Insider alerts Singapore Exchange about potential non-disclosure of climate risks at South Korean energy company Kepco regarding environmental concerns
Singapore Exchange Cracks Down on Climate Disclosure for Bond Issuers
The Singapore Exchange (SGX) is tightening the screws on bond issuers, requiring them to comply with new climate-related disclosure requirements starting from financial year 2025 (FY2025). These new regulations aim to bring SGX-listed issuers in line with international standards, specifically the Task Force on Climate-related Financial Disclosures (TCFD) framework.
The new rules will gradually evolve into full adherence to the International Sustainability Standards Board (ISSB) standards, which are developed by the International Financial Reporting Standards (IFRS). However, many SGX-listed companies are currently falling short of these disclosure standards, with only about 32% meeting all 11 TCFD recommendations and just 36% having net-zero targets.
One of the most high-profile enforcement examples of these new regulations is the case of Korea Electric Power Corporation (Kepco), a company listed on SGX. Kepco was required by SGX RegCo to substantiate its climate disclosures, particularly relating to its transition strategies and alignment with regulatory expectations on sustainability-related financial risks.
The case of Kepco highlights SGX's increasing regulatory rigor in ensuring bond issuers provide transparent and credible climate risk information as part of their mandatory disclosures. While specific details of procedural enforcement actions against Kepco are not publicized, this case reflects SGX's commitment to enforcing these new regulations.
To support compliance, the Monetary Authority of Singapore (MAS) and SGX are developing digital tools like the Gprnt platform to streamline and automate sustainability reporting. This indicates a growing infrastructure support for companies to comply with the new disclosure requirements.
The regulatory environment is strengthening, focusing on climate resilience, mitigation of greenwashing risks through better disclosure practices, and validating transition plans and capital deployment related to climate goals.
Summary:
- Requirements start date: FY2025, IFRS Sustainability Disclosure Standards implementation
- Frameworks: Incorporation of TCFD recommendations, IFRS S2, ISSB standards
- Disclosure gaps: Only about 32% of SGX-listed firms meet full TCFD, 36% have net-zero targets
- Enforcement approach: SGX RegCo mandates substantiation of disclosures, exemplified by Kepco case
- Support tools: Development of Gprnt digital platform for automated reporting
- MAS & SGX strategy: Strengthening sustainable finance ecosystem with stricter disclosure and climate risk action
This move by Singapore demonstrates its proactive stance in aligning its financial markets with international climate disclosure standards and its enforcement of these through SGX, demonstrating increased scrutiny particularly for large issuers like Kepco.
- The new climate-related disclosure requirements by Singapore Exchange (SGX) for bond issuers will commence from financial year 2025 (FY2025), aiming to adhere to international standards such as the Task Force on Climate-related Financial Disclosures (TCFD) framework.
- The tightened regulations will evolve towards full compliance with the International Sustainability Standards Board (ISSB) standards, which are developed by the International Financial Reporting Standards (IFRS).
- Currently, many SGX-listed companies fall short of the disclosure standards, with only about 32% meeting all TCFD recommendations and just 36% having net-zero targets.
- SGX's regulatory arm, SGX RegCo, has acted upon these new regulations, requiring companies to substantiate their climate disclosures, as shown by the case of Korea Electric Power Corporation (Kepco).
- To facilitate compliance, Monetary Authority of Singapore (MAS) and SGX are developing digital tools like the Gprnt platform, indicating a growing infrastructure support for companies to comply with the new disclosure requirements.
- Singapore's proactive approach aligns its financial markets with international climate disclosure standards, displaying enhanced scrutiny, particularly for large issuers like Kepco, and emphasizing the importance of corporate responsibility, climate finance, and education-and-self-development in dealing with climate change and energy transition. The focus is also on mitigating greenwashing risks through better disclosure practices, ensuring climate resilience, and validating transition plans and capital deployment related to climate goals.
