Taking the magnifying glass on sustainability reporting, majority of Singapore-listed companies are deemed not prepared under ISSB standards that comes into effect in the financial year 2025.
According to a findings of the third edition of EY's Transparency in focus: State of Climate Reporting in Singapore, among the 359 companies that published sustainability reports for the financial year ended 31 December 2024, 98% or 351 contained disclosures that met at least one of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
The study, which was supported by global accountancy body, CPA Australia, aims to provide insights into the current state of climate reporting in Singapore.
Additionally, the research revealed that only 17% of issuers have linked sustainability-related performance to remuneration, with 62% being companies of large market capitalisation.
EY says the linking of sustainability-linked remuneration suggests accountability from the business to help ensure proper management of their exposure to climate-related risks and associated impact on the broader society and economy.
The study highlights three recommendations for companies to boost their transition to reporting under ISSB standards:
- Understand the true exposure of climate-related impact to the business: Having access to both quantitative and qualitative information is critical in understanding the extent of the impact of climate-related risks and opportunities on enterprise value as well as the wider environment and society, thereby enabling the organisation to make informed strategic decisions. Yet, companies are passive about climate-related issues and few have embarked on a quantitative-based analysis of climate-related risks and opportunities.
- Develop a robust transition plan: For this, companies need to gather information that provides a comprehensive view of their environmental footprint, together with climate-related risks and opportunities. Effective resource planning and allocation are also critical for a viable transition to a low- to no-carbon economy.
- Equip members across different functions with sustainability knowledge: The responsibility for sustainability extends across various functions within the organisation. For instance, with the introduction of ISSB standards, it emphasises the connectedness of sustainability-related financial disclosures, which requires the finance function to support in preparing information for climate reporting purposes.
