SINGAPORE: Singapore-listed companies have made progress in climate reporting, but less than a third of them provided all the information required under a framework by the Task Force on Climate-Related Financial Disclosures (TCFD).
This is a globally recognised framework for companies to disclose climate-related impacts, risks and opportunities.
It comes at a “critical period” when listed companies are getting ready to meet the mandatory climate reporting requirements that kick in from the 2025 financial year, said Professor Lawrence Loh, director of the NUS Business School’s Centre for Governance and Sustainability.
The centre and the Singapore Exchange Regulation (SGX RegCo) reported their findings in a review released on March 11. The review found that most listed companies have made initial steps towards climate reporting.
Of the 529 companies whose sustainability reports were reviewed, 97 per cent carried out climate reporting, having at least one disclosure based on the TCFD recommendations. This is an increase over the 73 per cent in the previous review in 2023.
But only 28 per cent of all listed firms provided the 11 recommended disclosures under the TCFD.
These disclosures include describing the board’s oversight of climate-related risks and opportunities, and noting the climate-related risks and opportunities the organisation has identified over the short, medium and long term, among other things.
Prof Loh said this gap exists because listed companies are still making progress in their climate reporting efforts. TCFD-aligned disclosures have been mandatory for all listed firms in the financial industry, agriculture, food and forest products industry, and the energy industry, from the 2023 financial year.
But from the 2025 financial year, all listed companies regardless of sector will be required to do climate reporting, which makes it vital that these gaps are addressed.
Delving into the specific segments, companies made progress in disclosing the role of governance in climate-related issues, with a significant jump from 47 per cent of firms in 2023 making such disclosures to 95 per cent in 2024.
Some 92 per cent of companies also made disclosures relating to their metrics and targets.
But there was slower adoption among companies in terms of disclosing how climate affects their strategy or risk management.
Prof Loh also noted that fewer than half of the companies integrated these risks into their broader risk management frameworks, implying that many of them still view climate risks as separate from their overall risk management strategy.
SGX RegCo chief executive Tan Boon Gin said: “This latest survey focused on climate-related disclosures shows that while issuers progressed, they need more help in adapting to the TCFD recommendations. This is necessary if companies are to smoothly and successfully transition to the latest International Sustainability Standards Board standards.”
Under these requirements, companies also need to report their Scope 1 and Scope 2 greenhouse gas emissions from the 2025 financial year.
Scope 1 emissions refer to direct emissions incurred by a company, say, from its facilities or transport vehicles, while Scope 2 refers to indirect emissions such as the electricity or heating it buys from power generation companies.
SGX RegCo is also reviewing the situation before implementing a timeline for companies to report their Scope 3 emissions.
Scope 3 emissions refer to indirect greenhouse gas emissions incurred by a company as part of its value chain, such as business travel by employees, the use of its sold products or the emissions from its purchased goods and services.
Scope 3 remains a challenge for companies, with only 29 per cent reporting Scope 3 emissions, compared with the 80 per cent that disclosed their Scope 1 emissions and 87 per cent that disclosed Scope 2 emissions.
Mr Michael Tang, SGX RegCo’s head of the sustainable development office, listing policy and product admission, said the first batch of Scope 3 disclosures are expected to be made in the 2026 financial year, but there are no fixed timelines yet.
But beyond meeting requirements, Prof Loh noted that climate reporting is also about being business-ready.
“Smaller listed companies, in particular, will have to pay even more attention as they will have to see that adopting climate actions is in their very self-interest to do business in global markets, particularly Asia and Europe,” he said.
When asked about how the pullback in the climate agenda in the US affects Singapore, both Prof Loh and Mr Tang said it is still important for companies to look at how climate affects their businesses.
Mr Tang said: “That’s something that we will closely monitor. But I think from our perspective, for the Singapore-listed companies, our main objective is really getting them to recognise what the potential climate risks or opportunities are that might impact business, and then how to best enable them to deal with these risks.”
Prof Loh said that looking at the bigger picture, regardless of what happens in the US, there are still nearly 200 countries in the Paris Agreement, with many reaffirming their commitments.
“My personal view is we should double down on sustainability and climate (issues) so that our transition going forward will not be disorderly,” he added.
To prepare to make better disclosures, Prof Loh said companies should do more in detailing how their boards and managements monitor climate-related issues. They can also link climate issues to their strategic decision-making and ensure climate risks are not viewed in isolation, he said.
Companies can also expand on their targets, such as giving information on the base year and timeframe.
They can also begin Scope 3 reporting with the metrics that might be easier to measure, such as business travel, he added.
“Even if the current regulation addresses the listed companies, being climate-sensitive has to be for all companies where relevant to the respective businesses,” Prof Loh noted.
The story was first published in The Straits Times.