate resilient economy by 2050. 

CDP: A nonprofit organization that runs the global disclosure system to manage environmental impacts 

ISSB S1: Provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium, and long term 

ISSB S2: Sets out specific climate-related disclosures and is designed to be used with IFRS S1 

 

 

References 

 

ACRA. (2024, February 28). Response to Public Consultation on Climate Reporting and Assurance Roadmap for Singapore. https://www.acra.gov.sg/legislation/legislative-reform/listing-of-consultation-papers/response-to-public-consultation-on-climate-reporting-and-assurance-roadmap-for-singapore 

 

Booth, L. (2022, January 7). ESG and it’s alphabet soup of acronyms. ESG Foundation. https://esgfoundation.org/esg-and-its-alphabet-soup-of-acronyms 

 

Climate X. (2024, January 23). Singapore and Hong Kong introduce mandatory ISSB disclosures. https://www.climate-x.com/articles/industry/singapore-and-hong-kong-introduce-mandatory-issb-disclosures 

 

 

Enterprise Singapore. (2023b). Enterprise Singapore and CDP launch new environmental disclosure programme for Singapore enterprises. https://www.enterprisesg.gov.sg/-/media/esg/files/media-centre/media-releases/2023/july/mr03023_enterprise-singapore-and-cdp-launch-new-environmental-disclosure-programme-for-singapore-enterprises.pdf 

 

European Commission. (2023, July 31). Questions and Answers on the Adoption of European Sustainability Reporting Standards. https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_4043 

 

EY. (2024, January). Technical Line - How the climate-related disclosure proposals from the SEC, EFRAG and ISSB compare | EY - US. Www.ey.com. https://www.ey.com/en_us/assurance/accountinglink/technical-line---how-the-climate-related-disclosure-proposals-fr 

 

HKEX. (2023). Update on Consultation on Enhancement of Climate Disclosures under ESG Framework. https://www.hkex.com.hk/News/Regulatory-Announcements/2023/231103news?sc_lang=en 

 

IFC Beyond the Balance Sheet. (2023). Understanding the Global Reporting Frameworks https://www.ifcbeyondthebalancesheet.org/understanding-global-reporting-frameworks 

 

IFRS. (2023, December 4). IFRS - ISSB at COP28. 

 

Mancheva, M. (2023, December 14). CSRD Reporting: Preparing for Mandatory ESG Disclosure Deadlines.  

 

 

NUS. (2023b, December 7). Raising standards for sustainability reporting in Singapore. https://news.nus.edu.sg/raising-standards-for-sustainability-reporting-in-singapore/ 

 

Seow, J. (2023, October 2). Sustainability reporting can help S’pore SMEs attract clients, consumers, financing: Experts. 

 

SGX. (2024, February 28). Climate reporting to help companies ride the green transition - SGX Group. https://www.sgxgroup.com/media-centre/20240228-climate-reporting-help-companies-ride-green-transition 

 

Williams, P. P., Tim Baines, Musonda Kapotwe, James Taylor, Patrick Scholl, Oliver. (2023, September 7). The EU Corporate Sustainability Reporting Directive is upon us – what non-EU companies should know and do.  

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