Singapore Exchange Plans Mandatory Climate-Related Disclosures
(Bloomberg) -- Singapore will require mandatory climate-related disclosures for listed companies under proposals that aim to meet rising investor demand for commitments to tackle climate change.
Starting from the 2022 financial year, all firms will need to publicize information in line with recommendations from the Group of 20’s task force on climate-related financial disclosures, according to a proposal by the regulatory arm of Singapore Exchange Ltd. published Thursday. Those that do not will be required to explain why.
The requirements will become mandatory in the following year for companies in key industries including finance and transportation, with more sectors following in subsequent years, according to the proposals by Singapore Exchange Regulation, known as SGX RegCo.
Singapore’s move would be among the more aggressive efforts amid a global push from investors for more companies and countries to meet Paris Agreement targets through an energy transition to lower carbon emitting sources. The requirements could aid the status of Singapore as a finance hub, where some $3.5 trillion worth of investors’ assets are parked, if local regulators can ensure compliance with tougher disclosure rules related to climate change and governance.
Too few firms based in the city-state have shown sufficient awareness of climate risks, said SGX Regco Chief Executive Officer Tan Boon Gin. Only one third of listed companies surveyed by SGX RegCo identified climate change as a “material” topic, while 86% of banks, asset managers and insurers placed importance on firms’ disclosures of carbon emissions, he told reporters at a briefing about the proposals.
“Our companies must start giving better climate information to meet the demands of their investors, insurers and lenders, or risk being marginalized in terms of allocation of capital and access to financial facilities,” Tan said.
The regulator also proposed that listed companies set and disclose targets, plans, and a timeline for efforts to boost board diversity and governance for financial years starting on or after Jan. 1, 2022.
The public consultation is open until Sept. 27. SGX RegCo expects to have the rules in place by the end of this year.
The Task Force on Climate-related Financial Disclosures consists of 32 members from across the G-20. Michael Bloomberg, founder and majority owner of Bloomberg LP, chairs the Task Force.
©2021 Bloomberg L.P.