Singapore Exchange To Require Greater Climate-Related Disclosures

The Singapore Exchange Regulation, the regulatory arm of the Singapore Exchange, makes climate-related disclosures mandatory for companies.

29 October 2021

Coastal Infrastructure Energy and Resources Water Management

Singapore Exchange To Require Greater Climate-Related Disclosures

In August this year, the Singapore Exchange Regulation, the regulatory arm of the Singapore Exchange, proposed to make climate-related disclosures mandatory for companies from January 1, 2023, starting with key sectors, including finance, energy and transportation, and expanding to other industries in 2024.

This is significant given Singapore’s role as a financial hub and regional headquarters for many multinational companies which care deeply about climate change and who operate in multiple jurisdictions.

The announcement also follows extensive guidance provided by the Green Finance Industry Taskforce (convened by the Monetary Authority of Singapore) in May 2021 contained within the Financial Institutions Climate-related Disclosure Document (FCDD)[1]. The purpose of the FCDD is to highlight leading environmental disclosures practices to serve as a practical reference as financial institutions step up their efforts in the area of environmental disclosures. The FCDD has focused on climate-related disclosures, adopting the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) as the guiding framework for disclosure.

Greg Fisk, Global Lead, Climate Risk and Resilience, BMT said, ‘With this announcement, Singapore joins the growing list of countries where investors and financial regulators are seeking greater transparency and disclosure around how companies and organisations are approaching their ‘net zero’ targets; but also, to understand and respond to the increasing physical risks from climate change and extreme weather on business assets, operations and workforces.”

Singapore’s move reflects a global push from investors and financial regulators for more companies and countries to meet Paris Agreement targets through an energy transition to lower carbon emitting sources but also to understand and respond to the increasing physical risks from climate change and extreme weather on business assets, operations and workforces.

The reporting reforms are proposed to occur over a phased approach as follows:

For financial year commencing

Baseline reporting practice

Calendar year in which report published

1 January 2022

All issuers to adopt climate reporting on a comply or explain basis

2023

1 January 2023

Climate reporting will be mandatory for some sectors of issuers with the comply or explain basis remaining for others

2024

1 January 2024

More sectors will be required adopt the mandatory requirements; with all others required on a comply or explain basis

2025

Source:  https://www.sgx.com/regulation/public-consultations/20210826-consultation-paper-climate-and-diversity

 

The adopted TCFD reporting framework covers four core areas for firms to disclose their approach to managing the financial implications of climate change:

  • Governance: Governance around climate risks and opportunities.

  • Strategy: The actual and potential impacts of climate-related risks and opportunities on strategy and financial planning.

  • Risk management: How the organisation identifies, assesses and manages climate-related risks.

  • Metrics and targets: The metrics and targets used to assess and manage climate-related risks and opportunities.

Shivaprakash Rao, Head of Consulting, Critical Infrastructure & Energy Transition, BMT Asia Pacific said, "Climate-related disclosures are under an ever-increasing spotlight of regulators and investors, and rightly so for enterprises to demonstrate that climate-related risks are being managed to ensure business continuity so as to preserve and grow shareholder's value. We at BMT are not only passionate about assisting our clients with better decision making and with sustainable solutions but see our contributions as part of the larger mission to hand over green and sustainable Earth to our future generations."

As illustrated in Figure 1 (appended from the 2017 TCFD Recommendations Report)[2], a sound understanding of risk and opportunity from climate change is at the heart of effective climate financial disclosure. To be done successfully, this should draw upon a combination of science, engineering, economics, and business management.

With increasing international pressure to decarbonise across supply chains, now is the time to build climate change related literacy within organisations and establish approaches to ensure businesses and industry transition and continue to be viable into the future.

Credit: Figure 1 is appended from the Final Report of the Taskforce on Climate related Financial Disclosures (2017) access via https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf

 

With relevant expertise across all of these disciplines in-house and with over two decades of experience assessing technical, operational and financial risks in the Asia Pacific region, BMT are primed to support our clients and customers to understand and demystify the implications of climate change for their business but also to develop appropriate pathways toward resilience. 

The company’s key capabilities in climate risk and resilience include:

  • Awareness training and knowledge brokering around climate change science, decarbonisation and building resilience.

  • Risk assessments - from first pass screening to detailed risk analysis carried out in accordance with International Standards (ISO) across future emission scenarios.

  • Decarbonisation strategy development and target setting to allow clients to be ‘market ready’ as more and more countries commit to ‘net zero’ pledges.

  • Resilience advice utilising best practice tools and technologies to understand impacts from natural hazards such as flooding, storm tide and heatwaves at the site or property level.

  • Assessment of transition technology and infrastructure to mitigate risks, cost-benefit analysis and timing of deployment.

  • Economic analysis of both impact pathways and solution options to inform climate related disclosures financial planning and financial viability studies required to align with TCFD recommendations.

[1] Access document via https://abs.org.sg/docs/library/financial-institutions-climate-related-disclosure-document.pdf

[2] Access document via https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf

Meet the Expert

Contact one of our experts today to start a dialog.

Greg Fisk

Global Lead, Climate Risk and Resilience, BMT

Greg Fisk

Global Lead, Climate Risk and Resilience, BMT

Greg is a Senior Associate at BMT and leads the firm’s global campaign related to climate risk and resilience. Based in Brisbane, Australia, Greg has over 25 years of experience in natural hazard and climate change planning and adaptation studies with planning, transport, and conservation authorities.

Shivaprakash Rao

Head of Consulting, Critical Infrastructure & Energy Transition

Shivaprakash Rao

Head of Consulting, Critical Infrastructure & Energy Transition

Shivaprakash Heads the Consulting and Energy Transition department in BMT Singapore. He has 27 years of experience in Energy and Coastal Infrastructure projects. He is a Chemical Engineer by training with MBA in Finance, and a PMI certified Project Management Professional (PMP).

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