ESG Accounting Requirements in Singapore

ESG (Environmental, Social, and Governance) accounting in Singapore is becoming increasingly important as both global and local regulatory frameworks continue to evolve to encourage sustainable business practices. ESG accounting refers to the process of measuring, reporting, and managing the environmental, social, and governance impacts of a company.

Key Aspects of ESG Accounting in Singapore includes:

Regulatory Framework

Companies listed on the SGX are required to comply with certain sustainability reporting guidelines. The SGX mandates that listed companies report on material sustainability factors annually, covering areas such as environmental impact, social responsibility, and corporate governance practices. The SGX sustainability reporting guide includes the ESG disclosure framework that requires companies to disclose their ESG practices, key risks, and opportunities.

The Singapore Green Plan 2030, the national sustainability blueprint outlines a wide range of initiatives for businesses and society to become more sustainable. It encourages companies to align with sustainability goals that focus on carbon reduction, energy efficiency, and social welfare.

Sustainability Reporting

Companies are encouraged to provide non-financial disclosures related to ESG factors under the SGX Listing Rules and the Global Reporting Initiative (GRI) standards. These disclosures help investors, stakeholders, and regulators assess the sustainability risks and opportunities that a company faces.

In addition to local frameworks, businesses in Singapore often refer to international standards, such as the Task Force on Climate-related Financial Disclosures (TCFD), GRI Standards, and the Sustainability Accounting Standards Board (SASB) guidelines.

Environmental Accounting

Companies are expected to assess and report on their environmental impact, including carbon emissions, energy consumption, waste generation, water usage, and the use of sustainable resources.

There is a growing emphasis on green financing, where companies may be required to demonstrate the environmental impact of their investments, particularly in relation to reducing carbon footprints or other environmental benefits.

Social Accounting

This includes reporting on labour practices, employee welfare, community engagement, and diversity & inclusion initiatives.

Governance Accounting

This relates to the company's governance practices, including board composition, risk management, business ethics, anti-corruption measures, and transparency in financial reporting.

Conclusion

In a nutshell, ESG accounting in Singapore is evolving rapidly, influenced by both regulatory requirements and growing investor demand for sustainability transparency. Companies are encouraged to adopt robust ESG frameworks and ensure that they meet both local and global standards for non-financial disclosures. With increased focus on sustainability from both the

government and investors, the role of ESG accounting will continue to grow, leading to better transparency, risk management, and long-term business value.

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DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily represent the views and opinions of any individuals or organizations with which the author may be affiliated, either in a professional or personal capacity, unless explicitly stated.

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