Singapore Exchange Proposes Mandatory Climate and Board Diversity Disclosure for Issuers
The Singapore Exchange (SGX) announced a series of ESG disclosure proposals for issuers, including plans for mandatory climate and board diversity reporting. The SGX has launched a public consultation on the proposals, and the exchange is also consulting on proposals including requiring assurance for sustainability reports and sustainability training for company directors.
According to SGX, the climate disclosure proposals come amid “urgent demand” from lenders, investors and other key stakeholders. The exchange has presented a proposed roadmap toward mandatory climate reporting, based on recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which would see all issuers to adopt climate reporting on a ‘comply or explain’ basis for their financial years beginning in 2022. In each of the next two years, reporting on climate would become mandatory for certain sectors, with the rest continuing on a ‘comply or explain’ basis.
Mr Tan Boon Gin, CEO of SGX RegCo, the regulatory-focused subsidiary of SGX, said:
“Lenders, insurers and investors increasingly want climate-related information for decision-making. The proposals today are aimed at helping our issuers meet these demands and to build their resilience to climate risks. Some business sectors are more carbon intensive and hence climate risks affect them more significantly compared to others. These should therefore be among the first to make climate disclosures.”
The exchange’s diversity proposals include requiring each issuer to disclose a board diversity policy along with targets, accompanying plans and a timeline, as well as a description of how the combination of skills, talents, experience and diversity of directors in the board serves the issuer’s needs and plans.
The diversity disclosure proposals follow the recent announcement by one of SGX’s US counterparts of a similar initiative. In December, US-based exchange Nasdaq announced proposals to require listed companies to publicly disclose consistent, transparent diversity statistics regarding their board of directors. The Nasdaq proposals were approved earlier this month by U.S. Securities and Exchange Commission (SEC).
Other proposals being considered include requiring issuers to have sustainability reports subject to assurance by internal auditors (while some may also choose to have assurance provided by external auditors or independent assurance services providers), and having all directors attend a one-time training on sustainability.
The SGX stated that it is also consulting on proposals for an aligned set of 27 ESG metrics that may be used by issuers, on a voluntary basis, and on a data portal where investors will be able to access ESG data in a structured format as reported by issuers in accordance with aligned metrics and disclosure requirements.