Scope 1, 2 and 3 emissions reporting: A practical guide for Singapore companies

Greenhouse gas emissions reporting forms the cornerstone of Singapore's new mandatory climate disclosure requirements. Understanding the three scopes of emissions and their reporting requirements is essential for companies preparing to comply with the IFRS S2 standard and Singapore's phased implementation approach.

Understanding the three scopes of emissions

Scope 1 emissions are direct greenhouse gas emissions from sources owned or controlled by the company. These include emissions from company facilities, vehicles and industrial processes. Examples include fuel combustion in company-owned boilers, furnaces and vehicles, as well as emissions from chemical production and other industrial activities. For Singapore companies, this often includes emissions from backup generators, company vehicle fleets and industrial operations.

Scope 2 emissions are indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the company. In Singapore's context, this primarily involves electricity purchased from the national grid. Companies must report both location-based and market-based Scope 2 emissions where applicable, though initial reporting may use location-based methods with a transition to market-based approaches as data becomes available.

Scope 3 emissions encompass all other indirect emissions that occur in a company's value chain, including both upstream and downstream activities. These represent the most challenging category to measure and often constitute 70% or more of a company's total carbon footprint. Scope 3 includes purchased goods and services, business travel, employee commuting, waste disposal, use of sold products and end-of-life treatment of sold products.

Singapore's phased implementation approach

Singapore has adopted a phased approach to emissions reporting that recognises the varying levels of complexity across the three scopes. Listed companies must begin reporting Scope 1 and Scope 2 emissions from FY 2025, with larger listed companies required to add Scope 3 reporting from FY 2026. However, SGX RegCo has indicated flexibility in the Scope 3 timeline, prioritising larger companies by market capitalisation and providing additional guidance based on industry readiness.

Large non-listed companies will follow a similar but delayed timeline, beginning Scope 1 and 2 reporting from FY 2027 and Scope 3 reporting no earlier than FY 2029. This extended timeline acknowledges that non-listed companies may need additional time to build necessary capabilities and systems for comprehensive emissions measurement.

Measurement methodologies and standards

Companies must use the GHG Protocol Corporate Standard for measuring and reporting emissions. This internationally recognised standard provides detailed methodologies for calculating emissions across all three scopes. For Scope 1 emissions, companies typically use direct measurement or calculation based on fuel consumption data and emission factors. Scope 2 calculations require electricity consumption data and grid emission factors, which in Singapore are provided by the Energy Market Authority.

Scope 3 measurement is more complex, often requiring engagement with suppliers and customers to obtain activity data. Companies may use spend-based, supplier-specific or hybrid approaches depending on data availability and materiality. The GHG Protocol's Scope 3 Standard provides detailed guidance for each of the 15 Scope 3 categories, helping companies determine which categories are relevant to their operations.

Data collection and management systems

Successful emissions reporting requires strong data collection and management systems. Companies should establish clear procedures for gathering activity data, including fuel consumption, electricity usage, waste generation and business travel. Digital solutions can help automate data collection and ensure consistency across reporting periods. Many companies are investing in environmental management software that integrates with existing enterprise resource planning systems.

Quality assurance and verification

While external assurance is not immediately required for Scope 1 and 2 emissions in Singapore, companies should prepare for future assurance requirements by implementing internal quality assurance processes. This includes establishing clear documentation, maintaining audit trails and implementing review procedures. Companies should also consider voluntary assurance to build stakeholder confidence and prepare for eventual mandatory requirements.

Scope 3 preparation strategies

Given the complexity of Scope 3 emissions, companies should begin preparation early even if not immediately required to report. This includes conducting Scope 3 screening to identify relevant categories, engaging with key suppliers to understand their emissions and measurement capabilities and developing supplier engagement strategies. Companies should also consider setting science-based targets that include Scope 3 emissions to demonstrate climate leadership.

Industry-specific considerations

Different industries face unique challenges in emissions measurement. Financial services companies must consider financed emissions, while manufacturing companies focus on industrial processes and supply chain emissions. Retail companies must address product lifecycle emissions, while real estate companies concentrate on building energy efficiency and tenant emissions.

Building internal capabilities

Companies should invest in building internal capabilities for emissions reporting through training programs, hiring sustainability professionals and establishing cross-functional teams. Understanding the technical aspects of emissions measurement, staying current with evolving methodologies and building relationships with data providers and verification bodies will be crucial for long-term success in emissions reporting under Singapore's new requirements.