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Singapore Exchange Mandates Climate and Board Diversity Disclosures From 2022

The Singapore Exchange (SGX) has unveiled a roadmap which will require companies to provide climate reporting as well as setting board diversity policies beginning from next onwards.

All issuers must provide climate reporting on a ‘comply or explain’ basis in their sustainability reports from the financial year commencing 2022.

Climate reporting will subsequently be mandatory for issuers in the financial, agriculture, food and forest products, as well as energy industries from 2023.

Key changes effective 1 January 2022 include requiring issuers to subject their sustainability reporting processes to internal review and all directors will have to undergo a one-time training on sustainability.

Additionally, companies will need to set a board diversity policy that addresses gender, skill and experience, and other relevant aspects of diversity.

They must also describe the board diversity policy and details such as diversity targets, plans, timelines and progress in their annual reports.

A separate public consultation on 27 proposed core ESG metrics and a portal for issuers to input relevant data also received strong market support.

Though not mandated, the metrics will be a starting point for what companies can disclose in their sustainability reports.

Respondents noted that an ESG data portal will not only make information more accessible and comparable but will also save costs, make data more transparent, and simplify decision-making for investors.

SGX expects the portal to house information beyond the core ESG metrics.

Information recorded in the portal may include material ESG factors, commentaries and explanations for reported metrics, and discussions on strategies, processes, board statements and targets.

Tan Boon Gin

“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.

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.”

said Tan Boon Gin, CEO of SGX RegCo.