Raymond Cheung
Chartered Actuary · CRO · Board Adviser · Singapore
Scope 3 emission reporting becomes mandatory for SGX-listed companies from FY2026. The data challenges are significant. The governance challenges — who owns the disclosure, how the assumptions are validated, what board sign-off means — are where most organisations are least prepared.
Scope 3 emissions — all indirect emissions in a company's value chain, upstream and downstream — become part of mandatory sustainability disclosure for SGX-listed companies from FY2026. The scope of what needs to be measured, estimated, and disclosed is significant: supply chain emissions, employee commuting, use of sold products, end-of-life treatment of goods, business travel, leased assets not in direct control.
The data challenge is well-understood: Scope 3 requires organisations to collect emissions data from suppliers, customers, and across their value chain — much of which is estimated rather than measured, and none of which is under the reporting company's direct control. What is less well-discussed is the governance challenge: who in the organisation takes responsibility for the adequacy of those estimates, how the board validates a disclosure it cannot independently verify, and what liability attaches to a Scope 3 disclosure that turns out to be materially inaccurate.
The governance responsibilities boards need to assign
- Methodology ownership: who has decided which estimation methodology the company is using for each Scope 3 category, and on what basis? This should be a documented, board-approved decision — not a sustainability team judgment
- Materiality assessment: which Scope 3 categories are material to the business? A company does not need to report immaterial categories, but the determination of materiality requires board-level engagement
- Data quality governance: what is the quality of the underlying data, and what assurance does the board have that the estimates are reasonable? This is the hardest question — and the one most sustainability reports avoid
- Year-on-year consistency: Scope 3 disclosures will be compared across years and against peers. The board needs to understand what changes in the disclosure reflect genuine changes in the business versus methodology changes
- External assurance: MAS has signalled expectations on assurance of climate disclosures. The board should be deciding — not just approving — the level and scope of external assurance for Scope 3
“A Scope 3 number that the board cannot explain is a liability, not a disclosure. The governance challenge is ensuring the board can explain it.”
What boards should do before FY2026 closes
For companies that have not yet built their Scope 3 governance architecture, FY2026 is already underway. The practical steps are: commission a Scope 3 materiality assessment if one has not been done; establish internal ownership of the methodology and data quality; understand what your material categories are and what the data sources for each are; and brief the board — in governance terms, not technical terms — on what the company will be disclosing and what the confidence level in those disclosures is.
This is exactly the kind of work I help boards with — translating a technically complex reporting requirement into a governance question that boards can take responsibility for. The time to do that work is before the disclosure is signed.
Common Questions
When is Scope 3 reporting mandatory for Singapore companies?
Scope 3 emissions disclosure is required for SGX-listed companies from FY2026, as part of the mandatory climate-related disclosure framework for Mainboard issuers. The requirement is phased, with larger companies disclosing first.
What is Scope 3 and why is it harder to report than Scope 1 and 2?
Scope 3 covers all indirect emissions in a company's value chain — supplier emissions, customer use of products, business travel, leased assets, and more. Unlike Scope 1 (direct emissions) and Scope 2 (purchased energy), Scope 3 data is largely outside the company's direct control and must be estimated from supplier data, industry averages, or spend-based proxies, making accuracy and consistency significantly more challenging.
What is a Singapore board's responsibility for Scope 3 disclosure?
The board is responsible for approving the methodology and materiality assessment that determines what is disclosed, ensuring that the data quality is adequate for public disclosure, and understanding the confidence level in the estimates well enough to take governance responsibility for the disclosure.
About the author
Raymond Cheung is a Chartered Actuary, C-suite executive and board adviser with more than 20 years of experience across Asia in risk management, insurance, ESG and corporate governance. He is the CEO of CER Consultancy and an accredited trainer at SMU Academy and the Singapore College of Insurance.