How Singapore is Approaching ISSB Standards: Insights and Developments

Singapore has established itself as a global hub for sustainable finance and corporate governance. With the advent of the International Sustainability Standards Board (ISSB), the country is aligning its policies to integrate global standards for sustainability disclosures. This article explores Singapore’s approach to the ISSB standards, supported by international research insights, and highlights the key developments in this rapidly evolving landscape.

Background: The ISSB and Its Significance

The ISSB, established by the IFRS Foundation in November 2021, aims to develop a comprehensive global baseline for sustainability disclosure standards. These standards seek to provide investors and other capital market participants with consistent, comparable, and reliable sustainability-related financial information.

Key standards issued by the ISSB include:

IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information
IFRS S2: Climate-related Disclosures

Both standards emphasise alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and address the growing demand for enhanced transparency on environmental, social, and governance (ESG) issues.

Singapore’s Policy Environment

Singapore’s commitment to sustainability and climate action has positioned it as a leader in sustainable finance within the ASEAN region. The Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) have been instrumental in driving ESG reporting requirements. In 2021, SGX introduced mandatory sustainability reporting for listed companies, aligning closely with TCFD principles.

The Accounting and Corporate Regulatory Authority (ACRA) and MAS are key regulators working to ensure alignment with international standards. As the ISSB standards gain traction, Singapore is actively integrating them into its regulatory framework.

Alignment with ISSB Standards

Key Steps Taken

Consultation and Stakeholder Engagement:

MAS and SGX have initiated consultations with key stakeholders, including industry groups and professional bodies.
A public consultation paper released in early 2023 sought input on the adoption of ISSB standards alongside existing TCFD-aligned requirements.

Capacity Building:

Training programs and workshops have been conducted to familiarise organisations with the ISSB’s requirements.
Partnerships with academic institutions and professional bodies aim to enhance expertise in sustainability reporting.

Pilot Projects:

Several companies in Singapore are participating in pilot projects to implement IFRS S1 and S2, providing valuable feedback to regulators.

Challenges and Opportunities

Challenges:

Aligning ISSB standards with Singapore’s unique legal and economic context.
Addressing resource constraints, particularly for small and medium-sised enterprises (SMEs).

Opportunities:

Enhancing Singapore’s reputation as a global hub for sustainable finance.
Improving investor confidence through enhanced transparency and comparability.

International Research Insights

Research from global institutions provides valuable context for Singapore’s efforts:

Adoption Trends: According to a 2023 report by KPMG, over 60% of G20 countries are considering or have begun implementing ISSB standards.
Investor Expectations: A study by the Global Investor Coalition on Climate Change (GICCC) revealed that 85% of institutional investors prioritise TCFD-aligned disclosures, underscoring the importance of ISSB standards.
Economic Benefits: Research by the World Bank highlights that robust sustainability disclosures can lead to reduced capital costs and increased access to global markets.

Data-Driven Insights

Singapore’s proactive approach is supported by key data points:

Corporate Readiness:

A 2024 survey by PwC Singapore found that 72% of publicly listed companies have begun aligning their reporting with ISSB standards.

Investor Sentiment:

MAS reported that 78% of institutional investors view enhanced ESG reporting as a critical factor in decision-making.

Market Impact:

ESG-focused investment flows in Singapore increased by 14% in 2023, reflecting growing market demand.

Conclusion

Singapore’s approach to implementing ISSB standards reflects its commitment to global best practices in sustainability reporting. Through stakeholder engagement, capacity building, and alignment with international frameworks, the country is poised to set a benchmark for other jurisdictions in the region.

By addressing challenges and leveraging opportunities, Singapore can further enhance its leadership in sustainable finance, contributing to a more transparent and resilient global economy.

References

IFRS Foundation. (2021). Establishment of the ISSB.
KPMG. (2023). Global Trends in Sustainability Reporting.
Global Investor Coalition on Climate Change. (2023). Investor Expectations on Sustainability Disclosures.
PwC Singapore. (2024). Corporate Sustainability Reporting Survey.
World Bank. (2023).Economic Impacts of Sustainability Reporting.
Monetary Authority of Singapore. (2024). Institutional Investor Sentiment Report.