Climate risk reporting is no longer optional; it is becoming a defining factor in business resilience and long-term value. While the Accounting and Corporate Regulatory Authority and Singapore Exchange Regulation have extended implementation timelines, this should not be mistaken as a signal to slow down. Now is the time for businesses to focus on the real value of climate disclosures and use them as a strategic tool, not just a compliance exercise.
Having advised numerous companies on the International Sustainability Standards Board (ISSB) requirements across the region, we have observed how easily companies, especially those with a regional or global presence, can adopt a compliance mindset. Climate-related disclosures are seen as a communication exercise rather than a strategic tool. If your company has a robust understanding of its exposure to climate risks, you will be far better positioned not only to comply with today’s requirements and the adoption of the ISSB Standards but also to reap long-term strategic value from your disclosures.
The key is getting the fundamentals right.
Understanding the momentum for climate reporting
What was once voluntary guidance is rapidly becoming mandatory in markets such as Singapore and Malaysia, which have adopted the ISSB Standards in a phased approach. This is a step in the right direction, as climate change impacts can lead to significant financial consequences. Both financial institutions and companies will therefore have to assess their climate risks – treating them on par with financial risks, such as operational, credit or market risks – before publicly disclosing their findings in line with the ISSB requirements.
Despite top-down efforts in Malaysia and Singapore, uncertainty persists regarding the feasibility of climate reporting and meeting the stipulated deadlines, particularly among smaller companies. According to the Singapore Business Federation’s survey of 40 companies, only 4% of respondents felt ready for ISSB-aligned climate reporting. Singapore has since extended the timeline for climate reporting requirements in a move to provide companies with more time to develop their reporting capabilities. However, this extended timeline should not be seen as a reason to delay assessing climate risks.
This extended timeline should not be seen as a reason to delay assessing climate risks. The best way forward now is to focus on building a solid, decision-useful climate risk assessment.
Robust climate risk assessments should help uncover and manage a spectrum of climate-related risks and opportunities. In the case of financial institutions, these risks and opportunities could impact portfolios, lending, solvency, liquidity, and capital allocation; for non-financial corporates, a sound understanding of climate risks and opportunities could shape how they view the resilience of their supply chains, safeguarding operations and assets, and most importantly, guiding strategic decision-making to ensure long-term competitiveness in a changing market. While regulatory requirements vary, the core objective of climate risk management remains the same: to protect asset quality and strengthen long-term financial resilience. When done effectively, a climate risk assessment is more than ticking a compliance box; it naturally aligns with regulatory expectations. The gained insights directly support the reporting requirements, because they are grounded in the same goal: understanding, managing, and mitigating material financial risks.
In this way, climate risk assessments become a critical tool that transcends compliance. It can be integrated into financial institutions’ credit investment and portfolio decisions, as well as corporates’ operational and strategic decisions that ultimately preserve shareholder value and bolster market confidence in an economy undergoing rapid transition.
So, where does this leave financial professionals and corporates? Despite extended timelines, the smartest companies are those that focus on three core principles:
- Stay informed, but don’t get obsessed with the regulations and timelines: Understand the evolving regulatory landscape, from international disclosure standards to each country’s reporting requirements, but avoid getting lost in chasing compliance templates. The focus should be on substance over form, recognising that strong climate risk management naturally aligns with regulatory demands.
- Build climate risk assessments that drive decision-making: Regardless of the methodology or data constraints, your climate risk assessment should be practical and valuable. It needs to inform governance, shape strategy, and support day-to-day risk management, not implemented in silo. Getting the fundamentals right enables companies to navigate uncertainty while maintaining operational resilience.
- Connect climate risks to core financial metrics: The most effective climate risk assessments translate climate insights into financial impacts, particularly on credit risk, liquidity, solvency, capital adequacy, and profitability for financial institutions, and on profitability, cash flow, investment decisions, and operational resilience for corporates. Both financial institutions and corporates should integrate climate considerations directly into existing risk frameworks, stress testing, and capital planning. This bridges the gap between sustainability narratives and concrete financial decision-making.
Regulations may change in the future, but your preparedness starts today. Whether other Southeast Asian governments will tighten their disclosure requirements or shift compliance timelines, a strong climate risk assessment remains your best safeguard. Get in touch to assess your resilience and start getting these fundamentals right.
