TerraLex Cross-Border Guide to Cross-Border Guide to ESG and Sustainable Finance

In Singapore, listed issuers have continuing obligations under the Singapore Exchange Listing Rules (the “SGX Listing Rules”) to disclose material information that is necessary to avoid the establishment of a false market in the company's securities or would likely to materially affect the price or value of its securities. Specifically, and in relation to ESG disclosure, listed issuers must publish an annual sustainability report for their financial year within the same timeframe as their annual report. This sustainability report must describe the sustainability practices with reference to certain primary components set out in the SGX Listing Rules on a ‘comply or explain' basis. These components include:

• Material ESG factors;
• Policies, practices, and performance in relation to such factors;
• Targets in relation to each factor;
• A sustainability reporting framework; and
• A board statement confirming that the board has considered sustainability issues as part of its strategic formulation, determined the material ESG factors and overseen the management and monitoring of these factors.

Listed issuers are also required to report and file annual climate-related disclosures (the “CRDs”) including Scope 1 and 2 GHG gas emissions (i.e., emissions that are direct emissions from owned or controlled sources, and emissions that are indirect emissions from the generation of purchased energy), using ISSB’s sustainability disclosure standards (i.e., the IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures) (collectively, the “ISSB Standards”).

Further, a series of required disclosures must be included in any prospectus for ESG-related financial products. These requirements include descriptions of the following:

• Investment focus of the scheme in question;
• Investment strategy used to achieve the ESG focus;
• Reference benchmark of the investment focus; and
• Any risks associated with the scheme.

In terms of sectoral requirements, banks, insurers, and asset managers are required under the Environmental Risk Management Guidelines to disclose their approach to managing environmental risk in a manner that is clear and meaningful to their stakeholders. They are also encouraged to disclose the potential impact of material environmental risk on the bank, including quantitative metrics such as exposure to sectors with higher environmental risk. The disclosure should be in accordance with well-regarded international reporting frameworks, such as the Task Force on Climate-related Financial Disclosures (the “TCFD”) recommendations.

There are also specific reporting and/or record-keeping obligations under the various environmental laws, such as the following:

• Under the Environmental Protection and Management (Air Impurities) Regulations, every owner of any industrial premises shall carry out tests with respect to the emission of air impurities and keep a register of such tests and enable authorized officers to inspect and obtain representative sample of any discharge from the chimney.
• Under the Carbon Pricing Act 2018 (the “CPA”), operators of business facilities with a carbon dioxide equivalence that attains the first emissions threshold must submit to the National Environment Agency of Singapore (the “NEA”) greenhouse gas emissions reports.
• Under the Resource Sustainability Act 2019 (the “RSA”), producers of specified packaging that fulfil prescribed threshold criteria must submit to the NEA reports on information relating to such specified packaging and a plan to reduce, re-use or recycle in Singapore (also known as the “3R plan”).

Based on the Sustainability Reporting Review Report 2021 issued pursuant to a joint review by the Singapore Exchange Regulation (the “SGX RegCo”) and the Centre for Governance and Sustainability at the National University of Singapore Business School (the “CGS”), the ten most commonly disclosed material factors are those of a social and environmental nature. The most commonly disclosed are:

• For social factors: occupational health and safety; employment practices; training and education; diversity and equal opportunities; local community involvement; and product, safety and marketing;
• For governance factors, anti-corruption; and
• For environment factors, energy and effluents and waste.

Other voluntary disclosures, as per the Sustainability Reporting Review Report 2021, include:

• The management's role in preparing the report;
• The company's sustainability targets, whether short term or longer term; and
• The relationship between those targets and the company's overall corporate strategy (i.e., business strategy and financial performance).

Additionally, some entities will disclose performance data in the context of previously disclosed targets, with some linking top executive remuneration to performance.

More recently, the Sustainability Reporting Review Report 2023 published by the SGX RegCo and the CGS noted that approximately 86% of the listed issuers had voluntarily disclosed at least one of their Scope 1, 2 or 3 greenhouse gas emissions, and 73% of the listed issuers had prepared climate reporting using the TCFD framework. Some listed issuers also disclosed targets backed by climate science in their transition plans, as well as absolute Scope 1 and Scope 2 emission and emission intensity data, absolute emission projections and emission intensity projections.

The Singapore Exchange has distilled 27 ESG metrics commonly reported by listed companies with each metric mapped against globally accepted reporting frameworks such as the following:

• The Global Reporting Initiative (the “GRI”);
• The Sustainability Accounting Standards Board (the “SASB”);
• The Task Force on Climate-Related Financial Disclosures (the “TCFD”) recommendations; and
• The World Economic Forum’s recommended set of metrics and disclosures.

All listed issuers are currently required to provide CRDs incorporating the climate-related requirements in the ISSB Standards. In particular, the SGX RegCo regards the disclosure of information on climate-related risk and opportunities in alignment with IFRS S2 (other than the disclosure of Scope 3 GHG emissions) as the “baseline requirement”, and listed issuers are expected to consequently apply the climate-relevant provisions in IFRS 1.

In terms of sectoral requirements, banks, insurers, and asset managers are required under the Environmental Risk Management Guidelines to disclose their approach to managing environmental risk in a manner that is clear and meaningful to their stakeholders. They are also encouraged to disclose the potential impact of material environmental risk to the bank, including quantitative metrics such as exposures to sectors with higher environmental risk. The disclosure should be in accordance with well-regarded international reporting frameworks, such as the TCFD recommendations.

For non-listed companies, the most commonly adopted sustainability reporting framework is the GRI Standards, with an increasing number of entities including climate-related disclosures made against the TCFD Recommendations. Note, however, that large non-listed companies (“NLCs”) (i.e., entities with an annual revenue of at least S$1 billion and total assets of at least S$500 million). will be required to make CRDs that incorporate the ISSB Standards from FY2027.

Other international frameworks and industry specific guidelines used by local entities are the United Nations Sustainable Development Goals and the Carbon Disclosure Project.

There is no single regulatory regime in respect of ESG obligations in Singapore. Instead, the laws applicable to ESG obligations (including those pertaining to disclosure), are encompassed within various statutes.

Environmental

The primary legislation with regards to environment and land management in Singapore is the Environmental Protection and Management Act 1999 (the “EPMA”). The EPMA establishes regulations and requirements for environmental protection and management in Singapore. Companies are obligated to comply with these regulations, which cover areas such as pollution control, waste management, and environmental impact assessments.

Other significant legislation includes the CPA and the RSA. Under the CPA, companies are required to pay carbon tax (the current rate being S$25/tCO2e). As part of Singapore’s target to achieve “net zero emissions by 2050, the rate of carbon tax will be raised to S$45/tCO2e in 2026 and 2027, with a view to reaching S$50-80/tCO2e by 2030. Under the RSA, owners and occupiers of certain commercial and industrial premises (e.g., shopping malls, hotels and factories) that generate large amounts of food waste will be required to segregate their food waste for treatment, either on-site or off-site.

Social

Employers in Singapore are obliged to comply with the regulations and guidelines under the Workplace Safety and Health Act 2006 and the Employment Act 1968. These include ensuring a safe and healthy work environment, providing fair terms and conditions of employment, and preventing discrimination and harassment in the workplace.

In addition, organisations are required to obtain consent for data collection, ensure data accuracy and security, and provide individuals with access and correction rights under the Personal Data and Protection Act 2012.

From 1 December 2024, employers must fairly consider formal requests from employees for flexible work arrangements (the “FWA”) under the Tripartite Guidelines on Flexible Work Arrangements (the “FWA Guidelines”). To this end, they are required to adhere to the FWA Guidelines in evaluating and approving or rejecting FWA requests from their employees. In particular, any rejection of a formal FWA request should be based on reasonable business grounds. While not legally binding, egregious employers who willfully refuse to comply with the FWA Guidelines may be required by the Ministry of Manpower to attend corrective workshops.

Governance

The Companies Act 1967 and the Securities and Futures Act 2001 (the “SFA”) set out various requirements for corporate governance, including the responsibilities of directors, protection of shareholders' rights, and disclosure of financial information. This includes establishing a board of directors, maintaining proper accounting records, conducting annual general meetings, and ensuring compliance with financial reporting requirements.

The Code of Corporate Governance provides additional guidelines to promote transparency, accountability, and ethical conduct in companies, for example, by including maintaining proper accounting records, preventing bribery and corruption, ensuring market integrity and transparency, and upholding high standards of corporate governance.

Under the Prevention of Corruption Act 1960, companies are required to implement anti-corruption measures and ensure that their employees are aware of the law and the company’s policies on corruption. Companies are also required to report any corrupt practices that they become aware of to the Corrupt Practices Investigation Bureau.

Generally, ESG rules in Singapore are not extraterritorial in nature and only apply to entities or activities that are based in or have a nexus with Singapore. For example, the Sustainability Reporting Guide issued by the Singapore Exchange (the “SGX”) only applies to companies listed on the SGX. Similarly, the Guidelines on Environmental Risk Management issued by the Monetary Authority of Singapore (the “MAS”) only apply to financial institutions regulated by the MAS in Singapore. Further, the recent MAS Circular on Disclosure and Reporting Guidelines for Retail ESG Funds requires fund managers who offer ESG funds to retail investors in Singapore to disclose and report on their ESG investment strategies, criteria, and metrics, regardless of where the fund managers or the funds are domiciled.

Notably, however, the Transboundary Haze Pollution Act 2014 (the “THPA”) has an extraterritorial effect, and is applicable to any conduct or entity outside Singapore which causes or contributes to any haze pollution in Singapore. In 2015, the National Environment Agency of Singapore launched an investigation into four Indonesian companies under the THPA, due to the transboundary haze pollution from Indonesian forest fires that year.

The primary legislation governing advertising in Singapore is the Consumer Protection (Fair Trading) Act 2003 (the “CPFTA”). The CPFTA contains provisions that protect consumers against unfair practices. Under the CPFTA, an unfair practice in relating to a consumer transaction is to:

• do or say anything, or omit to do or say anything, if as a result
• a consumer might reasonably be deceived or misled;
• to make a false claim;
• to take advantage of a consumer if the supplier knows or ought reasonably to know that the consumer (i) is not in a position to protect his or her own interests; or (ii) is not reasonably able to understand the character, nature, language or effect of the transaction or any matter related to the transaction; or
• do anything specified in the Second Schedule to the CPFTA.

Some specific unfair practices set out in the Second Schedule that may be relevant to advertising include:

• Representing that goods or services have sponsorship, approval, performance characteristics, accessories, ingredients, components, qualities, uses or benefits that they do not in fact have;
• Making a false or misleading representation concerning the need for any goods or services;
• Making a representation that appears in an objective form (such as in an editorial, documentary, or scientific report) when the representation is primarily made to sell goods or services, unless the representation states that it is an advertisement or a promotion;
• Representing that goods or services are available at a discounted price for a stated period of time, if the supplier knows or ought to know that the goods or services will continue to be so available for a substantially longer period;
• Representing that goods or services are available at a discounted price for a particular reason that is different from the facts; and
• Omitting to provide a material fact to a consumer, using small print to conceal a material fact from the consumer or misleading a consumer as to a material fact, in connection with the supply of goods or services.

In addition, advertisements that go against the Singapore Code of Advertising Practice (the “SCAP”) could invite sanctions for the advertiser and create adverse publicity. The SCAP was implemented by the Advertising Standards Authority of Singapore, a self-regulating body of the advertising industry established as a Council under the Consumers Association of Singapore to promote ethical advertising in Singapore.

The basic premise of the SCAP is that all advertisements should be legal, decent, honest, and truthful. Appendix L of the SCAP also sets out standards relating to environmental claims, including that:

• The basis of any claim should be explained clearly and qualified where necessary;
• Where comparisons are used (e.g., “greener” or “environmentally friendly”), advertisers will need to substantiate that the product provides an overall improvement in environmental terms either against their competitors’ or their own previous products;
• Where there is significant division of scientific opinion or where evidence is inconclusive this should be reflected in any statements made in the advertisement;
• If a product has never had a demonstrably adverse effect on the environment, advertisers should not imply that the formulation has been changed to make it harmless; and
• The use of extravagant language should be avoided, as should bogus and confusing scientific terms, and where scientific expressions need to be used, their meaning should be clear.

It is not required in Singapore to impose special ESG rights and/or obligations on suppliers. However, some entities or activities may choose to do so voluntarily, as part of their ESG policies and practices, or to comply with the ESG rules of other jurisdictions where they operate or have exposure.

At the date of this publication, there are no known cases/examples of shareholders/investors holding a company/entity or its directors liable for taking positive ESG efforts that has caused loss to the company. However, shareholders may bring a claim against the directors for a breach of directors’ duties. A claim could be made that the directors have failed to balance ESG considerations with the financial performance and viability of the company/entity, and accordingly, failed to act in the best interests of the company. As above, there are no known cases/examples of such claims being made by shareholders as at the date of this publication.

Shareholders/investors could seek to make a company and its directors liable where there has been a breach of law or duties in respect of ESG compliance. Some of the potential liabilities arising from a breach of laws or duties in respect of ESG compliance include:

• Misrepresentation or misleading statements: Companies/entities that make ESG disclosures or claims may be liable for misrepresentation or misleading statements if they provide false, inaccurate, or incomplete information in relation to the issuance of shares; and
• Breach of fiduciary duties: Directors and officers of companies/entities have fiduciary duties to act in good faith and in the best interests of the company/entity. These duties may require them to consider ESG issues that are relevant to the company/entity’s performance, strategy, and risk management. Failure to do so may expose them to claims by shareholders for breach of fiduciary duties.

Customers, creditors, and other affected parties may seek to hold a company or its representatives accountable for non-compliance with ESG efforts that cause loss to them. More specifically, such companies and/or its corporate bodies/representatives may be held liable for misrepresentation. Under the SFA, a company that is listed on the Singapore Exchange and which makes false or misleading statements are liable for statutory compensation under the said act. The relevant customer, creditor or affected party may also bring a claim against the company on the tort of deceit or negligence for making false or misleading statements. Contractually, a customer, creditor or affected party may also bring a claim against a company for a breach of contract, if the company makes a warranty or representation relating to ESG factors that is false, misleading or inaccurate in the said contract.

There are no analogous regulation or regulatory initiatives to ESG rules and initiatives in Singapore.

Apart from ESG regulation, the key regulatory initiatives in Singapore include the following:

• The Singapore Green Plan 2030, a national sustainability roadmap which sets sustainability targets across industries, to enable Singapore to achieve net-zero emissions by 2050, with tangible targets set for 2030;
• The establishment of the Sustainability Reporting Advisory Committee by the SGX to advise on the roadmap for advancing sustainability reporting by companies in Singapore, which led to the implementation of the CRD reporting requirements for listed issuers (and to be implemented for large NLCs in due course); and,
• The Green Finance Action Plan (also known as the Finance for Net Zero (FiNZ) plan), which outlines various sustainable finance schemes to enable the financial sector to contribute to Singapore’s net zero emissions target.

There has been no review undertaken specifically to identify restrictions and prohibitions pursuing ESG initiatives.

There is no single statutory sustainable finance and investment framework in Singapore. The latest Singapore Government policy in this regard is the Singapore Green Plan 2030, which is Singapore’s blueprint for sustainable development. It consolidates the country’s existing plans to cut its carbon footprint and adapt to the impacts of the changing climate and features new targets that will change the way people here live, work and play. The Green Plan charts ambitious and concrete targets over the next 10 years, strengthening Singapore’s commitments under the UN’s 2030 Sustainable Development Agenda and Paris Agreement, and positioning Singapore to achieve its long-term net zero emissions aspiration by 2050.

Currently, the Singapore Exchange (the “SGX”) Listing Rules imposes sustainability and diversity reporting requirements on listed issuers in Singapore. Briefly, all listed issuers must issue an annual sustainability report together with their annual reports on a ‘comply or explain' basis. Listed issuers must also establish a board diversity policy that addresses gender, skill and experience, and other relevant aspects of diversity, and must disclose such policy along with other required information in their annual report.

In addition, the SGX imposes mandatory climate-related reporting requirements on issuers in the financial, energy, and agriculture, food and forest products industries from the financial year commencing 2023, and for issuers in the materials and building and transportation industries from the financial year commencing 2024.

Similarly, the Monetary Authority of Singapore intends to implement mandatory climate-related disclosure obligations for financial institutions as soon as a global baseline sustainability reporting standard is established by the International Sustainability Standards Board.

In Singapore, there are several voluntary frameworks that are followed by different stakeholders in the financial sector. Some of the most prominent ones are: 1. The Singapore Stewardship Principles for Responsible Investors, which provide guidance for institutional investors to exercise stewardship responsibilities, such as engaging with investee companies, voting on shareholder resolutions, and disclosing their stewardship policies and activities; 2. The Code of Corporate Governance, which sets out the principles and provisions for listed companies to adopt good corporate governance practices, such as board composition, risk management, remuneration, and stakeholder engagement. The code also encourages companies to disclose their sustainability policies, practices and performance; 3. The Association of Banks in Singapore Guidelines on Responsible Financing, which outline the expectations for banks to integrate ESG considerations into their lending and investment activities, such as conducting due diligence, assessing ESG risks and opportunities, and engaging with clients on ESG issues; 4. The Monetary Authority of Singapore Guidelines on Environmental Risk Management which set out the supervisory expectations for banks, insurers, and asset managers to identify, assess, monitor, mitigate and disclose environmental risk in their business activities. The guidelines also encourage financial institutions to adopt green finance solutions and support the transition to a low-carbon economy; and 5. The Green Finance Industry Taskforce Green Taxonomy, which is a proposed traffic light classification system for economic activities that can be considered green or transitioning towards green based on their contributions to climate change mitigation. The taxonomy aims to provide a common language and reference point for financial institutions, corporates, and investors to identify and assess green finance opportunities in Singapore.

In Singapore, institutional investors and financial intermediaries are not expressly required to consider ESG factors when making investment decisions.

In Singapore, the Monetary Authority of Singapore (the “MAS”) has launched a number of schemes to encourage the use of ESG factors. For example, the MAS Green and Sustainability-Linked Loan Grant Scheme was launched to encourage companies to take up green and sustainability-linked loans in Singapore and offset up to S$100,000 per loan over a 3-year period in costs incurred in engaging sustainability advisory and assessment service providers.

The MAS also announced its USD 2 billion Green Investments Programme (the "GIP") to invest in public market investment strategies that have a strong green focus. The GIP aims to foster the growth of a strong and diverse ecosystem of green financing capabilities in Singapore. As of March 2022, the MAS has fully funded a group of five externally managed mandates amounting to US$1.8 billion under the GIP, allowing asset managers to drive regional green efforts from Singapore. The MAS has also contributed to a S$5 million Asia Climate Solutions Design Grant to fund early-stage projects in blended finance solutions.

There are no specific incentives or reliefs for financial institutions or pension institutions to integrate ESG factors into their investment decisions. However, there are some general tax benefits for green activities in Singapore, such as the following:

1. The Land Intensification Allowance Scheme provides an allowance of up to 25% of the capital expenditure incurred on qualifying building projects that achieve higher land productivity and lower carbon footprint. This Scheme aims to promote the intensification of industrial land use towards more land-efficient and higher value-added activities across various sectors in Singapore;
2. The Energy Efficiency Investment Tax Allowance encourages companies to invest in energy-efficient equipment or adopt energy-efficient practices by allowing companies to claim a tax allowance of up to 100% of the capital expenditure incurred on qualifying energy-efficient equipment or practices; and
3. The Energy Efficiency Improvement Assistance Scheme provides financial assistance to companies that adopt energy-efficient practices (e.g., providing funding for energy audits, consultancy services, and implementation of energy-efficient measures).

Efforts to combat greenwashing have intensified on the back of increased greenwashing awareness in Singapore. For example, in July 2022, MAS published a circular on disclosure and reporting guidelines for retail ESG funds to tackle greenwashing risks (the “Circular”). The Circular amends the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005 to impose ESG-specific requirements on fund naming, prospectus disclosures and periodic reporting disclosures. Pursuant to the Circular, a scheme’s prospectus should disclose its investment objective, investment strategy, reference benchmark, as well as the risks of investing in the scheme. In addition, ESG funds would have to disclose, in an annual report, the actual proportion of investments that meet the fund’s ESG focus, as well as how, and the extent to which, the fund’s ESG focus has been met during the relevant financial period.

Financial institutions have also adopted artificial intelligence (an “AI”) platforms to combat greenwashing, with AI platform NovA! being utilised to detect greenwashing by comparing actual sustainability performance indicators from third parties against a borrower’s self-declaration.

In Singapore’s first greenwashing case in December 2023, the Advertising Standards Authority of Singapore (the “ASAS”) requested Prism+ to remove its advertisement from its Instagram page, for breach of the Singapore Code of Advertising Standards' (the “SCAP”) environmental claims guidelines.

The ASAS concluded that the language of the advertisement was in breach of the SCAP, in particular, the claim that the air-conditioners sold by Prism+ were the “best tip” to “save the earth” and the influencer setting the temperature of the air-conditioner to 23 degrees celsius to do so.

In particular, Prism+ had flouted the following standards of the SCAP:

1. The requirement that advertisements must not mislead by “inaccuracy, ambiguity, exaggeration or omission”; and
2. The requirement that advertisements must not misrepresent any matter likely to influence consumers’ attitudes to the product.

ASAS also reminded Prism+ that any claims about energy savings should be substantiated by tests conducted by independent parties in conditions that are applicable to the local context.

Environmental legislative and regulatory developments

Singapore is showing signs of shifting away from a primarily incentive-based approach to one which incorporates more mandatory legal and regulatory requirements. Among other things, with respect to climate-related disclosures, the Singapore Exchange has announced that climate reporting will subsequently become mandatory for issuers in certain industries, to be implemented in tranches:

1. By 2023 for issuers in the financial, agriculture, food and forest products, and energy industries; and
2. By 2024 for issuers in the materials and building and transportation industries.

Similarly, the Second Minister of Finance announced that from FY2025, all listed issuers in the financial industry, agriculture, food and forest products industry, energy industry, materials and buildings industry, and transportation industry will be required to report and file annual climate-related disclosures (the “CRD”), using requirements aligned with the International Sustainability Standards Board (the “ISSB”) standards.

From FY2027, large NLCos (i.e., entities with an annual revenue of at least S$1 billion and total assets of at least S$500 million) will be required to do the same.

The timeline for the implementation of mandatory CRD is as follows:

1. For listed issuers

(a) From FY2025 – CRD including Scope 1 and 2 GHG emissions (i.e., emissions that are direct emissions from owned or controlled sources, and emissions that are indirect emissions from the generation of purchased energy). (b) From FY2026 – CRD for Scope 3 GHG emissions. (c) From 2027 – External limited assurance on Scope 1 and 2 GHG emissions.

2. For NLCos

(a) From FY2027 – CRD including Scope 1 and 2 GHG emissions (i.e., emissions that are direct emissions from owned or controlled sources, and emissions that are indirect emissions from the generation of purchased energy). (b) From FY2029 – CRD for Scope 3 GHG emissions and external limited assurance on Scope 1 and 2 GHG emissions.

A large NLCo whose parent company reports CRD using ISSB-aligned local reporting standards or equivalent standards will be exempted from reporting and filing CRD, subject to certain conditions, while a large NLCo whose parent company reports CRD using other international standards and frameworks will be exempted from reporting and filing CRD for a transitional period of 3 years, from FY2027 to FY2029.

MAS also intends to step up disclosure requirements for all financial institutions over the next few years by introducing mandatory sustainability disclosure requirements. This is slated to be developed once the baseline sustainability reporting standard has been published by the International Sustainability Standards Board.

Employment legislative and regulatory developments

In August 2023, the Tripartite Committee on Workplace Fairness (the “Tripartite Committee”) released its final report setting out its final set of 22 recommendations on a proposed workplace fairness legislation, which will complement the existing Tripartite Guidelines on Fair Employment Practices and strengthen Singapore’s stand against workplace discrimination.

Broadly, the recommendations of the Tripartite Committee aim to:

1. Strengthen protections against workplace discrimination;

2. Support business/organizational needs and national objectives;

3. Encourage implementation of processes for resolving grievances and disputes while preserving workplace harmony; and

4. Ensuring fair outcomes through redress for victims of workplace discrimination and appropriate penalties for breaches.

5. A new Tripartite Guidelines on Flexible Work Arrangements will also come into effect on 1 December 2024. Flexible Work Arrangements (the “FWAs”) are defined as work arrangements where employers and employees agree to a variation from the standard work arrangements. There are three broad categories of FWAs:

6. Flexi-place (e.g. work-from-home);

7. Flexi-time (e.g. staggered hours); and

8. Flexi-load (e.g. job sharing).

The Tripartite Guidelines require employers in Singapore to fairly and properly consider FWA requests made by their employees. In this regard, the Tripartite Guidelines sets out the minimum requirements that all employers are required to abide by when handling FWA requests, and recommend other good practices for employers to consider in relation to formal FWA requests.

Corporate governance legislative and regulatory developments

On 12 March 2024, the Ministry of Finance and the Accounting and Corporate Regulatory of Singapore (the “ACRA”) published a consultation paper seeking feedback on a proposed Corporate Service Providers (“CSP”) Bill to enhance the regulatory regime for the CSP sector.

The consultation paper also sought feedback on legislative amendments to the Companies Act 1967 and Limited Liability Partnerships Act 2005 to enhance the transparency of beneficial ownership of companies and limited liability partnerships, through the introduction of a Companies and Limited Liability Partnerships (Miscellaneous Amendments) (the “CLLPMA”) Bill.

Key changes that will be introduced by the CSP Bill include the following:

1. Requiring all business entities carrying on a business of providing corporate services in and from Singapore to register with ACRA as registered CSPs;
2. Requiring all registered CSPs to comply with obligations, including those on anti-money laundering, countering the financing of terrorism and the proliferation of weapons of mass destruction (the “AML/CFT/PF Obligations”);
3. Introducing fines for breaches of AML/CFT/PF Obligations by registered CSPs and their senior management;
4. Prohibiting persons from acting as nominee directors by way of business unless the appointments are arranged by registered CSPs and they have been assessed as fit and proper by the registered CSPs;

Key changes that will be introduced by the CLLPMA Bill include the following:

1. Requiring nominee directors and shareholders to disclose their nominee status and the identities of their nominators to ACRA under the CLLPMA; and
2. Increasing fines pertaining to the Register of Registrable Controllers, Register of Nominee Directors and Register of Nominee Shareholders under the CLLPMA.

In relation to greenwashing, the Competition and Consumer Commission of Singapore is developing a set of guidelines to provide greater clarity to suppliers on the environmental claims that could amount to unfair practices under the Consumer Protection (Fair Trading) Act 2003, and will be seeking views from the public in due course.

At the date of this publication, there are no proposed legislative or regulatory developments in respect of the application of ESG in M&A. Nevertheless, as ESG credentials become increasingly important to companies, and with ESG regulations being promulgated globally, acquirers are now more vigilant in scrutinising target companies for potential ESG issues. The significance of conducting thorough ESG due diligence in M&A deals is also steadily increasing. Key ESG aspects, such as environmental practices and anti-corruption measures, are now integral parts of the due diligence process in M&A transactions. Through the due diligence process, acquirers will be able to identify ESG-related risks that may influence a target's price and the overall deal structure. Consequently, acquirers and potential investors may seek to protect themselves by demanding greater representations and warranties relating to environmental, human rights and specific ESG risks experienced by the target, the inclusion of pre-closing covenants mandating the disclosure of any new ESG risks, and / or special indemnity arrangements for known ESG issues.