A recent study by Ernst & Young LLP (EY) reveals that a majority of companies listed on the Singapore Exchange (SGX) are not ready for the upcoming International Sustainability Standards Board (ISSB) requirements, set to take effect in the financial year 2025. Despite 98% of the 359 companies surveyed having made at least one climate-related disclosure, only 32% have fully complied with all 11 recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The ISSB standards, which expand upon the TCFD’s core themes of governance, strategy, risk management, and metrics and targets, demand more detailed reporting. Ken Ong, Partner at EY, highlighted the urgency, noting that companies with a financial year ending 31 December have less than six months to transition. “Companies that disclose fully against the TCFD recommendations will find it easier to make the transition,” Ong stated.
The study also found that only 36% of issuers have set net-zero targets, and a mere 9% have disclosed capital allocations for climate-related risks and opportunities. Furthermore, only 17% of companies have linked sustainability performance to remuneration, with larger firms leading in this area.
An increasing number of companies are seeking external assurance for their sustainability reports, with 13% doing so in the last financial year. Ong emphasised the importance of external assurance, stating it enhances investor trust by linking sustainability information with financials.
The report underscores the need for companies to develop robust transition plans and equip staff with sustainability knowledge to meet the new standards. As Nhan Quang, Partner at EY, noted, “Companies with a transition plan are more likely to exhibit better business resilience towards climate events.”
“`
