In the race for climate resilience, the Task Force on Climate-related Financial Disclosures (TCFD) has swiftly set the global standard in climate risk disclosure. Singapore is one of the eight crucial jurisdictions – the others are the UK, Japan, New Zealand, Hong Kong, the EU, Brazil and Switzerland – that have already incorporated TCFD recommendations into their national reporting regimes. The United States is expected to join them soon.
Across almost every continent, we now see pioneering governments taking up the mantle. And in Asia, Singapore leads the way.
What sets Singapore apart?
An ever-rising star on the global scene, Singapore offers both industry titans and fledgling start-ups the opportunity to contribute to the nation’s expanding economy. It is no coincidence that Singapore sits at the intersection of several lucrative trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Indo-Pacific Economic Framework for Prosperity. In 2020, Singapore’s export value was S$805 billion – a value the country’s Ministry of Trade and Industry aims to increase to S$1 trillion by 2030.
Given all this growth, Singapore’s implementation of TCFD requirements is a heartening sign that its government intends to make sustainability a priority. Singapore has recently deepened this commitment by releasing Industry Transformation Roadmaps: 23 industry-specific plans to address the common challenges of each sector.
The TCFD was developed in response to decades of careful research surrounding climate risk and resilience. It provides a firm but flexible framework for climate disclosures, reinforcing institutional accountability in a competitive landscape where greenwashing has ruled for too long.
This process isn’t a one-size-fits-all approach to future-proofing economies. Each jurisdiction that requires TCFD comes to the table with its own approach, decided with consideration for the economic and cultural factors unique to its setting.
Never one to follow, Singapore has laid out a bold vision of its own: a tiered roll-out of TCFD requirements by industry. Companies in the energy, finance and agriculture sectors must offer a completed disclosure in 2023, while industries including logistics/ transport and building and materials have until 2024.
This approach has its built-in challenges, but it also carries promise. If Singapore’s industry-specific strategy proves effective, the country will further cement its growing reputation as a hub for groundbreaking industrial policy where strong economic returns are delivered through the government investing in ‘future-ready’ industries.
While Singapore’s industry-tailored approach sounds like an ambitious first step, it has already been tested elsewhere. In New Zealand, the fishing industry conducted a top-down TCFD analysis to uncover climate risk and inform public policy. Singaporean industries are already partnering with the government to do similar exercises.
So will Singapore be ‘top of the pops’ in building climate resilient industries? It is possible, but it is best to exercise caution.
What lies ahead?
According to Singapore’s TCFD timeline, the first three industries to receive oversight will be energy, finance and agriculture in 2023, then buildings and materials and transport in 2024. A key benefit to this arrangement is that it will enable Singapore to deliver targeted economic growth that creates inclusive prosperity and it will also maintain the city-state’s status as an Asian economic powerhouse.
However, the majority of TCFD research so far has been gathered from faster-paced, tertiary industries like finance. So existing best practices in TCFD are not necessarily readily transferrable to help Singapore build a resilient agriculture or even transport sector.
As for energy, Singapore relies heavily on gas. This is by necessity, not design: Singapore’s topography makes it tricky for the nation to rely extensively on tidal, wind or solar energy. The next-best options include nuclear-, hydrogen-, geothermal- and nuclear-fusion-based energy, but these will take years to be implemented and come with their own potential challenges. So, how are Singapore’s industries going to chart a course from climate disclosure to climate transition plans while the country is still finding its path to a net-zero-emissions economy? Robust policy will be needed to manage these challenges.
There is another unknown at play: in a new setting, we don’t yet know whether and how the TCFD process will need to be adapted to different cultures and jurisdictions. Are established best practices for climate risk management in Europe suitable for Singaporean business or are new priorities and processes required? For example, fostering effective dialogue on risk differs from culture to culture, so we may need specific TCFD guidance, not only for each industry but also for each jurisdiction. But the best way to answer this is to do exactly what Singapore is doing: getting started now.
Indeed, Singapore is also a uniquely innovative and adaptive economy; given the size of the population and its relative land scarcity, the government is better equipped than most to recalibrate its strategies without losing valuable time. As businesses begin to apply themselves to the TCFD process and gain insight into new obstacles, we can expect to see the Singaporean government reacting swiftly in order to incentivise best practice. And given the government’s strong partnership with private enterprise, the country could be well placed to show the world how TCFD can deliver accurate, detailed disclosures to bring about real change.
Singapore’s involvement marks the promising expansion of TCFD requirements into Asia: a continent that is poised to take centre stage in the coming decades of climate action. This is yet another indication that TCFD is a guiding star on the rise and will only be strengthened by the best practices emerging around the world.