Singapore Exchange Proposes Mandatory Climate Disclosures in Issuers Sustainability Reports from 2022, New Diversity Policy at Board Level
27th August 2021 | Singapore
Singapore Exchange Regulation (SGX RegCo) is proposing new mandatory climate-related disclosures in issuers’ Sustainability Reports (SRs) and diversity policy at board level starting from 2022. The proposed disclosures on climate is due to the increase in demand by lenders, investors and key stakeholders for information on sustainability. Singapore Exchange Regulation (SGX RegCo) is consulting the public on requiring assurance of Sustainability Reports (SRs) and a one-time sustainability training for all directors. The SGX RegCo public consultation on climate and diversity is open till 27th September 2021. View: SGX RegCo Public Consultation on Climate and Diversity
“ Singapore Exchange Proposes Mandatory Climate Disclosures & New Diversity Policy “
SGX RegCo Proposed Mandatory Climate Reporting:
SGX RegCo Proposed Mandatory Climate Reporting:
- All issuers to adopt climate reporting on a ‘comply or explain’ basis for their financial year (FY) commencing in 2022;
- FY commencing in 2023 onwards, climate reporting will be mandatory for some sectors of issuers while ‘comply or explain’ will remain the approach for the others; and
- FY commencing in 2024 onwards, more sectors of issuers will adopt mandatory climate reporting with the rest doing so on a ‘comply or explain’ basis.
SGX RegCo proposes to require issuers to subject their Sustainability Reports to assurance by their internal auditors. The scope should minimally include assurance on whether the data being reported is accurate and complete. Issuers may also choose to have their Sustainability Reports externally assured through external auditors or an independent assurance services provider. To ensure boards have common knowledge of their roles and responsibilities, it is proposed that all directors attend a one-time training on sustainability.
To assist issuers in providing, and investors in accessing, an aligned set of environmental, social and governance (ESG) data, a list of 27 proposed ESG metrics is being consulted on. While not mandatory, these metrics may be used by issuers in conjunction with their sustainability reporting. We are also consulting on a proposed data portal where investors can access ESG data in a structured format as reported by issuers in accordance with aligned metrics and disclosure requirements.
SGX RegCo Proposed Board Diversity Policy:
- Board diversity policy including targets, accompanying plans and timeline for achieving the stipulated diversity on its board; and
- Description of how the combination of skills, talents, experience and diversity of directors in the board serves the needs and plans of the issuers.
SGX RegCo isproposing that issuers be required to adopt these enhancements for their sustainability reports and annual reports for financial years beginning on or after 1 January 2022.
Tan Boon Gin, CEO of SGX RegCo:
“ Lenders, insurers and investors increasingly want climate-related information for decision-making. The proposals today are aimed at helping our issuers meet these demands and to build their resilience to climate risks. Some business sectors are more carbon intensive and hence climate risks affect them more significantly compared to others. These should therefore be among the first to make climate disclosures. We are also proposing to codify board diversity disclosures in response to investor requirement.”
Grace Fu, Singapore Minister for Sustainability and the Environment:
“Climate risks are of increasing concern to investors. Climate-related disclosures allow companies to demonstrate that they are preparing for the challenges of climate change. I encourage companies to use the opportunity to give stakeholders confidence in the future of their businesses.”
Lim Tuang Lee, Assistant Managing Director (Capital Markets), Monetary Authority of Singapore:
“SGX’s proposed roadmap towards mandatory TCFD aligned climate-related disclosures by SGX-listed issuers is a timely one. Globally consistent, comparable and reliable climate-related disclosures will enable market participants to price and manage climate risks more effectively.
This will help enhance trust in sustainable investments and expand SGX-listed issuers’ access to the growing pool of global capital directed at sustainability investing. Overall, this is an important step in facilitating Asia’s transition to a low carbon economy.”
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About Singapore Exchange
Singapore Exchange is Asia’s leading and trusted market infrastructure, operating equity, fixedincome, currencies and commodities markets to the highest regulatory standards. As Asia’s most international, multi-asset exchange, SGX provides listing, trading, clearing, settlement, depository and data services, with about 40% of listed companies and over 80% of listed bonds originating outside of Singapore.
SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN and offers commodities and currency derivatives products. Headquartered in AAA- rated Singapore, SGX is globally recognised for its risk management and clearing capabilities.