Why SMEs May Need Sustainability Reports Even When Reporting Is Not Mandatory

Sustainability reporting is becoming more important in Singapore, but many SMEs are not currently required by law to prepare a formal sustainability report.

That does not necessarily mean sustainability reporting is irrelevant to them.

Large customers, supply-chain partners, investors and financiers are paying greater attention to environmental and sustainability information. An SME may therefore be asked for information about energy use, greenhouse gas emissions, sustainability policies or environmental practices even when the company itself is not directly subject to mandatory climate reporting.

Singapore also provides support for local SMEs that want to develop their first sustainability report voluntarily.

For business owners, the question is therefore not simply, “Do we legally have to publish a sustainability report?”

A more useful question is, “Would better sustainability information help us meet customer requirements, improve operations, access opportunities or prepare for future expectations?”

1. Are Singapore SMEs required to prepare sustainability reports?

For most ordinary non-listed SMEs, the answer is currently no.

Singapore’s mandatory climate-reporting roadmap applies in phases to listed companies and certain large non-listed companies.

According to the Accounting and Corporate Regulatory Authority, or ACRA, a large non-listed company falls within the mandatory reporting requirements where it meets both of the following thresholds:

• annual revenue of S$1 billion or more; and
• total assets of S$500 million or more.

Unless exempted, these large non-listed companies are scheduled to begin reporting ISSB-based climate-related disclosures from financial years starting on or after 1 January 2030.

A typical Singapore SME is far below these thresholds.

This distinction is important. SMEs should not assume that every business in Singapore is suddenly required to produce an ISSB sustainability report.

2. Why should an SME care if reporting is voluntary?

Legal compliance is only one reason a company may need sustainability information.

An SME operates within a wider business ecosystem.

It may supply goods to a multinational company, provide services to a listed company, borrow from a financial institution, bid for major contracts or sell to customers that have their own sustainability commitments.

These stakeholders may increasingly ask their suppliers and business partners for information relating to sustainability.

Enterprise Singapore notes that sustainability is becoming increasingly important to customers, supply chains and investors.

An SME may therefore experience sustainability reporting requirements indirectly through commercial relationships even if the Government does not directly require the SME to publish a report.

3. Large customers may need information from their suppliers

A large company preparing climate-related disclosures needs information about its own operations, but some sustainability reporting also looks beyond the company’s direct activities.

This can create requests for information further down the supply chain.

For example, a large customer may ask an SME supplier for information such as:

• electricity consumption;
• fuel use;
• greenhouse gas emissions;
• waste generation;
• recycling practices;
• environmental certifications;
• sustainability policies;
• energy-efficiency initiatives;
• responsible sourcing practices; or
• targets for reducing environmental impact.

An SME that already collects this information may be able to respond more quickly than one that needs to reconstruct several years of data whenever a customer sends a questionnaire.

4. Sustainability reporting can become a customer requirement before it becomes a legal requirement

An SME does not need to wait for sustainability reporting to become mandatory before the issue affects revenue.

Suppose a manufacturer supplies components to several large corporate customers.

One customer introduces a new procurement requirement asking suppliers to provide carbon emissions information and describe their sustainability practices.

The SME may not be legally required to publish a sustainability report.

However, the commercial relationship may effectively require the business to provide sustainability information if it wants to remain an approved supplier.

In this situation, sustainability reporting has become a business requirement rather than a regulatory one.

5. What is Singapore’s current sustainability reporting roadmap?

Singapore is implementing mandatory climate reporting progressively.

All SGX-listed companies are already within the reporting roadmap, although the timing and extent of their requirements depend on their category.

For financial years starting on or after 1 January 2025, all listed companies are required to report Scope 1 and Scope 2 greenhouse gas emissions.

Straits Times Index constituents also began reporting other ISSB-based climate-related disclosures from FY2025 and Scope 3 greenhouse gas emissions from FY2026.

Other listed companies will progressively face additional requirements according to the implementation timeline.

Large non-listed companies meeting the S$1 billion revenue and S$500 million total assets thresholds are scheduled to begin ISSB-based climate-related reporting from FY2030 unless an exemption applies.

For SMEs, the relevance is not that these same requirements automatically apply to them.

The relevance is that more large companies around them will be collecting climate and sustainability information, which may increase the amount of information requested from suppliers and business partners.

6. What are Scope 1, Scope 2 and Scope 3 emissions?

These terms appear frequently in sustainability reporting and can initially sound complicated.

ACRA describes them broadly as follows:

• Scope 1: direct greenhouse gas emissions from sources the company owns or controls.
• Scope 2: indirect emissions associated with the generation of purchased energy used by the company.
• Scope 3: other indirect emissions occurring throughout the company’s value chain.

An SME does not need to become a climate-reporting specialist overnight.

However, understanding these basic categories can help the business make sense of information requests received from larger customers.

7. Scope 3 is one reason SMEs can become part of another company’s reporting journey

Scope 3 emissions can include indirect emissions throughout a company’s value chain.

This is where smaller suppliers can become relevant.

A large company may need better information about the environmental impact associated with the goods and services it purchases.

That can eventually lead to sustainability questionnaires or data requests being passed to suppliers.

An SME that supplies several major corporations may therefore find itself answering similar sustainability questions repeatedly.

Creating a more structured internal sustainability reporting process can reduce the amount of time required to respond to these requests.

8. A sustainability report is more than a carbon emissions table

Sustainability reporting can cover a wider range of environmental, social and governance issues depending on the framework and the company’s circumstances.

For an SME, relevant topics may include:

• energy use;
• greenhouse gas emissions;
• water consumption;
• waste;
• employee health and safety;
• workforce practices;
• responsible sourcing;
• data protection;
• business ethics;
• governance;
• climate risks; and
• sustainability targets.

Not every topic will be equally important to every business.

A logistics company may focus heavily on fuel consumption and fleet emissions, while an office-based professional services firm may have very different material sustainability issues.

9. Start with material issues instead of trying to report everything

A common mistake is to assume that sustainability reporting means collecting every possible environmental and social metric.

A more practical approach is to identify the issues that matter most to the business and its stakeholders.

This process is often called a materiality assessment.

An SME could consider questions such as:

• Which sustainability issues create the greatest risks or opportunities for our business?
• What information are customers already asking us for?
• Which environmental costs materially affect our operations?
• What issues matter to employees?
• What sustainability requirements appear in customer tenders?
• Which risks could affect future competitiveness?
• What information would management actually use when making decisions?

This keeps sustainability reporting connected to business priorities rather than turning it into a large administrative exercise with little practical value.

10. Sustainability data can reveal ordinary operating costs

Some information collected for sustainability purposes can also provide useful financial insight.

For example, tracking electricity consumption may reveal inefficient equipment or unusual energy usage.

Tracking waste may show that the company is purchasing excess material.

Tracking fuel consumption may highlight inefficient routes or vehicles.

Tracking packaging may identify opportunities to reduce material costs.

This creates an important connection between sustainability and financial management.

A sustainability initiative that reduces resource consumption can potentially reduce operating costs at the same time.

11. Example: energy data leading to a financial decision

Consider an SME that begins tracking electricity consumption across its operations.

Management discovers that one group of older machines consumes substantially more electricity than newer equipment.

The business can now compare:

• the cost of replacing the machines;
• expected energy savings;
• maintenance savings;
• the useful life of the new equipment;
• available government support; and
• the expected payback period.

The sustainability data therefore supports an investment decision rather than existing purely for reporting purposes.

This is one reason SMEs can benefit from collecting useful sustainability information even when they are not required to publish a formal climate report.

12. Reporting can help an SME answer tenders more efficiently

Sustainability questions are increasingly appearing in procurement and supplier assessments.

An SME bidding for a contract may be asked whether it:

• measures greenhouse gas emissions;
• has environmental targets;
• tracks energy consumption;
• has responsible sourcing policies;
• has sustainability certifications;
• monitors workplace safety;
• has environmental management processes; or
• publishes sustainability information.

If the business has never collected this information, employees may need to search across electricity bills, spreadsheets, policies and supplier documents whenever a tender arrives.

A structured sustainability reporting process can create a reusable source of information.

This does not guarantee that the SME will win a contract, but it can make the company better prepared when customers request evidence of sustainability practices.

13. Sustainability can affect access to financing

Sustainability is also becoming increasingly connected to financing.

Enterprise Singapore works with financial institutions and other partners to help companies strengthen sustainability capabilities and access sustainability-linked financing opportunities.

For example, some sustainability-linked financing arrangements may connect financing terms or business support to specified sustainability requirements or performance indicators.

This does not mean that preparing a sustainability report automatically results in a cheaper loan.

However, a company that already tracks relevant sustainability data may be better positioned to assess financing products that require measurable sustainability commitments.

14. Investors may also care about sustainability information

Sustainability information can become relevant when an SME seeks external investment.

Investors may want to understand how environmental or climate-related changes could affect the company’s costs, customers, supply chain or future growth.

For example, an investor evaluating a manufacturing business may want to understand:

• energy exposure;
• carbon-intensive operations;
• regulatory risks;
• customer sustainability requirements;
• resource efficiency;
• future capital expenditure; and
• management’s sustainability strategy.

A sustainability report can organise this information into a more structured form.

15. Singapore SMEs can receive support to prepare their first sustainability report

Enterprise Singapore currently operates the SME Sustainability Reporting Programme, or SME SRP.

The programme is designed for local non-listed SMEs preparing their first sustainability report.

It supports companies in areas including:

• identifying material sustainability areas;
• collecting relevant data;
• analysing sustainability information; and
• drafting a sustainability report.

Enterprise Singapore currently states that eligible companies applying from 1 November 2024 to 31 October 2027 can receive up to 70% support for sustainability reporting package fees.

The programme uses designated service providers and supports reporting with reference to established frameworks such as the Global Reporting Initiative, or GRI, and the Task Force on Climate-related Financial Disclosures, or TCFD.

16. Who may qualify for the SME Sustainability Reporting Programme?

Enterprise Singapore lists several key eligibility conditions.

The business must:

• be registered and operating in Singapore;
• have at least 30% local equity held directly or indirectly by Singapore Citizens or Permanent Residents; and
• have Group Annual Sales Turnover not exceeding S$100 million or Group Employment Size not exceeding 200 employees.

The programme is intended to help local non-listed SMEs embark on their sustainability reporting journey.

Companies that have already published a sustainability report are not eligible for the SME SRP.

Businesses should check the latest Enterprise Singapore conditions before committing to a reporting project.

17. Do not confuse voluntary SME reporting with mandatory ISSB reporting

There are several sustainability reporting programmes and standards in Singapore, so businesses should understand which one applies to them.

The SME Sustainability Reporting Programme supports eligible local non-listed SMEs developing their first sustainability report.

Companies that are subject to mandatory climate-related disclosure requirements have different reporting obligations and may instead be eligible for the separate Sustainability Reporting Grant.

An SME should therefore avoid assuming that every sustainability report needs to meet the full mandatory reporting requirements applying to major listed or large non-listed companies.

The appropriate reporting approach should reflect the company’s circumstances, objectives and stakeholder requirements.

18. Singapore is developing its own Sustainability Disclosure Standards

Singapore’s sustainability reporting framework is continuing to develop.

In July 2026, ACRA’s Interim Sustainability Standards Committee launched a public consultation on draft Singapore Sustainability Disclosure Standards.

The proposed standards are based on the International Sustainability Standards Board standards and adapted for Singapore’s climate-first reporting approach.

The draft standards include:

• SFRS S1, covering general sustainability-related financial disclosures; and
• SFRS S2, covering climate-related disclosures.

Under the current proposal, SFRS S2 would be mandatory for companies within Singapore’s mandatory climate-reporting roadmap, while SFRS S1 would remain voluntary.

The public consultation runs until 25 October 2026.

Most SMEs are not directly within the mandatory reporting population, but the development shows the direction in which corporate sustainability reporting is moving.

19. SMEs should avoid producing a report only for appearance

A sustainability report should be based on credible information.

Businesses should avoid making broad environmental claims that they cannot support with evidence.

For example, phrases such as “environmentally friendly”, “carbon neutral” or “sustainable” can be misleading if the company has not defined what the claim means or measured the relevant impact.

A smaller report containing clear data, realistic objectives and transparent limitations can be more useful than an impressive-looking document filled with unsupported claims.

The objective should be to improve understanding of the business rather than to create a marketing brochure.

20. Start collecting data before trying to write the report

An SME preparing for sustainability reporting should first determine what information is already available.

Useful sources may include:

• electricity bills;
• fuel records;
• water bills;
• waste disposal records;
• purchase records;
• transport or logistics information;
• HR records;
• workplace safety information;
• supplier records;
• existing company policies; and
• previous customer sustainability questionnaires.

The company may discover that much of the required information already exists but is stored across different departments and systems.

The first challenge is often organising the information consistently rather than collecting everything from zero.

21. Assign clear ownership of sustainability information

Sustainability reporting can become difficult when nobody is responsible for maintaining the data.

An SME should decide who owns each important information source.

For example:

• finance may hold utility expenditure records;
• operations may track energy, fuel or production information;
• HR may manage workforce information;
• procurement may hold supplier information;
• facilities staff may manage waste or building data; and
• management may be responsible for policies and targets.

Clear ownership makes future reporting easier and reduces the risk that important figures cannot be verified.

22. Example: an SME supplier receiving repeated customer questionnaires

Consider a small manufacturer supplying products to three large corporate customers.

During the year, each customer sends a different sustainability questionnaire.

One asks for electricity use and emissions.

Another asks about waste management and environmental policies.

The third asks whether the supplier has sustainability targets and a formal sustainability report.

Without a structured system, employees repeatedly search for electricity bills, request information from operations and manually calculate figures for each customer.

The SME decides to create a central sustainability dataset and prepare its first report.

The immediate benefit is not regulatory compliance.

It is improved readiness for customer requirements and a more efficient way to respond to future requests.

23. Example: sustainability information supporting cost reduction

Consider another SME that begins collecting energy and waste data for its sustainability report.

The company discovers that electricity consumption has increased 15% over two years even though production volume has remained relatively stable.

Management investigates and identifies several inefficient pieces of equipment.

The company can now evaluate whether replacing the equipment would:

• reduce electricity costs;
• reduce maintenance costs;
• lower emissions;
• improve productivity; and
• generate an acceptable financial payback.

The sustainability reporting process has therefore revealed information that can support an ordinary capital expenditure decision.

24. Reporting should connect to financial planning

Sustainability information becomes more useful when it is connected to financial decisions.

For example, if the company identifies an opportunity to reduce energy consumption, management should calculate:

• the upfront investment required;
• expected annual cost savings;
• maintenance effects;
• available grant support;
• financing costs where applicable;
• expected payback period; and
• the effect on cash flow.

This prevents sustainability initiatives from being treated as completely separate from ordinary business management.

A project should still make commercial sense even when it also produces environmental benefits.

25. Do not wait for perfect data

SMEs may delay sustainability reporting because they believe every figure must be perfect before they begin.

In practice, developing reporting capabilities is often a gradual process.

ACRA’s work on climate-related disclosures has highlighted the principle of prioritising progress over perfection.

An SME can begin by identifying the most relevant information it can measure reliably, documenting the methodology and improving the process over time.

The business should still avoid publishing figures it cannot support.

However, waiting indefinitely for a perfect data system may prevent the company from building the capabilities it will eventually need.

26. When might an SME not need a full sustainability report yet?

Preparing a formal sustainability report is not automatically the right next step for every SME.

A very small business with no customer requirements, limited environmental impact and no immediate financing or procurement need may gain more value from starting with basic sustainability data collection.

The business could first:

• track electricity consumption;
• measure fuel usage where relevant;
• document waste practices;
• review customer sustainability requests;
• identify material sustainability risks; and
• establish simple policies and responsibilities.

A formal report can come later when there is a clear commercial or stakeholder need.

This avoids spending money on reporting before the company has established the basic data and processes required to make the report useful.

27. Questions SMEs should ask before preparing a sustainability report

Before starting a reporting project, management can ask:

• Are customers already requesting sustainability information?
• Are major customers likely to introduce additional supplier requirements?
• Do tenders in our industry include sustainability questions?
• Are we seeking sustainability-linked financing or external investment?
• Which environmental or social issues materially affect our costs or operations?
• What sustainability information do we already collect?
• Where are the largest data gaps?
• Who will be responsible for maintaining the data?
• What reporting framework best fits our needs?
• Can we qualify for government support?
• Will the report help management make better decisions?

If the company cannot identify a clear purpose for the report, it may be better to strengthen its underlying sustainability practices and data collection first.

28. A practical starting plan for SMEs

An SME that wants to become more prepared can take a gradual approach.

• Step 1: Identify external requirements. Review customer questionnaires, tender requirements and requests from financiers or investors.
• Step 2: Identify material issues. Focus on sustainability matters that genuinely affect the business and its stakeholders.
• Step 3: Map existing data. Identify which information already exists and where it is stored.
• Step 4: Fix major data gaps. Introduce simple processes for collecting important information consistently.
• Step 5: Assign ownership. Decide who is responsible for maintaining each dataset.
• Step 6: Set realistic targets. Avoid promising improvements that the company has no practical plan to achieve.
• Step 7: Check available support. Review programmes such as Enterprise Singapore’s SME Sustainability Reporting Programme.
• Step 8: Decide whether a formal report is necessary. Base the decision on business needs rather than preparing a report simply because sustainability is a popular topic.

29. Voluntary today can still mean commercially important today

The absence of a legal reporting obligation should not be confused with the absence of a business reason to collect sustainability information.

An SME may remain outside Singapore’s mandatory climate-reporting rules for many years while still facing sustainability expectations from customers, supply chains, investors and financiers.

The practical objective is not to copy the reporting process of a large listed company.

It is to develop sustainability information that is proportionate to the SME’s size, sector, risks and commercial relationships.

Final thoughts

Most ordinary non-listed Singapore SMEs are not currently required to prepare mandatory climate-related disclosures.

Singapore’s mandatory roadmap currently focuses on listed companies and large non-listed companies meeting significantly higher revenue and asset thresholds.

However, sustainability reporting can still become relevant to SMEs through their customers, supply chains, tenders, investors and financing relationships.

Collecting sustainability data can also reveal practical opportunities to reduce energy use, waste and other operating costs.

Eligible local SMEs preparing their first report can currently explore Enterprise Singapore’s SME Sustainability Reporting Programme, which provides support for materiality assessment, data collection and report development.

The strongest reason to prepare a sustainability report is therefore not simply that reporting may become more common in the future.

It is that better sustainability information can help an SME understand its risks, respond to stakeholder requirements, identify operational improvements and make more informed business decisions today.