Singapore Directors Told to Account for Climate-Related Financial Risks

Singapore climate financial risks must be reflected in company accounts where they are material, despite extended timelines for some sustainability disclosures, according to guidance from the Accounting and Corporate Regulatory Authority.

Directors remain responsible under the Companies Act for ensuring financial statements provide a true and fair view of a company’s financial position and performance.

Climate-related factors could affect asset valuations, useful lives, depreciation, impairment testing, capital expenditure, provisions and contingent liabilities.

The impact could become more significant as carbon taxes rise or companies adopt net-zero commitments and plans to phase out carbon-intensive assets.

Some Singapore-listed companies have already disclosed carbon-compliance expenses, weather-related asset write-offs and disposals of fossil-fuel assets.

Others have reviewed whether climate-related risks require changes to accounting estimates.

Acra’s guidance reinforces the need for boards to consider climate exposure as a financial reporting issue rather than solely a sustainability disclosure matter.