Bong Yap Kim: New climate reporting for large non-listed companies needs 'a balance between ambition and market readiness’

Singapore’s Sustainability Reporting Advisory Committee (SRAC) has proposed recommendations to make climate reporting mandatory for listed companies by FY2025, and large non-listed companies with more than S$1 billion in revenue from FY2027. 

This announcement by SRAC, which was formed by the state’s Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo), could line Singapore up to be the first Asian country to mandate globally aligned climate reporting for non-listed companies, with Japan and Hong Kong following closely behind. 

This may soon make Scope 3 emissions mandatory for the first time in Singapore’s climate reporting history. While Scope 1 and Scope 2 account for the direct and indirect emissions of a company’s operations respectively, Scope 3 encompasses all other emissions along the value chain, including that of its suppliers. 

Such a policy would apply to roughly 700 listed issuers and 300 non-listed entities. This will be crucial in requiring corporations in Singapore to attain full oversight and accountability of their emissions, set more informed targets, and track their progress to net-zero emissions.

As public consultation on SRAC’s recommendations to advance climate reporting commenced recently in July, GovInsider hears from Ms Bong Yap Kim, Senior Technical Director of the Sustainability Reporting Office at ACRA, on these recommendations, and how climate reporting capabilities can be built up within the private sector. 

Why target large non-listed (private) companies?

While publicly listed companies are increasingly under pressure from shareholders, investors and the general public to disclose and abate their carbon emissions with greater transparency, large non-listed companies (NLCos) have largely escaped the public eye for their emissions footprints. 

Yet, these companies may be where a significant bulk of global emissions lie. In the global energy and commodity trading industry, the largest emitters are all held privately – Vitol, Trafigura, Gunvror, and Mercuria, with the exception of Glencore – according to a 2022 Working Paper by the European Corporate Governance Institute (ECGI). 

On top of this, some listed companies have turned to selling off carbon-intensive assets to such private players, a phenomenon known as brown-spinning, to “achieve” emissions reductions, a practice that has attracted scrutiny.

Household names of top non-listed NLCos in the world include Bosch, Huawei and IKEA – private companies with a revenue of at least US$40 billion each. 

“With more resources to deploy, [large NCLos] should be ready for sustainability reporting by FY2027. We believe that some may have already started their reporting journey. These companies are also able to drive changes down their value chain,” Bong says. 

As for smaller NLCos with annual revenue of less than S$1 billion, the SRAC has recommended for a review to be conducted in 2027 to assess if those with at least S$100 million in revenue can be ready for sustainability reporting by around FY2030. 

“We will learn from the experience of these larger NLCos before scaling the requirements to other NLCos,” Bong says. 

Key takeaways from SRAC’s recommendations 

Other than seeking public views on SRAC’s recommendations, the public consultation also aims to understand concerns of stakeholders. “These inputs will assist the government in deciding whether to accept the recommendations and to carry out the necessary law reforms,” says Bong. 

What are SRAC’s key recommendations? First, in terms of timeline, the disclosures should have the same reporting and filing timelines as financial statements, according to Bong. 

Second, legal responsibilities should be imposed on the companies, their directors, and/or officers, similar to financial reporting. It is not yet detailed by the SRAC what exactly these legal responsibilities will be. 

One recommendation of note is that companies can apply to be exempted from scope 3 emissions in the first year for listed companies, and up to two years for NLCos.

Some critics, however, have expressed concern that this may hinder Singapore from hitting its 2030 climate goals, as this would mean NLCos could only begin reporting in 2029, just one year before the target year. 

“For NLCos, this will enable requirements to be progressively imposed, especially for NLCos that are new to climate reporting. They will have more time to develop their competencies and implement processes to measure their Scope 3 greenhouse gas (GHG) emissions,” Bong explains to GovInsider. 

Finally, external assurance – checks conducted by independent climate auditors – will also become a mandatory requirement two years after mandated reporting takes effect.

“This will allow time for capacity building both for companies to be ‘assurance ready’ and to grow an adequate supply of assurance providers. Climate auditors in Singapore will need to develop the necessary assurance competencies and apply to be registered,” she says. 

But some have voiced concerns that Scope 3 emissions are not included in the recommended mandate. To this, Yap says that companies are still encouraged to voluntarily obtain Reasonable Assurance, a more comprehensive form of external assurance than the proposed Limited Assurance, over their entire climate reports. 

“Over time, when industry capabilities become more developed, we would recommend progressing towards Reasonable Assurance covering the entire report (including Scope 3 GHG emissions),” Yap tells GovInsider. 

Carbon versus capacity 

On the matter of industry capabilities, the SRAC recognises that not all companies have the necessary skills and expertise to meet evolving standards. 

While the SRAC advises on the roadmap for implementing sustainability reporting in Singapore, the Green Skills Committee – a partnership between the Ministry of Trade and Industry and Workforce Singapore – will develop the skills and training programmes, and frameworks required for a green economy. 

To improve data availability across the value chain over time, EnterpriseSG will also subsidise the use of pre-scoped carbon accounting solutions under the Productivity Solutions Grant. These solutions will provide SMEs with affordable solutions to calculate and manage their GHG emissions, according to Bong. 

Leaders from DXC Technology recently shared with GovInsider what some solutions for simplified ESG reporting may look like.

“The proposed tiered and phased implementation timeline aims to strike a balance between ambition and market readiness. Spacing out the implementation timeline will stagger market demand for consultancy and assurance services. [This] also seeks to provide adequate time for nationwide capacity building,” she says.

Read also: 5 next-generation technologies that can solve sustainability’s data nightmare