TAIPEI (Taiwan News) — Singapore has recently announced that by 2027, public and large private companies will be required to provide climate-related disclosures.
As of this year, Taiwan’s listed companies are required to provide environmental, social and governance (ESG), climate-related, and sustainability disclosures in their annual reports.
Singapore regulators, the Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo) have recently announced that by 2027, public and large private companies in Singapore will be required to provide ESG disclosures aligned with the International Financial Reporting Standards (IFRS), newly published International Sustainability Standards Board (ISSB) disclosure standards.
IFRS are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board and in June, the ISSB issued its first two disclosure standards IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.
The mandatory climate-related reporting plan was recommended by Singapore's Sustainability Reporting Advisory Committee (SRAC), jointly launched by ACRA and SGX RegCo last year to advise on a sustainability reporting roadmap for Singapore companies.
According to the Singapore regulators, the proposal for mandatory climate reporting aims to maintain Singapore’s position as a global business hub, while also contributing to the Singapore Green Plan 2030, the government’s sustainable transition strategy aimed at strengthening Singapore’s commitment to the U.N.’s 2030 Sustainable Development Agenda.
Taiwan has some similar aims in terms of the roll out in September 2022, by the Financial Supervisory Commission (FSC) of its Green Finance Action Plan 3.0 (GFA Plan 3.0). GFA Plan 3.0 aims to further promote the understanding of greenhouse gas emissions by the financial industry and the targets it invests in and extends credit to, in support of the 2050 Net-zero Emissions policy. However, GFA Plan 3.0 seems to pale in comparison to Singapore’s proposed plans.
Whilst, currently, Singapore only requires listed companies in select sectors including finance, agriculture, food, forest products, and energy to provide Taskforce on Climate-related Financial Disclosures (TCFD) aligned climate reporting, with all other listed issuers required to apply TCFD on a "comply-or-explain" basis. The TCFD was created to develop recommendations on the types of information that companies should disclose to support investors, lenders, and insurance underwriters in appropriately assessing and pricing a specific set of risks—risks related to climate change.
Under Singapore’s new proposals, all listed issuers, including those incorporated overseas, which may well capture some Taiwanese companies, as well as business trusts and Real Estate Investment Trusts (REITs), would be required to report climate-related disclosures beginning in fiscal year 2025, with non-listed companies with at least S$1 billion (NT$23 billion) in revenues beginning in FY2027.
The regulators also have plans to extend the climate disclosure requirements to non-listed companies with revenues of at least S$100 million, with reporting to begin around FY2030.
The endeavor is to put Singapore at the forefront of sustainability reporting and its desire to be viewed as a country that values the importance of green finance and sustainability. Singapore is out to attract green investors.
It has to be noted that the new reporting standards will only apply to large private companies with revenues of S$1 billion, but that hurdle will then be reduced to S$100 million by 2030. At the time of publication, it was unclear how many large private companies would be affected by the new regulations. However, according to the Singapore Department of Statistics's Small Medium Enterprise (SME) Report, as updated in September 2022, there were just over 288,000 SMEs in Singapore. SMEs make up 99% of all enterprises in Singapore.
Similarly, as of 2021, Taiwan boasted more than 1.59 million SMEs, according to the White Paper on Small and Medium Enterprises in Taiwan in 2022. This accounts for more than 98% of all businesses in Taiwan.
SMEs in Hong Kong account for 98% of total business units and 47% of total employment. In Japan, in April 2023, SMEs represent an impressive 99.7% of all businesses and employ approximately 70% of the country's workforce.
Four major countries in Asia report similar percentages of SMEs and there is no doubt that where Singapore’s regulators go, Hong Kong’s regulators and markets will be quick to follow. Japan often runs its own race and according to its own rules.
This article is not to belittle Taiwan’s efforts in green financing, sustainability, and its commitment to its 2050 Net Zero Pathway. Taiwan has clearly enunciated its plans, but it is intended to ask whether Taiwan is able to compete with, or indeed even keep up with, countries like Singapore and attract the international investment that Taiwan says it wants and needs.
As far back as 2017, Taiwan’s Ministry of Foreign Affairs (MOFA) said “MOFA has also been organizing economic and trade delegations to travel abroad, assisting Taiwan’s small and medium-sized enterprises to gain a foothold in emerging markets, and promoting the New Southbound Policy and the Six Core Strategic Industries, thereby attracting foreign investment and encouraging our enterprises to reinvest in Taiwan.”
Fine words from MOFA and there is no doubt about the sincerity, but “are the runs on the board?” Is Taiwan keeping up? Taiwan seems unlikely to meet its energy ambitions by 2025. We're seeing Taiwan fall behind in the race for the family office “dollar” and lose out to Singapore and Hong Kong.
Taiwan cannot allow itself to fall further behind, for whatever reason, and become less attractive to both domestic investors and the much desired foreign investment.
