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• March 24, 2020
• HMRC CT600
• By FinTags UK iXBRL Team

Singapore's ESG Reporting Mandate: What to Expect in 2025

Singapore's ESG Reporting Mandate: What to Expect in 2025

Singapore is taking a significant step towards enhancing corporate transparency and sustainability. Starting from the financial year 2025, the Accounting and Corporate Regulatory Authority (ACRA) will implement mandatory climate-related disclosures for listed companies, aligning with the International Sustainability Standards Board (ISSB) standards. This move positions Singapore as a leader in structured ESG (Environmental, Social, and Governance) reporting in Asia.

Key Reporting Requirements

Under the new mandate, companies will be required to disclose:

• Scope 1 Emissions:

  Direct greenhouse gas emissions from owned or controlled sources.

• Scope 2 Emissions:

  Indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting company.

• Scope 3 Emissions:

  All other indirect emissions that occur in a company’s value chain (to be reported from FY2026 for listed companies and not before FY2029 for large non-listed companies).

• Governance Structures:

  Information on governance processes, controls, and procedures used to monitor and manage climate-related risks and opportunities.

• Risk and Opportunity Assessment:

  Identification and assessment of climate-related risks and opportunities over the short, medium, and long term.

• Transition Plans:

  Strategies and plans for transitioning to a lower-carbon economy, including targets and metrics used to assess progress.

• Financial Impacts:

  Disclosure of the actual and potential impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning.

These disclosures aim to provide stakeholders with a comprehensive view of a company's climate-related risks and strategies.

Timeline for Implementation

The mandatory reporting will be phased in as follows:

• FY2025:

  Listed companies must report Scope 1 and Scope 2 emissions.

• FY2026:

  Listed companies to include Scope 3 emissions disclosures.

• FY2027:

  Large non-listed companies (with annual revenue of at least S$1 billion and total assets of at least S$500 million) begin reporting Scope 1 and Scope 2 emissions.

• FY2029:

  Large non-listed companies to include Scope 3 emissions disclosures.

This phased approach allows companies to build their reporting capabilities over time.

Role of XBRL in ESG Reporting

While ACRA currently mandates the use of eXtensible Business Reporting Language (XBRL) for financial statement filings, it has not yet specified XBRL tagging requirements for ESG disclosures. However, as ESG reporting becomes more integral to corporate disclosures, it's anticipated that ACRA may extend XBRL requirements to include ESG data in the future.XBRL offers a standardized format for reporting, enabling easier analysis and comparison of data across organizations. Preparing for potential XBRL requirements now can position companies for smoother compliance down the line.

Preparing for Compliance

Companies should take proactive steps to align with the upcoming ESG reporting requirements:

1. Understand the Standards:

   Familiarize yourself with the ISSB's IFRS S1 and S2 standards to ensure accurate and comprehensive reporting.

2. Assess Current Capabilities:

   Evaluate your existing data collection and reporting processes to identify gaps.

3. Develop Internal Processes:

   Establish or enhance internal controls and procedures for ESG data collection and reporting.

4. Engage Stakeholders:

   Collaborate with internal and external stakeholders, including suppliers and customers, to gather necessary data, especially for Scope 3 emissions.

5. Consider Technology Solutions:

   Explore tools and services that can assist in data collection, analysis, and reporting, including potential XBRL tagging solutions.

By starting preparations now, companies can ensure they meet the upcoming requirements and demonstrate their commitment to sustainability and transparency.

Also refer

• HMRC guidance on paying corporation tax if you are a non-resident-company