What is Sustainability Reporting? Understanding Singapore’s New Climate Reporting Mandates

It is important for all companies to understand that mandatory reporting extends beyond mere compliance. It signifies a broader commitment to corporate governance and environmental stewardship, reaffirming that ESG is a top priority for your business. Companies now need to integrate sustainability into their business strategies and decision-making processes, ensuring they meet the expectations of regulators, investors and other stakeholders.

Sustainability reporting offers several benefits to companies, including enhanced transparency, improved investor trust and better risk management. By disclosing your environmental impact, your company can demonstrate your commitment to sustainability, improving your reputation and attracting socially conscious investors. “Younger generations make a lot of decisions based on how sustainable the business is and how they treat their employees,” Tina advises. “This transparency is just another reason why sustainability reporting is important.”

However, implementing sustainability reporting also presents challenges. Companies must invest in new systems and processes to collect and report data accurately. This process can be costly and resource-intensive, particularly for SMEs. Tina acknowledges these challenges but also offers the following advice. “Right now, it’s about understanding what your company needs to do, especially in relation to climate. There’s an expectation that you understand what your carbon footprint is, what your hotspots are, and how you can reduce carbon emissions. From there, what sort of initiatives can you take in terms of carbon offsets or decarbonisation strategy? I think the main challenges are understanding first, what sustainability reporting is and second, what needs to be done. Compliance requirements are still in the early stages, so getting a good understanding of what you need to do and communicating that with your staff is essential.”

To understand the advantages and disadvantages of sustainability reporting, as well as why sustainability reporting is important, you need to establish or outsource a dedicated ESG task force team. They’ll be able to oversee data collection, ensure compliance with regulatory requirements and communicate the company’s sustainability efforts to stakeholders. Additionally, investing in training and technology can help streamline the reporting process and reduce costs over time.

Sustainability reporting will also provide insights that can help you gain a competitive advantage and become an industry leader. “It is imperative to keep up to date with what is happening, especially regulatory changes, and be prepared to move quickly as compliance requirements evolve,” Tina says.

Complying with the new sustainability reporting regulations requires a systematic approach. The Task Force on Climate-related Financial Disclosures (TCFD) provides a framework that companies can use to enhance their climate-related reporting. This TCFD summary includes guidelines on governance, strategy, risk management, metrics and targets.

Tina recommends that companies start collecting data and use the right tools to do so. “The SGX has a minimum set of data that every business has to collect, which includes 27 core ESG metrics,” Tina explains. This data collection is crucial for understanding the company’s environmental impact and identifying areas for improvement.

The TCFD is an international organisation that aims to create a standardised set of climate-related financial risk disclosures. These disclosures are intended for companies and financial institutions to provide clearer information to their investors, stakeholders and the general public about the financial risks they face due to climate change.

While SGX requires listed companies to adopt the TCFD recommendations for climate-related reporting, it is also aligning with the International Sustainability Standards Board’s (ISSB) efforts to create a global baseline for sustainability disclosures. In March 2024, Singapore Exchange Regulation (SGX RegCo) launched a consultation on how the ISSB standards are to be incorporated into its sustainability reporting rules for climate-related disclosures.

In order for companies to comply with the reporting standards, they first have to understand their climate risks and opportunities. BoardRoom can help with conducting climate risk assessment workshops and drafting sustainability and climate reports according to TCFD and ISSB standards, including TCFD summary, TCFD disclosure examples and TCFD training. BoardRoom can also assist companies with funding applications from Enterprise Singapore.

Enterprise Singapore offers funding and grants to support companies in their ESG journey, such as the Enterprise Development Grant (EDG) which provides support for projects aimed at upgrading, innovating, growing, and transforming your business. There is a small window for companies to take advantage of this grant. From 1 April 2023 to 31 March 2026, under the EDG, small and medium-sized enterprises (SMEs) can receive up to 70% support for sustainability-related projects. EDG covers eligible project costs, including third-party consultancy fees, software and equipment expenses, and internal manpower costs.

As a Registered Management Consultant (RMC) with Enterprise Singapore, Tina emphasises, “Navigating climate-related challenges and opportunities requires not just compliance but strategic foresight. Our goal is not just to help companies meet the reporting standards, but also access funding to drive impactful climate initiatives.” This approach ensures that companies enhance their sustainability strategy while securing the financial support needed for their climate goals.