Mandatory TCFD Reporting in Singapore from 2023

Climate reporting will be mandatory for financial institutions from financial year 2023; board diversity policies to be disclosed in annual reports.

The Singapore Exchange (SGX) has announced its roadmap for issuers to provide climate-related disclosures, based on the TCFD recommendations.

The roadmap follows an August public consultation containing proposals to strengthen disclosure requirements around sustainability reporting and board diversity – which received broad support.

Under the roadmap, all SGX issuers must provide climate reporting on a ‘comply or explain’ basis in their sustainability reports from the financial year commencing 2022.

From FY 2023, climate reporting will be mandatory for issuers in the financial industry; the agriculture, food and forest products industry; and the energy industries.

From FY 2024, mandatory reporting will apply to the materials and buildings industry; and the transportation industry.

In addition, from 1 January 2022, issuers will be required to subject their sustainability reporting processes to internal review, and issued their sustainability reports together with annual reports (unless they have conducted external assurance).

Issuers will also have to set a board diversity policy that addresses gender, skill and experience, and other relevant aspects of diversity. The board diversity policy – and details such as diversity targets, plans, timelines and progress – will have to be disclosed in annual reports.

All directors will have to undergo a one-time training on sustainability, to ensure boards have common knowledge of their roles and responsibilities.

“The market recognises that climate reporting is important as a first step towards efforts to mitigate the effects of climate change,” said SGX RegCo chief Tan Boon Gin. “Decision-makers also want climate information when they allocate assets, extend financing, and price risks. These factors make climate reporting most urgent for industries with the biggest impact.”

SGX said its proposals to set out 27 core ESG metrics for issuers disclosures, and to introduce a data portal for investors to access ESG data in a structured format, both received strong market support.

The metrics will not be mandatory, but they will serve as a starting point for what companies can disclose in their sustainability reports, SGX said. “Issuers should still conduct a materiality assessment to ensure the relevance and completeness of their reported metrics.”

The introduction of an ESG data portal will help make information more accessible, comparable and transparent, while also saving costs and simplify decision-making for investors.

SGX expects the portal to house ESG information beyond the core ESG metrics. Information recorded in the portal may include material ESG factors, commentaries and explanations for reported metrics, and discussions on strategies, processes, board statements and targets relating to ESG matters.

SGX’s responses to the feedback on the climate and diversity proposals are published here, and for the core ESG metrics here.

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