Singapore (CU)_ According to Singapore Exchange’s latest announcement, all issuers must include climate disclosures in their sustainability reports beginning in fiscal year 2022 on a ‘comply or explain’ basis, and that these climate-associated reports are based on Task Force on Climate-related Financial Disclosures directions (TCFD). These disclosures will become compulsory for select industries beginning in fiscal year 2023, for example, the financial, agricultural, food, and forest sectors and energy industries, and for further sectors of the economy beginning in fiscal year 2024, for example, materials and structures and transportation sector.
Above all, the Singapore Exchange has also released a set of ESG measures that, while not compulsory, are meant to serve as a guide for what firms might disclose in their sustainability reports. Such measures are anticipated to increase the accessibility and comparability of information and to increase the transparency of data, thereby simplifying investor decision-making.
This declaration by the Singapore Exchange highlights the rising global efforts to require firms to disclose their climate-related activities. Moreover, the Singapore Exchange claimed that these policies gained widespread endorsement. Although no disclosures of this nature have been made in the US, the SEC is anticipated to do so in the near future. Additionally, the Singapore Exchange requires some disclosures about board diversity.
Tan Boon Gin, CEO of SGX RegCo, expressed optimism over the new decision. He also explained the importance of climate disclosures. He said, “The market recognises that climate reporting is important as a first step towards efforts to mitigate the effects of climate change. Decision-makers also want climate information when they allocate assets, extend financing, and price risks. These factors make climate reporting most urgent for industries with the biggest impact”.
Gin added, “We are also mandating specific disclosures around board diversity. Recent uncertainties have posed financial and governance challenges for boards. Having a broad set of perspectives will better enable companies to anticipate and face these challenges. It is therefore crucial that boards are diverse and have the necessary skill and experience to deal with the complexities of today’s operating environment”.