A couple of days ago, we posted about California’s proposed greenhouse gas emissions reporting requirements. Across the Pacific, in Singapore, a public consultation on climate reporting has been launched by the Accounting and Corporate Regulatory Authority and Singapore Exchange Regulation.
The purpose of the consultation is to consider the climate reporting recommendations made by the Sustainability Reporting Advisory Committee. SRAC is an industry-led committee set up by ACRA and SGX RegCo to advise on the roadmap for advancing sustainability reporting by companies in Singapore.
SRAC’s recommendations of relevance to U.S.-based multinationals operating in Singapore include the following:
- Climate reporting by non-listed companies should start in fiscal 2027. As proposed, reporting would initially apply only to non-listed companies with annual revenue of at least S$1 billion (approximately US$750 million). In total, 300 non-listed companies are estimated to have a reporting requirement at this threshold. The Singapore subsidiaries of a limited number of U.S.-based multinationals would be captured.
However, it is proposed that the threshold be further stepped down. SRAC recommends that a review be conducted in 2027, with the intent of mandating climate reporting for non-listed companies with annual revenue of at least S$100 million, starting by around 2030. That threshold is estimated to pick up approximately 2,200 companies. This will include a much larger number of U.S. multinational subsidiaries, a number that is likely to grow in the coming years as U.S. companies expand their Singapore regional hubs. SRAC recommends that the 2027 review consider, among other things, international developments. These are therefore likely to factor into reporting thresholds.
SRAC has proposed some relief for multinationals that are subject to climate reporting across multiple jurisdictions. Specifically, SRAC has proposed that a Singapore non-listed company be exempt from climate reporting if (1) its immediate, intermediate or ultimate parent (local or foreign) is preparing climate or sustainability reports in accordance with prescribed Singapore requirements or a regime that is deemed equivalent, (2) the non-listed company’s activities are included in the parent report and (3) the report is publicly available.
- The prescribed standards should align with the ISSB requirements for climate reporting. We expect to see many jurisdictions align with ISSB now that the ink is dry on the final standards.
- SRAC acknowledges the complexities of climate reporting. It proposes a two-year phase-in (fiscal 2029) before non-listed companies would be required to report scope 3 data. This parallels generally the approach we are seeing in other jurisdictions.
- External assurance of scope 1 and 2 emissions would commence two years after mandatory reporting, starting in fiscal 2029 for large non-listed companies. A limited assurance standard has been proposed. The foregoing also parallels the approach in at least some other jurisdictions, i.e., a phase-in for assurance, limited rather than reasonable assurance at least initially and exclusion of scope 3 data from assurance.
- Climate reporting should have the same reporting and filing timelines as financial statements.
- Legal responsibilities should be imposed on the reporting company, its directors and/or officers to ensure accountability for climate disclosures.
The public consultation will be open until September 30th. We recommend that relevant U.S.-based multinationals include Singapore in their ongoing monitoring of climate reporting legislation. Since proposed legislation is at an early stage and, as proposed, there would be a long runway for compliance, we are not recommending additional action at this time.
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