Emphasis on Scope 3 as a significant vulnerability: Majority of Singapore-based companies initiate rudimentary climate data disclosure

In a recent study, it was noted that while progress has been made by Singapore-listed companies in aligning with the Task Force on Climate-related Financial Disclosures (TCFD), full alignment remains limited. Only 28% of issuers align with all 11 disclosures and are deemed ISSB-ready.

Despite this, there has been a significant jump in the number of issuers working towards TCFD alignment. However, the challenge lies in "deepening" their reporting, from providing just one or a few of TCFD's recommended disclosures.

The study found that nearly all Singapore-listed issuers (96%) now disclose at least one of TCFD's 11 recommendations, with the average number of TCFD disclosures per issuer doubling to eight in 2024. Yet, the weakest disclosures were in the areas of climate scenario analysis, integration of risk management processes, and climate targets.

SGX RegCo, the regulatory body for Singapore's stock exchange, is working to address these gaps. They are prioritizing larger issuers for the first batch of Scope 3 disclosures they expect from FY2026. SGX RegCo is also collaborating with the Institute of Singapore Chartered Accountants to support accountants and companies in understanding ISSB and its financial impacts.

In addition to Scope 3 disclosures, 87% of these companies disclosed their Scope 2 emissions, while 80% disclosed their Scope 1 emissions. However, only 29% of SGX-listed companies reported their Scope 3 emissions, according to the study conducted by SGX RegCo and the National University of Singapore Business School.

The lack of specificity and details in climate-related disclosures, particularly in the governance pillar, is another area of concern. Loh, the CEO of SGX RegCo, emphasized this as a weakness. He stated that many countries have signaled that they are going to reaffirm and even strengthen their continued commitments to climate change, and that it is not a time to go backwards on sustainability.

Tang, the Head of Listings Regulation at SGX RegCo, has made it his main objective to get Singapore-listed companies to recognize potential climate risks or opportunities that might impact their business and enable them to deal with these risks. He also mentioned that the regulator will continue to closely monitor proposals and decisions in other markets, despite moves to roll back climate disclosure rules in the United States and the European Union.

Loh believes that we should double down on sustainability and climate change to ensure a smooth transition. He does not see a trend of "softening" regulations in many countries, despite the US' plans to freeze its climate reporting rules and the EU's omnibus proposal to reduce the scope of companies subjected to mandatory sustainability reporting.

SGX RegCo dropped its 2026 timeline for disclosing Scope 3 emissions after a public consultation. The specific companies in Singapore involved in the mandatory implementation of International Sustainability Standards Board (ISSB)-driven carbon reporting from FY2026 are not explicitly listed in the available search results.

However, a positive note is that only 4% of issuers describe how their board would monitor progress in addressing climate issues, a figure that needs improvement. Yet, 77% of issuers have described the impact of climate issues on their business, strategy, and financial planning in 2024.

Only 48% of Singapore-listed issuers have integrated climate risks into their broader risk management frameworks, another area that needs attention. Yet, it is encouraging to see that only 9% of issuers reported all 11 recommendations in their sustainability reports in 2023, a figure that has significantly improved, with 97% of Singapore-listed issuers having provided at least one TCFD disclosure, outperforming the global average figure of 82% of companies.

In conclusion, while progress has been made by Singapore-listed companies in climate disclosure, there are still areas that need improvement, particularly in the areas of Scope 3 emissions, climate scenario analysis, integration of risk management processes, and climate targets. SGX RegCo is working to address these gaps and encourage companies to double down on sustainability and climate change.