SGX Climate Reporting, Bursa Malaysia Sustainability Reporting, and Scope 1, 2 and 3 Explained for Boards
Climate and sustainability disclosure has moved from voluntary good practice to a core board responsibility in Singapore and Malaysia. Investors, lenders, and regulators now expect companies to report emissions, climate risks, and governance over those risks with the same discipline they apply to financial statements. For directors, the challenge is not only to understand the rules but to ask the right questions before a report is signed off. This article covers the climate reporting requirements of the Singapore Exchange (SGX), the sustainability reporting framework of Bursa Malaysia, and the Scope 1, 2 and 3 emissions categories that sit at the centre of both regimes. It closes with a practical checklist for boards and a note on the governance and ESG conversations that matter most in the region. Why Boards Need to Understand These Rules Sustainability reporting used to sit with a small team of communications or ESG staff. That is no longer realistic. A sustainability report is a public document that carries legal and reputational weight, and the board is responsible for overseeing the risks and opportunities it describes. When a company reports that its emissions have fallen, or that climate risk has been assessed, directors need to be able to explain how those conclusions were reached. Three questions help frame the discussion at board level: SGX Climate Reporting Requirements The SGX-ST requires each listed issuer to publish an annual sustainability report, and this requirement is designed to add transparency and encourage efficiency and innovation. Under the SGX rulebook, climate-related disclosures sit within the sustainability report and must follow the requirements set out in Practice Note 7.6. The Core Principles For climate-related disclosures, SGX expects issuers to report based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and to follow the chosen framework from year to year. The TCFD structure is built around four areas: Who Must Report Emissions All listed issuers must disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions. STI constituents must also provide other climate-related disclosures. Linklaters notes that the mandatory climate reporting regime applies to all issuers listed on the Singapore Exchange, so the regime is broad even though some obligations are phased or tiered. Because requirements can be phased, boards should not rely on a summary from an earlier year. Check the current text of Practice Note 7.6 and the SGX sustainability reporting guidance each financial year, and confirm your company’s obligations with your external auditors or sustainability advisers. What a Strong SGX Climate Disclosure Looks Like A good climate disclosure does more than list numbers. It should: Bursa Malaysia Sustainability Reporting Bursa Malaysia has moved its sustainability reporting onto the International Sustainability Standards Board (ISSB) framework. Its amended listing requirements, effective from December 2024, align with the National Sustainability Reporting Framework (NSRF), and the sustainability statement must follow the IFRS Sustainability Disclosure Standards. The Structure of the Requirement The Malaysian approach is built on two IFRS standards: In-scope companies must prepare a sustainability statement under IFRS S1 and IFRS S2, and publish it in the annual report at the same time as the financial statements. The rollout is phased. Bursa Malaysia’s media release indicates that the first group of Main Market companies applies the IFRS Sustainability Disclosure Standards for annual reporting periods starting on or after 1 January 2025, followed by the remaining Main Market listed companies on a later timetable. The IFRS Malaysia jurisdictional profile also refers to applicability dates for IFRS S1 and IFRS S2 that extend into later years. Because the timelines differ by company category, the practical step for every board is to confirm three things: which group your company falls into, the first financial year in which the standards apply, and whether any transitional relief is available for particular disclosures. Practical Implications for Malaysian Boards The move to IFRS S1 and S2 changes the nature of the report. Disclosure is no longer a narrative exercise. Boards should expect: Scope 1, 2 and 3 Explained for Boards Greenhouse gas emissions are grouped into three scopes. These categories are used in both SGX and Bursa reporting, so every director should be comfortable with what they mean. Scope 1: Direct Emissions Scope 1 covers emissions released directly from sources that the company owns or controls. Examples include fuel burned in company boilers, vehicles, and generators, along with emissions from processes such as manufacturing or refrigerant leaks. For a board, Scope 1 is the most within the company’s direct control. Reductions often come from equipment upgrades, fuel switching, fleet management, or process changes. Scope 2: Indirect Emissions from Purchased Energy Scope 2 covers emissions from the generation of electricity, heat, steam, or cooling that the company purchases and consumes. The emissions occur at the power station, but they are counted in the company’s inventory because the company creates demand for that energy. Scope 2 reductions can come from energy efficiency, on-site renewable generation, and renewable energy procurement. Boards should ask whether the company reports Scope 2 using a location-based method, a market-based method, or both, and why. Scope 3: Value Chain Emissions Scope 3 covers all other indirect emissions across the value chain, both upstream and downstream. These can include purchased goods and services, business travel, employee commuting, transport and distribution, use of sold products, and end-of-life treatment. Scope 3 is often the largest category for service businesses and many manufacturers, and it is also the hardest to measure. Data comes from suppliers, customers, and third parties, and the quality of that data varies. Boards should expect management to explain: A Simple Way to Remember the Scopes Questions Every Board Should Ask Directors do not need to calculate emissions, but they do need to test whether the process is sound. These questions can guide a board discussion before approving a sustainability report. Building a Reporting Process That Works Strong disclosure depends on a repeatable process rather than a last-minute effort. A practical approach has five stages. Stage 1: Map your obligations. Confirm your listing venue, your category