Understanding Mandatory Sustainability reporting for SMEs

January 4, 2026 by

BLUE PLAN PRIVATE LTD.

Sustainability reporting shifts from voluntary to mandatory in 2025, marking a pivotal change for businesses worldwide. Organizations that previously treated environmental disclosures as optional must soon comply with standardized reporting requirements or face potential penalties. This regulatory evolution responds to escalating climate concerns and growing demands for corporate transparency from investors, consumers, and governments alike.

For companies operating in Singapore, the 2025 ESG reporting mandate introduces specific disclosure obligations, including detailed emissions tracking and external verification processes. While large corporations face immediate compliance requirements, even smaller enterprises should prepare for this inevitable shift toward mandatory reporting. The timeline might seem distant, but developing robust sustainability reporting systems requires significant preparation, especially for organizations starting from scratch.

This comprehensive guide examines why sustainability reporting becomes mandatory, unpacks Singapore's specific requirements, explores relevant frameworks like GRI and TCFD, and outlines practical steps businesses should take today to ensure compliance by 2025.

Why Sustainability Reporting Is Becoming Mandatory

Environmental, social, and governance (ESG) factors have climbed to the top of business agendas worldwide as sustainability reporting transitions from voluntary disclosure to regulated requirement. This fundamental shift is driven by multiple forces converging simultaneously.

Global climate and ESG pressures

The business landscape is rapidly evolving to address climate change impacts through increasingly stringent ESG regulations. Consequently, sustainability reporting has reached a critical turning point where information once treated as optional marketing material must now meet the same rigorous standards as financial reporting.

In 2022, Singapore established a Sustainability Reporting Advisory Committee to develop a roadmap for advancing sustainability reporting nationwide [1]. Furthermore, February 2024 saw Singapore's first announcement of mandatory climate reporting requirements, later updated in August 2025 with extended timelines to support companies in building their reporting capabilities [1].

Internationally, thousands of companies have already published statements under the European Union's Corporate Sustainability Reporting Directive, with many countries adopting the International Sustainability Standards Board's framework [2]. This global momentum demonstrates that sustainability reporting is becoming an operational necessity rather than a strategic option.

Investor and stakeholder expectations

Investors now view ESG performance as integral to financial analysis and risk assessment. According to PwC's Global Investor Survey 2024, more than 70% of investors believe companies should incorporate sustainability directly into business strategy [2]. Additionally, almost two-thirds stated these companies should take further steps to reduce carbon emissions [2].

This pressure is clearly reflected in company behavior:

66% of companies reported increasing resources devoted to sustainability reporting [2]
65% have increased senior leadership time focused on ESG matters [2]
Only 5% of companies report getting no additional value from sustainability reporting [2]

Notably, institutional investors are formalizing these expectations—58% either require or plan to require asset managers to provide portfolio-level exposure to financially material ESG risks [3]. Moreover, nearly a quarter (23%) specifically mandate reporting on ESG engagement activities [3].

The business impact extends beyond finance into supply chains. Half of business-to-business companies now spend more with sustainable suppliers, whereas 26% have already dropped suppliers failing to meet sustainability criteria [4]. Even more significantly, 49% plan to eliminate unsustainable suppliers within the next three years [4].

The role of transparency in business accountability

Transparency has become fundamental to building trust in an era of growing consumer awareness and demand for sustainability. Indeed, it represents more than disclosure—it requires providing clear, accessible evidence that substantiates claims and verifies actions [5].

When companies openly share their sustainability performance, they foster accountability that enables stakeholders to make informed judgments. This accountability culture supports meaningful progress toward a sustainable future while combating greenwashing [5].

External verification strengthens transparency significantly. Organizations like SPOTT emphasize the importance of second and third-party verified information in enhancing the credibility of sustainability claims [5]. Similarly, the Corporate Sustainability Assessment tracks companies' sustainability data reporting boundaries and external assurance scope across multiple sectors [6].

Beyond compliance, transparency offers strategic advantages. It attracts investors increasingly focused on companies with strong ESG credentials, enhances reputation, improves operational efficiency, and mitigates compliance and regulatory risks [6]. Most importantly, 28% of companies report gaining significant value from the data collected for sustainability reporting beyond mere compliance [2].

Singapore’s 2025 ESG Reporting Mandate Explained

Singapore unveiled its mandatory climate reporting roadmap in 2022, establishing a clear framework for businesses to follow. The mandate introduces a phased approach that progressively expands both the scope of companies affected and the reporting requirements they must meet.

The "Planet" Dividend: Resource Resilience

When a business protects the planet, it is actually protecting its own supply chain. By using fewer resources and generating less waste, a company becomes more resilient to price spikes and resource scarcities. Furthermore, as governments worldwide (including Singapore) introduce stricter environmental regulations, "Planet" focused companies find themselves ahead of the curve, avoiding heavy fines and gaining a competitive advantage in a "green-conscious" market.

Who is affected and when

In August 2023, Singapore announced a revised implementation timeline that affects companies based on size and listing status. Initially, the requirements target larger enterprises before expanding to smaller organizations:

2025: Listed companies in the financial, energy, agriculture, food, and forest products industries with market capitalization exceeding S$1 billion
2026: All remaining listed companies with market capitalization above S$1 billion
2027: Listed companies with market capitalization between S$300 million and S$1 billion
2028: All remaining listed companies regardless of market capitalization

The requirements also extend beyond listed companies to include significant carbon-emitting entities as part of Singapore's broader strategy for addressing climate change.

Scope 1, 2, and 3 emissions disclosure timelines

The reporting mandate establishes a graduated approach to emissions disclosure, recognizing the increasing complexity of measurement:

Scope 1: Direct emissions from owned or controlled sources become mandatory first
Scope 2: Indirect emissions from purchased electricity, steam, heating, and cooling follow
Scope 3: Value chain emissions (considered the most challenging to measure) phase in last

This tiered implementation allows companies to develop appropriate measurement systems and expertise progressively. For instance, larger corporations must begin reporting Scope 1 and 2 emissions in 2025-2026, with Scope 3 reporting commencing one year after their initial reporting cycle begins.

External assurance requirements

External verification stands as a cornerstone of Singapore's mandate to ensure reliability and comparability of reported sustainability data. The requirements follow a "limited assurance then reasonable assurance" approach:

Limited assurance: Required initially for Scope 1 and 2 emissions
Reasonable assurance: Phased in later, representing a higher verification standard

For example, companies starting reporting in 2025 must obtain limited assurance for Scope 1 and 2 emissions from 2027, followed by reasonable assurance from 2030. This gradual implementation acknowledges the current capacity constraints in the assurance industry.

Voluntary vs mandatory reporting for SMEs

Although small and medium enterprises (SMEs) fall outside the immediate mandatory reporting scope, voluntary adoption offers strategic advantages. SMEs that proactively implement sustainability reporting:

Position themselves favorably for future mandatory requirements
Prepare for supplier screening by larger companies with reporting obligations
Gain competitive advantages when seeking financing from ESG-conscious investors

To support smaller businesses, Singapore offers various resources through industry associations and government agencies, including simplified reporting templates and sector-specific guidance. These resources help SMEs adopt sustainability reporting practices proportionate to their size and capabilities.

The Singapore Exchange (SGX) has also developed tailored sustainability reporting guidelines that align with international standards while acknowledging the specific context of Singapore-based businesses.

Key ESG Reporting Frameworks to Know

Navigating the complex landscape of sustainability reporting requires familiarity with several globally recognized frameworks. Each framework offers distinct approaches yet serves the common purpose of standardizing how organizations disclose their environmental, social, and governance impacts.

GRI: Global Reporting Initiative

Established in 1997, the Global Reporting Initiative (GRI) stands as the most widely adopted framework for sustainability reporting worldwide. Over 10,000 companies across more than 100 countries currently use GRI [7]. The framework enables organizations of any size to report consistently on their economic, environmental, and social impacts through a modular structure that includes:

Universal Standards: Apply to all organizations and incorporate reporting on human rights and environmental due diligence
Sector Standards: Enable consistent reporting on sector-specific impacts
Topic Standards: List disclosures relevant to particular sustainability topics

GRI's comprehensive approach helps organizations identify material topics, related impacts, and management strategies while enhancing transparency and stakeholder engagement [8].

TCFD: Task Force on Climate-related Financial Disclosures

Created by the Financial Stability Board in 2015, the TCFD developed a framework to help companies disclose climate-related risks and opportunities through existing reporting processes [9]. The framework has gained widespread adoption, with nearly 5,000 organizations publicly declaring support [9]. TCFD recommendations are structured around four core pillars:

Governance: Board oversight and management's role
Strategy: Climate-related risks, opportunities, and scenario analysis
Risk Management: Processes for identifying, assessing, and managing climate risks
Metrics & Targets: Disclosure of relevant metrics and targets

Originally voluntary, TCFD recommendations are rapidly becoming part of mandatory regulatory frameworks in numerous jurisdictions, including Singapore [10].

ISSB: IFRS S1 and S2 standards

The International Sustainability Standards Board (ISSB) issued its inaugural standards in June 2023: IFRS S1 (General Requirements) and IFRS S2 (Climate-related Disclosures) [11]. These standards establish a global baseline for investor-focused sustainability disclosures and became effective for periods beginning January 2024 [12].

IFRS S1 requires companies to disclose sustainability-related risks and opportunities affecting their prospects, while IFRS S2 focuses specifically on climate-related disclosures, fully integrating TCFD recommendations [11]. Both standards have received endorsement from the International Organization of Securities Commission, signaling confidence in their implementation worldwide [11].

SASB: Industry-specific standards

The Sustainability Accounting Standards Board (SASB) Standards enable organizations to provide industry-specific disclosures about sustainability-related risks and opportunities [13]. Developed for 77 industries across 11 sectors, SASB Standards help companies identify which sustainability factors most likely affect financial condition or operating performance [14].

Since August 2022, the ISSB has assumed responsibility for SASB Standards, committing to maintain and evolve them [13]. Notably, IFRS S1 requires companies to consider SASB disclosure topics when identifying industry-specific sustainability risks and opportunities [11].

SGX Sustainability Reporting Guidelines

Singapore Exchange (SGX) guidelines emphasize selecting a sustainability reporting framework appropriate to a company's industry and business model [2]. The guidelines specifically acknowledge the IFRS Sustainability Disclosure Standards, GRI Standards, and SASB Standards as well-known and globally-recognized frameworks [2].

SGX recommends companies place importance on using globally-recognized frameworks for wider acceptance in an increasingly global marketplace, enabling easier comparison with peers both in Singapore and internationally [2]. Companies should exercise caution if deviating from generally-accepted frameworks and should follow their chosen framework consistently year-to-year to build knowledge and understanding [4].

How Businesses Can Prepare for 2025

Preparing for mandatory sustainability reporting requires systematic planning that begins long before the 2025 deadline. With proper groundwork, businesses can transform this regulatory requirement into a strategic advantage.

Conducting a materiality assessment

A materiality assessment serves as the cornerstone of effective sustainability reporting. This structured process helps identify and prioritize ESG topics that matter most to your business and stakeholders. During this assessment:

Define what materiality means for your organization and establish clear objectives [15]
Create a long list of potential material topics through stakeholder engagement [16]
Prioritize issues based on importance to stakeholders and impact on business [17]

Many organizations follow a three-step process: identification, prioritization, and validation [17]. This assessment should be repeated periodically to capture shifting stakeholder perspectives and emerging ESG issues.

Choosing the right reporting framework

Framework selection shapes your entire ESG strategy and reporting burden. Consider these factors when making your decision:

First, align frameworks with your company's ESG priorities and goals [18]. Industry context matters—manufacturing companies require different frameworks than service-oriented businesses [18]. Next, evaluate stakeholder needs, particularly investors who often request specific frameworks [19].

Most Singapore businesses with complex stakeholder bases should consider leveraging ISSB standards (mandatory from 2025) combined with GRI for broader stakeholder communication [20]. This approach satisfies regulatory requirements while addressing diverse stakeholder priorities.

Setting up internal ESG governance

Strong governance ensures accountability and data quality throughout your reporting process. Establish cross-functional teams drawing expertise from sustainability, finance, risk management, IT, and human resources departments [21]. Subsequently, develop clear roles and responsibilities for data collection, verification, and validation [22].

Currently, many companies implement centralized sustainability units to coordinate firmwide direction, particularly when just starting their ESG journey [21].

Collecting and managing ESG data

Data quality forms the foundation of credible reporting. Implement centralized data systems to prevent different departments from providing conflicting numbers [20]. Throughout this process, maintain robust data governance with standardized definitions and collection methods [23].

Given that sustainability data must meet the same standards as financial information by 2025, create documentation trails showing data origin and calculation methodologies [24].

Publishing and communicating the report

Effectively communicating your sustainability efforts extends beyond publishing the report. Create a concise 3-5 page summary highlighting key achievements for stakeholders who won't read your entire report [25]. In conjunction with this, consider hosting ESG-specific events where stakeholders can receive presentations and provide direct feedback [26].

Remember that sustainability reporting is not merely a compliance exercise but a valuable communication tool that builds trust with stakeholders [27].

Challenges and Support for ESG Reporting

Implementing effective sustainability reporting presents both significant hurdles and valuable opportunities for organizations transitioning to the 2025 mandate. Yet, with the right support systems, these challenges become manageable.

Common reporting challenges

Data quality stands as the primary obstacle in sustainability reporting. Many companies struggle with unreliable, outdated, or missing ESG data [3]. Additionally, the task of aggregating and harmonizing diverse data sets from multiple sources creates substantial complexity [3]. Most organizations (73%) operate with only moderate-level ESG measurement capabilities [28], indicating room for improvement.

Another fundamental challenge is navigating multiple frameworks—85% of companies report using several ESG reporting frameworks simultaneously [29]. This complexity is compounded by constantly evolving regulations [29].

Government and industry support

To ease this transition, Singapore offers the Sustainability Reporting Grant (SRG), which defrays up to 30% of qualifying costs capped at SSGD 201,312 [30]. The grant covers external consultancy, assurance costs, equipment, software, and manpower training [30]. Eligible organizations include Singapore-incorporated SGX-listed companies and those with annual revenue exceeding SSGD 134.21 million [31].

Training and upskilling opportunities

Several institutions offer specialized ESG training programs. Republic Polytechnic provides courses on ESG principles and local reporting requirements [6]. Meanwhile, the Singapore Green Council delivers training that enables businesses to develop in-house ESG capabilities [32]. NTUC LearningHub offers certification covering sustainability frameworks and reporting standards [5].

Tools and platforms for ESG tracking

Purpose-built software solutions streamline sustainability reporting processes. These platforms typically feature data integration capabilities, standardized metrics, pre-built models, and performance management tools [3]. Advanced solutions like SAP Sustainability Control Tower integrate with existing systems to centralize ESG data collection [33]. Such technologies transform raw data into actionable insights while ensuring compliance with evolving frameworks [34].

Conclusion

Mandatory sustainability reporting represents a significant paradigm shift for businesses worldwide. Companies must now view ESG reporting not merely as a compliance checkbox but rather as a strategic business priority. The phased implementation approach adopted by Singapore provides organizations with necessary time to develop robust reporting systems, though this timeline should not encourage complacency.

Businesses that start preparing now will gain competitive advantages beyond regulatory compliance. Early adopters will likely secure better financing terms, strengthen stakeholder relationships, and identify operational efficiencies that reduce both costs and environmental impacts. Additionally, proactive companies will attract investors increasingly focused on ESG performance as a key indicator of long-term viability.

Framework selection deserves careful consideration based on industry context, stakeholder needs, and organizational priorities. Most Singapore companies will benefit from combining ISSB standards with complementary frameworks like GRI to address both investor and broader stakeholder interests. Still, regardless of chosen framework, data quality remains paramount—sustainability information must meet the same rigorous standards as financial reporting.

Challenges certainly exist, particularly around data collection, framework complexity, and resource constraints. Nevertheless, numerous support systems help ease this transition, including government grants, specialized training programs, and technology solutions designed specifically for ESG tracking and reporting.

The journey toward mandatory sustainability reporting ultimately represents more than regulatory compliance—it reflects a fundamental change in how business success is measured. Companies that embrace this shift, invest in proper preparation, and commit to transparency will thrive in an economy where environmental and social performance increasingly determines business prosperity.