Singapore and Hong Kong Stock Exchanges Aim to Improve Climate and Diversity Information | Latham & Watkins LLP


The two exchanges seek to integrate the TCFD recommendations into their sustainability reporting regimes, thus continuing a trend towards convergence of regional ESG reporting standards.

On August 26, 2021, the Singapore Exchange Regulation (SGX RegCo) published a consultation paper proposing changes to the sustainability reporting regime (SR) of the Singapore Exchange (SGX). The proposed changes would require issuers listed in Singapore to include climate-related information in their sustainability reports consistent with the recommendations of the Working Group on Climate-Related Financial Reporting (TCFD recommendations).[1] In the same document, SGX RegCo also seeks to require issuers to maintain and monitor a diversity policy within the board of directors.

Amendments proposed by Singapore

Climate related disclosures

The consultation document notes that although the SR regime has been in effect since 2016, there remains an urgent need to improve the quality and consistency of climate-related disclosures.[2] For example, only about 2% of issuers in a recent SR survey said they used climate-focused frameworks to guide their disclosures.[3] To strengthen the SR reporting framework, SGX RegCo is seeking feedback on a proposed roadmap that would gradually put in place a mandatory climate reporting regime and more closely link climate-related disclosures to TCFD recommendations. The consultation document proposes to deploy mandatory reporting for issuers in certain key sectors (for the moment, not specified)[4] in early 2023, with other issuers required to submit reports on a “comply or explain” basis.[5]

The proposed changes to the SR regime include, for the first time, a specific reference to the TCFD recommendations. SGX RegCo intends to strengthen the Listing Rules Practice Notes by outlining TCFD recommendations with respect to specific reporting requirements in the SGX Listing Manual. The proposed changes aim to further incorporate the TCFD recommendations into the SAR regime by including new sections on measures and targets relating (among others) to greenhouse gas (GHG) emissions from scopes 1, scopes 2 and 3 and associated risks, as well as short, medium and long term objectives linked to significant environmental, social and governance (ESG) factors.[6] It is proposed that this information be supported by an improved assurance framework that requires external assurance measures to be applied in accordance with internationally recognized assurance standards. However, SGX RegCo has stopped (at least for now) prescribing a specific ESG reporting framework, although the consultation document suggests that this could become an area of ​​focus in the future.[7]

Board diversity

The consultation document proposes to issuers to require that they adopt a diversity policy and disclose in their annual reports “objectives for achieving the stipulated diversity, support plans and a timetable for achieving the objectives”.[8] Singapore-listed issuers are currently urged to make such disclosures on a ‘comply or explain’ basis, but the proposed changes would elevate this request to a mandatory requirement, consistent (as the consultation paper notes) with the corresponding regimes. in Australia, Hong Kong, Malaysia and the United Kingdom.[9] In addition, SGX is seeking comments on whether gender should be a mandatory part of diversity policies.[10]

Developments in Hong Kong

Climate related disclosures

The Hong Kong Stock Exchange (HKEx) already has a “comply or explain” regime that requires issuers to disclose “[p]policies on identifying and mitigating important climate issues that have impacted, and those that may impact, on the emitter.[11] In addition, the Hong Kong Interagency Green and Sustainable Finance Steering Group recently announced that it seeks to align climate-related disclosures with TCFD recommendations by 2025 and make such disclosures mandatory in all sectors concerned.[12]

Board diversity

HKEx released a consultation paper last spring proposing the mandatory disclosure of gender diversity goals for boards of directors and the entire workforce, as well as the requirement for boards of directors to monitor the progress of their diversity policies within their board of directors on an annual basis.[13] The consultation paper says diversity is not considered achieved with a single-sex board of directors and that existing issuers would have a three-year transition period to appoint a director of the absent gender if the rule goes into effect.[14]


The changes Singapore and Hong Kong have proposed to their disclosure rules align with the global trend towards convergence in disclosure standards. SGX RegCo’s paper notes, for example, that the UK has published a roadmap for mandatory disclosure obligations aligned with TCFD in the economy by 2025 and that Australia has encouraged its issuers to comply. refer to the recommendations of the TCFD.[15]

Given the regional appeal of SGX and HKEx, these amendments may well have a positive impact on emitters in the Asia-Pacific region, including mainland China, which aims to reach a peak in carbon emissions of by 2030 and has many companies listed on HKEx.[16]

Latham & Watkins will continue to monitor developments in this area.

This article was prepared with assistance from Sabrina Singh of the Singapore office of Latham & Watkins.

End Notes

[1] SGX, Consultation Document, “Climate and Diversity: The Way Forward”, August 26, 2021, part II, para. 1.8-1.9. The TCFD recommendations are a reporting framework for climate-related disclosures developed in 2017. The recommendations are structured around four thematic areas: governance, strategy, risk management, and metrics and objectives. For more information, see:

[2] Supra nm 1 in part II, paragraph 1.6.

[3] Supra nm 1 in part II, paragraph 1.5.

[4] The newspaper specifies that “[s]Sectors with the highest climate risks should be prioritized in mandatory climate reports, as this would have the most impact. Same. in par. 1.13.

[5] Supra nm 1 in part II, para. 1.10.

[6] Supra n. 1 to par. 1.18.

[7] The document notes that sustainability reporting frameworks are “a developing area” and therefore “[es] does not consider it appropriate at present to prescribe specific sustainability reporting frameworks ”, but that in the future, if certain standards are accepted by the market, SGX would be open to adopting a uniform standard . Supra nm 1 in par. 2.10-2.12.

[8] Supra nm 1 in par. 7.8.

[9] Supra nm 1 in par. 1.11.

[10] Supra nm 1 in par. 7.9.

[11] Same. Other KPIs include emissions, environment and natural resources as well as social issues such as employment, labor standards and supply chain management.

[12] Hong Kong Monetary Authority, “Interagency Steering Group Announces Next Steps to Advance Hong Kong’s Green and Sustainable Finance Strategy,” July 15, 2021, Available here: hk / eng / news-and -médias / press releases / 2021/07 / 20210715-4 /.

[13] HKEx, Consultation Document, “Review of Corporate Governance Code and Related Listing Rules”, April 2021. Para. 23-24.

[14] Same in par. 25.

[15] Supra nm 1 in par. 1.11.

[16] International, “Chinese Companies Get ESG Guidance from Hong Kong,” September 6, 2021, available here: esg -guidance-from-hong-kong /? kw = Chinese% 20Companies% 20Get% 20ESG% 20Guidance% 20From% 20Hong% 20Kong & utm_source = email & utm_medium = enl & utm_campaign = intdailysalert & utm_content = 20210906 =

Leave A Reply

Your email address will not be published.