Australia’s 2035 climate target is a new national commitment to reduce emissions by 62–70% by 2035. This strengthens the earlier commitment of a 43% reduction by 2030 and signals a clear shift in expectations for decarbonising Australia. Analysis by the Climate Change Authority (CCA) and consultation with the Government underpins this move, combining economic modelling, sector reviews, and stakeholder input.

We recently hosted a webinar to unpack what this means for business, exploring the implications for strategy, investment, and risk management. As Eliza Murray, Deputy CEO of the CCA, noted, “Australia can be more than a quarry – we can be the workshop of a cleaner world.” This perspective highlights the opportunity for industry growth and innovation alongside compliance, themes we unpack below.

Clearer Outlook for Business Planning

The 2035 target provides a defined national pathway for decision-making. Australia will need to accelerate emissions reduction across the economy with a focus on electricity, transport, industry, resources, and agriculture. For businesses, the electricity transition is largely being managed at a system level, but Tennant Reed, Director – Climate Change and Energy from the Ai Group warns that

“We should not underestimate the breadth and the amount of work to reach the target range.”

Much of what needs to happen will occur within corporate Australia.

“Higher national targets don’t stay confined to Canberra, they cascade. They flow through to stronger policy levers, sharper investor scrutiny, and tighter disclosure requirements. If you’re a board director, you’ll feel it through sustainability reporting standards, the Safeguard Mechanism and forthcoming sector transition plans. If you’re an investor, you’ll see it in the capital flows shifting toward credible science-aligned strategies. And if you’re an executive, you’ll find it in social licence, market licence and regulatory licence increasing. Increasingly the same license, they’re just merging together.

So the business question isn’t really how do we comply, but how do we compete?

Because the same forces that tighten compliance also create opportunity. Investors want credible transition plans. Customers demand low-carbon supply chains and governments are offering co-investment and certainty for early movers. So those who see climate ambition as a strategic signal, not a regulatory chore, will capture the growth markets. We’re looking at green iron, green hydrogen, critical minerals and low carbon manufacturing.” Eliza Murray.

This new target marks a pivotal moment. Higher national targets don’t stay confined to Canberra; they cascade. They flow through to stronger policy levers, sharper investor scrutiny, and tighter disclosure requirement.”

Eliza Murray, Deputy CEO Climate Change Authority

Policy Signals That Will Shape Corporate Action

The government’s new Net Zero Plan will steer a fair and efficient transition, enabling businesses and communities to plan, invest, and act for long-term value. In our webinar, we explored some of the key levers set to drive change and shape corporate strategy.

• Safeguard Mechanism Review
  The next Safeguard Mechanism reform will be conducted by the Clean Energy Regulator in the 2026–27 financial year. Expect discussion on baseline decline rates, coverage thresholds, and offset restrictions. Ai Group anticipates a desire for more abatement within company operations, alongside expanded and intensified federal and state policies. The Carbon Market Institute recently released some interesting analysis on what the new reforms could cover. Safeguard 3.0 at least in draft form is expected within 18 months.
• Mandatory Climate Reporting
  Reporting to AASB S2 under the Australian Sustainability Reporting Standards (ASRS) is underway from the beginning of this year, requiring up to 6,000 companies to disclose climate risks, opportunities, and emissions performance. This transparency will influence investor decisions and regulatory oversight. Setting Scope 1 and 2 targets and eventually Scope 3 is becoming standard through the disclosures. These requirements will cascade beyond the largest companies who have to report, into their value chains. The ASRS Scope 3 component and rising expectations for decarbonisation mean businesses across sectors will need credible targets and transition plans.
• Capacity Investment Scheme (CIS)
  Immediate focus on firming and renewable generation will shape energy markets under the CIS – the a federal program that guarantees revenue for renewable and clean energy projects, reducing investor risk and speeding up infrastructure development. “The government is closely watching the National Electricity Market Review, which is shaping up to be critical for making investment in the full range of electricity services easier, essential for a very clean grid to function,” Tennant Reed.
• New Vehicle Efficiency Standards
  Further reviews for Australia’s new vehicle efficiency standards will accelerate transport sector change, with implications for logistics and procurement.
• Carbon Border Adjustment Mechanism (CBAM)
  Tennant Reed from Ai Group notes the CBAM could interact with the Safeguard Mechanism, creating complexity for trade-exposed sectors.

These signals will cascade through boardrooms, shaping sustainability reporting, capital flows, and compliance strategies. For executives, market licence and regulatory licence are merging, where investors are increasingly linking capital access to credible transition plans.

Implications Across Key Sectors

• Electricity: Expected to deliver about half of the national emissions reduction to 2035 through renewable growth, firming investment, and coal plant retirements.
• Industry: Facilities will need to consider electrification, process changes, and efficiency improvements. Cement, steel, and chemicals may see new policy measures to support competitiveness.
• Transport: Vehicle efficiency standards and electrification will reshape fleets and logistics.
• Agriculture: Improvements in fertiliser use, electrification of equipment, and herd management will lead. Feed supplements remain at an early stage for broad adoption.
• Resources: Mining and extraction operations will face pressure to decarbonise through electrification, renewable integration, and low-emission technologies for processing.
• Built Environment: Buildings will need to adopt energy-efficient design, electrified heating and cooling, and low-carbon materials to meet tightening performance standards

Opportunities for Early Movers

• Investment Confidence: Clear national direction supports capital attraction. Investors favour organisations with credible emissions pathways and transparent reporting.
• Market Differentiation: Customers and supply chains seek reliable climate information and lower-carbon products. Demonstrating progress strengthens competitiveness.
• New Industry Growth: Australia’s renewable resources and critical minerals create opportunities for clean energy supply chains and low-carbon manufacturing.

What Should Businesses Do Now?

1. Review exposure to policy changes across electricity, transport, and industry, and understand implications for your operations.
2. Prepare for mandatory reporting under ASRS, including Scope 3 emissions and a credible climate transition plan aligned with science-based targets.
3. Build internal capability for climate governance, data management, and scenario planning to support long-term decision-making.
4. Engage supply chain partners on emissions data, target setting, and collaboration opportunities.
5. Assess nature-related risks and opportunities, alongside carbon strategies to ensure future resilience and compliance with emerging frameworks.
6. Explore technology investments in electrification, energy efficiency, and low-carbon production methods.

Looking Ahead

Australia’s 2035 target signals a decisive phase of transition. Ai Group expects expanded and intensified policies to meet the target range. For business, this creates a stable setting for planning and an environment that supports innovation and investment.

Organisations that act early with credible, science-aligned strategies will be positioned to adapt and compete in a low-carbon economy.

How Anthesis Can Help

At Anthesis, we guide organisations to turn climate ambition into practical action. From setting science-based targets and preparing for ASRS or Safeguard reporting to designing decarbonisation strategies and integrating nature and ESG priorities, we guide businesses through the complexity of transition. Our focus is on creating credible pathways that manage risk, meet investor expectations, and unlock opportunities for growth in a low-carbon economy. A goal we describe as driving sustainable performance. Contact us today for guidance on your sustainability initiatives.   

In today’s market, value creation extends beyond mainstream financial metrics.

Investors demand credible ESG performance, regulators mandate sustainability disclosures, and public stakeholders demand transparency. As a result, ESG is no longer a siloed, perception-driven exercise but is now strategically embedded in business planning, delivering measurable value under financial, regulatory, and competitive pressures.

Following ‘The Cost of Silence’, we now turn to its counterpart: what do companies gain when actively integrating ESG principles into value creation strategies?

ESG action does not replace traditional strategic growth and value creation strategies —it enhances them.

It’s not about sacrificing profits for purpose or inventing new sources of value; ESG principles help reveal value that has always existed. They force firms to rethink value creation as a dynamic, systemic process linked to broader ESG topics, rather than a series of isolated levers. Environmental considerations uncover operational inefficiencies, social factors align with talent and culture strategies, and governance underpins execution across all areas.

This article explores how recognising and measuring these connections can translate into practical value creation and solidify the synergy between sustainability and financial performance.

Traditional vs ESG-aligned value creation approaches

Unlocking long-term value by tackling hidden operational inefficiencies

Traditional operational value creation seeks maximum efficiency from existing assets and processes, often by cutting discretionary expenses, renegotiating supplier contracts, consolidating facilities or automating manual processes. While effective for short-term margin improvement, they risk creating a “race to the bottom,” undermining long-term value.  

 An ESG-aligned approach broadens the lens by examining how resources like energy, water, and labour are sourced, consumed, and wasted across the value chain. This exposes hidden costs — from energy loss and emissions hotspots to supply chain vulnerabilities — that may be absent from financial statements but have a material impact on future performance.

By addressing systemic inefficiencies through energy audits, waste assessments, and supply chain analysis, companies can reduce costs while also building resilience to climate and resource risks. A recent study by the UNDP, for example, found that organisations that actively mitigate climate-related supply chain risks realise measurable improvements in economic performance alongside reduced emissions. This shift reframes efficiency as both a financial and sustainability imperative.

Anthesis helps companies design, implement, and scale operational ESG initiatives. Examples of our support include unlocking £1.8m in energy-related savings for JLL; reducing 17,550 kg of food waste per year for Righteous Gelato without major capital investment; and helping over 3,500 suppliers cut production costs and reduce waste through a circular supply chain platform with Tesco Exchange.

From efficiency to engagement – how purpose transforms performance

There are multiple value-creation levers that align with social priorities such as health and safety (H&S) and diversity, equity and inclusion (DEI).Traditional talent & culture value creation relies on extrinsic motivators – KPIs, performance reviews, and financial incentives – to drive employee productivity. While these mechanisms can improve efficiency, they often reduce employees to resources, overlooking how culture and purpose drive long-term engagement and innovation.

An ESG-aligned approach builds on these levers by also activating intrinsic motivation. A purpose-driven culture creates performance advantages that profit-only structures cannot match. When employees see their work tied to meaningful goals, such as reducing environmental impact or creating positive social outcomes, they bring deeper commitment, creativity, and collaboration. Research from Great Place to Work shows that organisations with clear purpose and values achieve stronger outcomes in revenue growth, innovation, and employee engagement.

Rather than asking only what people deliver, companies should also focus on why they choose to contribute, unlocking lasting organisational value. This requires a clear organisational purpose and create engagement programs that connect daily work to meaningful impact.

Anthesis supports organisations by designing tailored sustainability strategies that embed behavioural and cultural change from the outset. Our work with the Billington Group purpose platform engaged 2,000+ employees, with over 90% purpose-driven within six months, and Yorkshire Valley Farms’ purpose-driven strategy achieved 3.4x higher social media engagement.

Technological enablement

Among the many governance value creation levers, technology enablement stands out as it rarely operates in isolation. Traditionally, the focus is either operational efficiency, through automation, or commercial growth, through new digital services and markets.

An ESG-aligned approach applies these same capabilities into sustainability. Internally, digital ESG tools help companies systematically capture complex non-financial data and simplify reporting Externally, ESG systems originally developed for internal compliance, are increasingly becoming marketable assets, transforming ESG technology from a cost of doing business into new sources of revenue and competitive advantage.

Technology has evolved from an external disruptor to a core value creation lever and ESG is following a similar trajectory. Companies that embed ESG into digital strategy from the outset position themselves to monetise sustainability data and capabilities as market demand accelerates.

Anthesis helps organisations achieve this by designing and implementing digital solutions,  including  ESG data collection with Anthesis Mero across 300+ Grupo Éxito stores, implementing Anthesis RouteZero to track and document emissions, supporting Belu Water in demonstrating carbon neutrality in line with PAS060, and developing Reckitt’s Sustainable Innovation Calculator, completing life cycle assessments in under 30 minutes and 700 product analyses.

Redefining market growth

Traditional growth strategies target market expansion through new geographies, products or acquisitions to capture market share and increase revenue. Yet this assumes a narrow definition of markets, where value is determined only by buyers, sellers, regulators, and intermediaries.

An ESG-aligned approach reframes markets as living ecosystems, shaped by a broader set of stakeholders. Regulators impose evolving compliance requirements; communities influence brand reputation; employees drive innovation; and institutional investors reward sustainable performance with higher exit multiples. Strong ESG performance not only reduces risk but also enables access to new customer segments, premium pricing, and entry into markets with stricter sustainability standards, with recent research showing, for example. that consumers are willing to pay more for products and services that demonstrate clear sustainability credentials.

In today’s environment, markets reward authenticity, sustainability, and responsibility, not just scale. Companies that analyse their strategic landscape through this enhanced ESG lens uncover growth opportunities that traditional approaches miss.

Anthesis has supported clients in this shift, such as supporting Energy Capital Partners (ECP) by delivering UK Plastic Waste Market Assessments, evaluating UK ESG regulations, infrastructure capacity, market pricing and key players to pinpoint growth opportunities and regulatory risks. This informed a market expansion strategy aligned with sustainability trends and long-term value creation.

Realising the ROI of ESG

It is clear that companies that identify where ESG can amplify existing levers, set targets, and design initiatives are best positioned to deliver both financial and meaningful impact.

An ESG strategy translates principles into measurable initiatives, aligns them with business priorities, and embeds sustainability into decision-making rather than treating it as a silo. We partner with organisations to model the financial ROI of ESG initiatives, build business cases, and implement programs that deliver measurable performance outcomes.

For organisations unsure where to start, Anthesis provides the expertise and tools to develop and implement ESG strategies that are actionable, scalable, and measurable, ensuring sustainability drives real value creation.

Climate and nature are inseparable, with intertwined impacts on business, society, and daily life. However, most companies still analyse and report on climate and nature separately, creating blind spots in corporate strategy and resulting in sourcing, investment, and land use decisions that are based on an incomplete picture of the risks involved. By integrating climate and nature risks, companies can instead leverage a more comprehensive foundation for resilience and can gain a competitive edge in an uncertain future.

From frameworks to foresight: Using TCFD and TNFD together

The consequences of a fragmented approach to climate and nature risks can be significant. Climate risks like extreme weather events and the transition to a low-carbon economy can accelerate biodiversity loss and ecosystem degradation. In turn, degraded ecosystems weaken natural defenses against physical risks like flooding or drought, amplifying sourcing and the supply chain disruptions for businesses dependent on critical commodities. When climate and nature risks compound each other, assessing them separately creates gaps and dangerously underestimates true exposure.

Integrated assessments of both climate and nature can work to close these gaps. The Task Force on Climate-related Financial Disclosures (TCFD) and the Taskforce on Nature-related Financial Disclosures (TNFD) are complementary frameworks for assessing and disclosing the financial impacts of climate-related and nature-related risks and opportunities, respectively.

TCFD helps organisations disclose the financial impacts of physical risks (extreme climate events) and transition risks (policy, technology, market, and reputation) from climate change, while TNFD addresses nature-related risks, including ecological dependencies and impacts, through tools like the LEAP (locate, evaluate, assess, prepare) approach. Importantly, TNFD highlights the ecosystem services businesses and their supply chains rely on to grow commodities or maintain continuity in their operations, like pollination, water regulation, soil fertility, and disease control, which are often missing in traditional climate risk models.

By integrating TCFD and TNFD, companies can go beyond compliance to strategic foresight, recognising how climate and nature changes interact and compound financial impacts across operations, supply chains, and markets.

Compounding climate and nature risks in action: Commodities

Climate risk assessments have become more common as financial reporting becomes mandatory, yet many companies still overlook the equally critical, and interlinked, nature-related risks. Deforestation, biodiversity loss, and water stress are not only nature issues – they amplify climate-related disruptions – and assessing climate and nature risks separately can create specific blind spots in sourcing, land use, and resource planning. Integrated assessments are therefore no longer a niche consideration, but a strategic imperative.  

At Anthesis, we support clients in developing integrated assessments that holistically combine climate and nature risk analysis for reporting and planning,  uncovering critical, interacting blind spots. Beyond operations, we also assess how climate change may affect commodity yield, pricing, and productivity across plausible futures.

For example, consider a multinational food and beverage company sourcing soy:

• A standalone climate assessment might show that the region faces future water stress from drought, flagging a moderate risk to supply.
• A regulatory review may flag new deforestation-free sourcing laws or disclosure requirements.
• A separate nature assessment might flag that same region for high rates of deforestation.

An integrated analysis reveals the critical insight these silos miss: deforestation (a nature risk) is eroding the ecosystem’s ability to retain water and regulate local climate. This amplifies the financial and operational impact of the projected climate-driven droughts (physical risk) and exposes the company to compliance and market-access risks from emerging deforestation-free laws (transition risk).

This compounding effect reveals a far greater threat of supply chain disruption and price volatility than either analysis would suggest alone. With integrated foresight, the company can shift from reactive risk management to proactive strategy, enabling smarter, more resilient sourcing and capital investment decisions.

The limits of current frameworks and the power of integration

Increasing water stress on soy crops is a physical climate risk, but its residual effects create nature risks: reducing water availability, crop yields, and biodiversity. These impacts disrupt supply chains, increase production costs, and threaten long-term resource security. Soy expansion is a major driver of deforestation, which destroys habitats, reduces pollinators, and weakens natural buffers against floods, landslides, and water stress. New regulations like the EU Deforestation Regulation add transition risks by limiting market access for soy linked to deforestation.

Viewed separately, these risks understate true exposure. And while TCFD and TNFD provide structured outlines to identify, assess, and disclose these risks, their true power lies in integration. Integrated risk assessments reveal how climate, nature, and policy pressures interact, enabling companies to anticipate systemic disruptions and make better sourcing, investment, and resilience decisions.

TNFD extends TCFD by focusing on the ecosystems and ecosystem services that businesses rely on to function: pollination, water regulation, soil fertility, and more. As an added benefit, aligning with both frameworks not only  meets regulatory and investor expectations under CSRD, SB 261, and ISSB, but also helps companies build adaptive strategies in a world shaped by dual environmental crises and expanding disclosure mandates.

For example, in the food sector, soy expansion upstream drives deforestation and water stress, creating exposure for processors and traders. Downstream, consumer goods companies and retailers face reputational damage and market-access risks if deforestation-linked soy is embedded in their supply chains. Similarly, in the apparel sector, cotton production depends on water-intensive upstream processes, while brands downstream are vulnerable to both physical supply shocks and rising scrutiny over nature impacts.

Bringing the value chain into focus

While the TCFD and TNFD share structural similarities (governance, strategy, risk management, and metrics), there are important differences. Climate risk analysis  benefits from decades of scientific modeling and standardised data, while nature risk evaluation in the corporate context is newer and less harmonised. TCFD, though foundational, is not sufficient on its own: it does not explicitly consider nature-related dependencies and impacts that may pose material financial risks across supply chains, operations, and valuation. For investors and businesses seeking resilience, long-term value creation,  and regulatory alignment, especially under frameworks like the CSRD and the emerging ISSB–TNFD convergence, integrating climate and nature risk is not optional, but essential.

Importantly, value chain analysis is now a regulatory mandate, not just good practice, CSRD and ISSB both require companies to examine upstream and downstream dependencies and impacts. For sectors heavily reliant on commodities like soy, cocoa, or cotton, integrating ingredient risk screening is critical. Dual analysis is also required: understanding risks to the business (like drought affecting soil fertility and crop yields) and risks from the business (like deforestation and biodiversity loss driven by sourcing practices). Tools such as TNFD’s LEAP approach help structure this assessment, capturing both dependencies on nature and impacts to nature, and translating them into financial and strategic terms.

This raises important questions for companies: How does your business connect the dots between climate and nature? Full integration requires a deliberate effort to link nature dependencies (like healthy soil, pollinators, or water availability) with climate hazards (like drought or floods), and then to quantify how those compounded effects translate into operational and financial risk. This is the work that moves companies from compliance to resilience.

Businesses that proactively integrate climate (TCFD) and nature (TNFD) can:

• Address systemic risks: Recognising climate change and nature loss as systemic threats to the global financial system.
• Improve transparency: Enhancing disclosure of interconnected environmental risks and opportunities.
• Enable better decision-making: Providing investors and executives with data that drives smarter capital allocation.
• Drive sustainable outcomes: Catalysing the shift to a more sustainable, resilient economy.
• Anticipate disruptions: Identifying compounding risks and value chain vulnerabilities before they materialise.
• Build resilient strategies: Creating forward-looking plans grounded in a complete risk picture.
• Meet regulatory and investor expectations: Aligning with CSRD, ISSB, and other regimes increasingly requiring integrated climate-nature risk.

Both frameworks are critical to ensuring that financial markets properly value environmental risks and incentivise responsible corporate action. Businesses that proactively incorporate climate and nature into their risk management practices can better anticipate market shifts, address investor concerns, and unlock opportunities for sustainable innovation and natural resource preservation. By understanding the full spectrum of environmental risks and opportunities, companies can not only enhance resilience but also secure long-term competitive advantage.

From insight to action

As climate-related risks become more widely assessed, it’s increasingly clear that nature risks are deeply connected and often overlooked. Companies that treat them in isolation can have blind spots in strategy, especially as environmental disruptions compound across supply chains, assets, and markets. A unified approach that integrates climate and nature risks is no longer just a reporting requirement, but a strategic imperative. Businesses that proactively align with TCFD and TNFD can anticipate market shifts, meet investor expectations, and capitalise on opportunities for sustainable innovation – all while protecting the natural systems their operations depend on.  

At Anthesis, we help companies move from insight to action through integrated climate and nature risk assessments tailored to their value chains. Our approach combines geospatial and financial analysis to identify location-specific exposure, quantify impacts under different scenarios, and prioritise strategic responses. Whether the goal is to meet regulatory requirements, safeguard continuity, or evaluate investment trade-offs, we provide the data, tools, and guidance to turn risks into resilience. By aligning with both TCFD and TNFD, we enable clients to future-proof operations and build competitive advantage in an increasingly risk-aware marketplace.

Methane emissions from fossil fuels are being materially underreported in Australia’s industrial sector. This has direct implications for compliance, carbon liability, and the effectiveness of decarbonisation strategies, especially under the Safeguard Mechanism and the AASB S2 mandatory climate- related disclosures. As scrutiny intensifies and regulatory thresholds tighten, these hidden emissions risk becoming a catalyst for financial exposure and reputational damage.

Australia’s Methane Emissions Under-Reporting

As of March 2025, DCCEEW’s quarterly update shows Australia’s fugitive methane to be 46.3 MtCO2e, accounting for 10.5% of Australia’s annual net emissions. This figure is based on a methane GWP of 28, derived from the IPCC’s 5th Assessment Report (AR5) for non-fossil methane.

This basis is misleading and outdated.

Fugitive methane is of fossil origin, not biogenic. Further, the 2014 AR5 value was superseded in March 2023 by the AR6 report, providing the most accurate figures for Australian reporters. Unfortunately for reporting entities in Australia however, there will be no formal change until the government updates its policy.

The financial implications of these under-reported emissions for Australia’s major emitters are significant.

By reporting fossil methane as non-fossil, $132m of emissions are being under-reported. Should Australia move to the IPCC’s AR6 – while failing to differentiate fossil and non-fossil methane – this gap will widen to 5mtCO2e, worth ~$200m.

This is a missed opportunity to incentivise decarbonisation and a risk exposure that many emitters may not be accounting for.

Implications for ASRS and Director Responsibilities

For organisations preparing to report under the Australian Sustainability Reporting Standards (ASRS), this underreporting of fossil methane emissions presents a serious governance issue.

Directors signing off on climate-related disclosures must ensure that reported emissions reflect a true and fair view of climate risk. Using outdated or inaccurate GWP values when more accurate data is available could expose companies to reputational, regulatory, and even legal risks.

The question boards should be asking is: Does our current reporting reflect the true and full extent of our climate liability? How do we account for future changes in GWP?

Impact on Safeguard Mechanism Baselines and Liabilities

Accurate methane emissions reporting also has direct implications for compliance under the Safeguard Mechanism.

If fossil methane is correctly accounted for using the appropriate GWP (29.8 for fossil fuel methane), our analysis found many facilities could see their reported emissions increase by 7% or more. This would significantly raise their carbon liability and potentially push them over their baseline thresholds, triggering the need to purchase additional ACCUs or invest in abatement. For some emitters, this could mean millions in additional costs or a strategic rethink of their decarbonisation pathway.

Considering the decline rate under the reformed Safeguard Mechanism is already 4.9% annually, this presents a real risk to decarbonisation initiatives and the bottom line.  

What Should be Done About this Under-Reporting of Methane Emissions?

These issues highlight a broader challenge: compliant industrial emitters may be facing greater financial and compliance risks than currently recognised, and the incentive to decarbonise is being weakened by inaccurate data.

To address this, we recommend that large emitters, particularly in oil, gas, and coal, begin assessing and separately reporting fossil methane emissions using the appropriate GWP for their emissions (29.8). This will ensure their risk profile is future-proofed and aligned with evolving regulatory expectations.

Regulators must also act. From 2026 onward, the NGER Determination should adopt AR6 GWP factors, and reporters under both NGERs and AASB S2 must be required to distinguish between fossil and biogenic methane. This will help ensure that climate disclosures are accurate, liabilities are correctly calculated, and decarbonisation incentives are based on real impact.

How Anthesis Can Help

Anthesis are market leading experts in carbon accounting and decarbonisation in the oil, gas and coal sectors. We have deep policy experience and understand how to effectively understand, quantify and mitigate climate risk and offer expert guidance for compliance with the ASRS, Safeguard Mechanism and NGERs. Reach out today and let us help you to future-proof your business.

Ecosystems worldwide, from the ocean depths to terrestrial environments, are facing an accelerating decline in nature. The pressures on nature and ecosystem services have reached a critical level, and there is real concern that we may be, or already have, breached tipping points, and change is becoming self-perpetuating.

With this decline, we are removing the very basis that supports our economic systems; the evidence is very clear on this.

Recent analysis by Ceres in Nature’s Price Tag: The economic cost of nature loss, suggests that the financial impacts of ecosystem decline for eight key sectors, including amongst the critical sectors for the Australian economy, will be up to $430 billion per year under a Business-As-Usual scenario.  

The stakes, quite literally, could not be higher.

However, no country can address the crisis in isolation, nor can it thrive without the ecological richness that defines life on Earth. Solving this crisis will depend on governments and business working in tandem to shift the world and our economies onto the right trajectory.

All businesses depend on nature, and in many ways, the impacts of nature’s decline are already being felt; to date, we simply have failed to put a price on those impacts.

In this article, we unpack what’s needed to meet the challenge head-on and the critical role that business can and must play in the journey to nature-positive.

Aligning Global Commitments to Nature-Positive

The Global Biodiversity Framework sets the stage for protecting nature, but turning global commitments into local action remains a challenge. The goal is clear – to halt biodiversity loss by 2030 and achieve a nature-positive world by 2050. But while COP16 delivered progress such as greater inclusion of Indigenous communities, a clear strategy for financing the economic transformation required is still missing.

This lack of financial commitment risks delaying critical investment, leaving a gap between ambition and the resources needed to deliver nature-positive outcomes.

Critical Components For Achieving Nature-Positive

In the context of having a global commitment but a significant funding gap, protecting and healing nature requires three critical components to come together to involve all actors – governments and business – in the journey towards Nature-Positive:

1. Effective Governance and Regulation: Cascading international commitments at the government level to business and organisations, and sending clear policy and regulatory signals on nature.
2. Valuing Nature in Financial Decisions: Embedding nature’s value into financial and economic analysis and decision-making. This requires a paradigm shift towards recognising nature as a form of capital – natural capital – as the asset that underpins economic prosperity.
3. Market and Financial Instruments: For mobilising public and private capital for restoration.

Let’s unpack what each of these elements mean for business action right now.

1. Governance and Regulation

A growing range of frameworks, tools, and case studies now support businesses and investors in understanding and reducing their impact on nature. Collaborative efforts by leading organisations, including WBCSD, Capitals Coalition, World Economic Forum (WEF), Task Force on Climate-Related Disclosures (TNFD), and Science Based Targets Network (SBTN), have developed the ACT-D (Assess, Commit, Transform, Disclose) approach – a systematic and adaptable process guiding businesses toward nature-positive strategies.

Currently, in Australia, there are no mandatory reporting requirements for nature. This is, however, predicted to change in the not-too-distant future. The most likely scenario is that the Australian Accounting Standards Board (AASB) Standard 1 will follow suit on the already mandatory reporting Standard S2.

AASB S1 is broad and cross-topic and would capture topics related to biodiversity and nature. The value of regulation lies, of course, in sending a clear message that nature risks and dependencies must be incorporated into business strategies and operations, much in the same way as climate and climate risk are becoming embedded as concerns in how organisations operate.

The most critical thing that organisations can do right now is to get ahead of understanding the risks and opportunities posed by nature to their business, rather than to wait for regulation to take effect.

2. Valuing Nature in Financial Decisions

This cuts right to the core of the issue. Nature has been treated as external to the costs and value created by economic activities, when in fact nature forms the very foundation for creating economic value.  

The key step for organisations to take now is to recognise that nature loss poses real, financial risks to most, if not all, organisations.

Equally, natural capital is a form of unrecognised financial value (assets) for organisations. Companies can start today on the journey towards valuing nature in financial terms. One key way that is emerging to integrate nature in this way is to ‘put nature on the balance sheet’.

This involves first understanding nature dependencies and impacts, translating these into measurable units (e.g., litres of water used) and then assigning financial value (e.g., via market or replacement costs, shadow pricing etc.). These values can then be used to link environmental data with financial accounts. In this way, natural capital can be reported on and considered in decision-making, in a language that is intuitive and familiar to decision-makers.   

3. Nature Markets and Financial Instruments

The final piece of the puzzle involves harnessing existing models to mobilise finance for nature restoration and protection. Financial mechanisms, such as payment for ecosystem services, green bonds, and green loans have long supported conservation efforts, and will continue to play a critical role in nature recovery.

However, these tools alone are insufficient. Finance for nature recovery needs to be scaled significantly.

Biodiversity and nature credit markets are now emerging as essential tools that could bridge this finance gap. When designed appropriately, nature credits offer a structured, market-based approach to drive measurable nature-positive outcomes while mobilising private capital and ensuring accountability.

The unitisation of nature through nature credit markets is a key strength of this market-based approach. That is, nature credit schemes turn natural assets or ecosystem services into quantifiable, tradeable units and thereby transform complex and often intangible ecological processes into measurable, financial instruments. For example, forests can provide multiple ecosystem services ranging from habitat provision, through to watershed protection. Applying quantification of species richness and water retention capacity, each of these services can be converted into a tradeable unit as a nature credit.

In other words, nature credit schemes present a mechanism to connect businesses with conservation outcomes delivered by third parties.

Nature credits can be used by organisations in varied ways to respond to nature decline. One scenario is that businesses buy nature credits generated by a third party – possibly within their supply chain – and subsequently retire those credits in response to their identified nature-positive commitments and targets.

Under another scenario, organisations may see an opportunity to generate nature credits to sell to other organisations as a new revenue stream, or in combination with addressing their own nature impacts and dependencies, where surplus credits may be sold to third parties. Connected to this scenario, nature credit schemes also present a pathways to verify conservation outcomes, and hence a method for businesses to report transparently on their response to nature impacts and dependencies.

Ultimately, therefore, nature credit schemes present an opportunity for businesses to manage risk and respond to impacts, whilst also presenting opportunities to get involved in a new type of market to generate revenue, enhance brand value, and innovate business models.

A shift to Nature-Positive Means Changing Our Relationship With Nature

Changing our relationship with nature is essential. Global and domestic policy signals point towards a future state where regulation will drive organisations in the direction towards nature-positive.

But we have no time to lose, and businesses are in a powerful position to act now. The tools and mechanisms needed to respond to the crisis are at our fingertips. Critically, these tools can unlock value for organisations by putting nature on the Balance Sheet, and through participation in new markets and the discovery of new business opportunities.

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As the regulatory environment around sustainability reporting continues to shapeshift, ESG and sustainability leaders are increasingly turning their attention to the mandatory climate-related reporting requirements and the Australian Sustainability Reporting Standards (ASRS). Jurisdictions across Asia, Europe, the United Kingdom, North and South America and Africa are also implementing similar reporting requirements. In Australia and internationally, this is the biggest financial reporting shift in a decade and there is much work to be done, but how can leaders look at this regime as not just a compliance requirement – but a strategic advantage?

Here we explore 7 key ways mandatory climate reporting can strengthen your ESG strategy and how you can leverage it for efficiencies, opportunities, change and innovation.  

1. Driving Stakeholder Engagement

Compliance with climate-related reporting standards can significantly enhance stakeholder engagement, especially at the senior level, given that the responsibility sits with the Board of Directors. Transparent and detailed reporting provides stakeholders with a clear understanding of the organisation’s sustainability efforts, climate risks, and opportunities. This increased visibility helps achieve buy-in from senior management and other key stakeholders, and departments driving sustainability initiatives throughout the organisation.

Reporting organisations are already finding that this approach helps break down silos, build a more unified and resilient organisation, and embed the language and acceptance of climate topics as part of business as usual. At a recent ASRS Executive workshop we held, many senior leaders shared these views.

Mandatory climate reporting places ESG, particularly climate, as a priority for many departments, including the Senior Leadership team, finance team, risk team, and the Board.

Although the current Australian legislation is ‘climate first,’ it is not ‘climate only’. As the Australian Accounting Standards Board (AASB) may adopt the full suite of International Sustainability Standards Board (ISSB) standards starting with IFRS S1 general requirements for sustainability reporting and IFRS S2 climate-related disclosures, and with nature-related standards hot on its heels, this presents an opportune time for sustainability leaders to engage with your stakeholders to advance previously identified initiatives and prepare for future broader ESG requirements.

Getting started early, including voluntary reporting can demonstrate leadership ahead of peers, and prepare you for a smoother transition towards mandatory requirements.

2. Discovering Efficiencies and Savings

Understanding your organisation’s carbon footprint (Scope 1, 2, and 3) through mandatory climate reporting can uncover opportunities for efficiency improvements and cost savings, as well as help understand potential vulnerabilities and opportunities in your value chain.

It can also strengthen relationships with supply chain partners by demonstrating an awareness of emissions and a robust plan to reduce them.

Detailed insights into energy use, waste management, and resource allocation help identify hotspots and inefficiencies that can be addressed to reduce costs and inform strategic decisions that enhance operational efficiency and sustainability. This process forms a comprehensive vision of your organisation’s carbon footprint in both the short and long term.

Below is an example of Meta’s carbon footprint giving insights into where the hotspots lie and where to focus on reductions. Like Meta many organisations also contribute to abatement via insetting or offsetting – ideally into carbon projects with co-benefits.

Carbon accounting software such as RouteZero combined with strategic expertise, is a great way to approach undertaking your greenhouse gas (GHG) inventory and gain a strong and comprehensive data set that positions you for continued success.

The principle “you can’t improve what you don’t measure” is particularly relevant here. Measuring your carbon footprint can yield quick wins and establish the foundation for identifying and implementing improvements that reduce emissions, lower operating costs, and mitigate risks.

Starting early to understand your carbon footprint before disclosure is essential, as data improvement is often necessary to enhance the accuracy of estimates.

Engaging with your supply chain is crucial for acquiring more accurate emission estimates and collaborating on reduction initiatives. Many organisations face barriers in influencing emissions from purchased goods and services and operations within their supply chain, but significant reductions can be achieved through effective supplier engagement.

3. Minimising Climate Risk and Maximising Opportunities

By identifying and understanding climate-related risks and opportunities through mandatory climate-related reporting, companies can ensure they are resilient to risks and can capitalise on opportunities in a decarbonising world.  

Demonstrating strong ESG practices can attract investment, as investors increasingly prioritise sustainability and the links between sustainability and financial performance over the short, medium and long term in their decision-making processes. Companies with robust ESG credentials and reporting are better positioned to access capital markets and secure favourable financing terms.

Climate scenario analysis is a well-established method for developing strategic plans that are more robust to a range of plausible futures. The process of undertaking climate scenario analysis can help a company understand how climate-related risks and opportunities may impact their business model, strategy and financial performance over time. This proactive approach not only highlights how companies need to respond to risks but also uncovers opportunities for potential innovation and growth.

Learn how private equity firms can capitalise on climate risk management to generate value in the transition to net zero.

4. Enhancing Market Access and Talent Attraction

Leveraging the data and initiatives required via mandatory climate reporting can improve market access by aligning with the expectations of consumers, partners, and regulators.

Companies that demonstrate commitment to sustainability are more likely to build strong, trust-based relationships with these stakeholders. For example, suppliers who place ESG principles at the heart of their operations and strategy are more appealing partners.

As global and local community expectations rise along with regulation, the ecosystem must work together to hold one another responsible. A solid reputation for ESG performance can help attract and retain top talent, as employees increasingly seek employers with values that align with their own.

A survey by IBM found that 71% of employees and job seekers find environmentally sustainable companies more attractive. Additionally, over two-thirds are more likely to apply for and accept positions with socially responsible organisations, and nearly half would accept a lower salary to work for such companies.

Being a B Corp, we’ve found, is also a good way to attract and retain talent, as it demonstrates a commitment to social and environmental responsibility, aligning with the values of employees and prospective hires.

5. Improving Sustainable Performance

Mandatory climate-related reporting and related transition planning provide a structured framework to drive sustainable performance (that sweet spot between ‘profit performance’ and ‘purpose performance’) and place sustainability at the heart of decision-making.

By undertaking the process involved in complying with standards such as the ASRS, measuring, monitoring, setting clear targets and regularly tracking progress, organisations can identify areas for improvement, align operations with sustainability goals, and enhance overall performance.

This proactive approach not only meets regulatory demands but also positions the company as a leader in sustainability. Essentially, it serves as your organisation’s sustainable performance analysis, reflecting community expectations and how your organisation measures up. This is particularly the case for organisations that use the reporting framework as a catalyst to prioritise deeper action and to implement a credible climate-related transition plan.

6. Upgrading your Data Capture and Reporting with Digital Tools

Considering mandatory climate reporting will be a compliance requirement, the adoption of digital tools is worth considering for efficient data capture and accurate reporting.

Advanced software solutions can streamline the collection, analysis, assurance and dissemination of ESG data. These tools enable real-time monitoring and facilitate detailed reporting, ensuring that all relevant metrics are captured accurately and timely. This digital transformation supports transparency and accountability, making it easier to demonstrate compliance and communicate performance to stakeholders.

With ESG software such as Mero you can add your suppliers as users to include their data into your database. You can tailor questions targeting mandatory reporting requirements, specific to suppliers and risks associated to suppliers as part of the solution.

7. Strengthening Governance

Mandatory climate-related reporting strengthens the G in your ESG strategy by integrating sustainability into core decision-making processes.

It compels your organisation to establish strong frameworks for monitoring and managing climate risks and opportunities, promoting transparency and accountability. This enhances your oversight mechanisms, ensures compliance, and fosters a culture of continuous improvement. It also helps unify your organisation by aligning teams around shared goals, strengthening resilience, and reinforcing long-term business performance

Improved governance practices build continued trust with your stakeholders and will contribute to long-term organisational resilience and success.

In Summary How Mandatory Climate Reporting Can Strengthen Your ESG Strategy

For senior ESG and sustainability leaders, the road ahead involves continuous learning and adaptation. Stay informed about regulatory changes, engage your people and stakeholders to understand why ESG matters to your organisation, invest in the right tools and technologies, and foster a culture of transparency and engagement.

By utilising mandatory climate-related reporting as a strategic way to strengthen your ESG strategy you can create value, impact, and drive sustainable performance.

By utilising digital tools, engaging stakeholders, discovering efficiencies, minimising climate risks, maximising investment opportunities, and enhancing market access and talent attraction, your organisation can turn these new regulatory requirements into a competitive advantage to drive sustainable performance.

Originally published July 2024, updated September 2025.

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In July 2025, the Science Based Targets initiative (SBTi) released its updated Financial Institutions Net Zero (FINZ) guidance, marking a significant step forward for the sector and arriving just as early adopters of the previous guidance reach their 5-year target review horizon. The guidance also presents greater alignment with other frameworks, such as the Net Zero Investment Framework (NZIF).

In this article, we outline how and when companies should leverage this updated guidance for target setting, summarise the key points about the new standard’s requirements for climate ambition and reporting, and outline what this all means for financial institutions.

How and when to leverage the new guidance

Companies are encouraged to start applying the new guidance as soon as practicable, but a phase-in period has been proposed. Either the FINZ v1 or the FINZ v2 guidance may be used for companies looking to set targets until December 2026. SBTi suggests:

Redefining climate ambition

SBTi has redefined climate ambition in its FINZ guidance, with more stringent requirements on certain sectors, namely the fossil fuel, transport, industry, energy, and real-estate sectors. The latest guidance introduces the concept of portfolio segmentation – four segments are used to define target-setting requirements and climate ambition:

• Segment A: Fossil fuels (coal, oil, gas).
• Segment B: Transport (air, maritime, land); Industrial (steel, cement); Energy (power generation); Real estate (residential and commercial buildings); Forest, land and agriculture (FLAG).
• Segment C: Other sectors (not listed in segments A or B).
• Segment D: Subset of activities in emissions-intensive sectors and other sectors. This includes private equity, venture capital and private debt in non-fossil fuel sectors with <25% ownership or no board seat, as well as funds of funds.

SBTi’s updated guidance introduces clearer criteria for how financial institutions should treat different types of assets on their journey to net zero. Assets are now categorised as either “in transition” (shifting toward lower-carbon operations), “climate solutions” (assets that directly support decarbonisation, such as renewable energy), or already in a “net zero state”.

For “in transition” assets, the guidance includes an Implementation List of approved benchmarks and third-party methodologies that institutions can use. This expands options for demonstrating portfolio alignment, which previously were limited to either using the ITR methodology or having SBTi-validated targets.

Unlike earlier drafts of the guidance, the final version does not require financial institutions to demonstrate that their portfolio is making progress towards the targets they have set. Institutions must still report their own progress annually and renew targets at the end of each near-term cycle (typically five years). However, there is no requirement to show that portfolio companies are delivering on the targets they have set, as is required in NZIF. In practice, this means financial institutions can meet the standard by ensuring companies set targets, without being responsible for how quickly those companies achieve them.

Climate ambition requirements also depend on the location of assets – financial institutions with assets in developing economies have longer timelines to bring those holdings into alignment, recognising regional differences in transition pace.

As with previous guidance, SBTi mandates that companies make certain over-arching strategic commitments to align with climate goals. These have been expanded with the addition of a commitment to monitor and phase out deforestation and land conversion from the portfolio, as well as to conduct and publish a deforestation assessment by 2030. Requirements for ending new finance to fossil fuel assets and divesting from fossil-fuel related assets remain similar to those outlined in the near-term guidance and are in alignment with coal phase-out by 2030 for OECD countries and 2040 for the rest of the world. The guidance also makes clear that offsets or carbon credits cannot be used to meet near- or long-term decarbonisation targets. Only residual emissions at the point of net zero can be neutralised.

Increased climate reporting expectations

Alongside these ambition requirements, SBTi FINZ also raises expectations for climate reporting and transparency. This includes requirements to report:

• Scope 1 & 2 financed emissions for segments A, B, and C. This was previously only required where companies were setting portfolio coverage targets on an emissions coverage basis. Reporting requirements are stricter if targets are set based on the share of emissions covered rather than the share of assets. If setting portfolio coverage based on emissions coverage, investors must also include segment D activities in their financed emissions statement.
• Scope 3 financed emissions for automotive, coal, oil & gas, and real-estate assets, as these are deemed to be “high impact” sectors. From 2030, Scope 3 financed emissions must be included for all assets.
• Exposure to fossil fuel-related activities and related GHG impacts. This includes a new requirement to report a ratio of fossil fuel financing relative to renewable energy financing.

Addressing private equity concerns

During the consultation period, key concerns raised by private equity firms included the need to maintain the 24-month post-investment grace period for portfolio companies to be integrated into targets, as well as the looser requirements around minority investments (<25% ownership or no board seat). SBTi has honoured these concerns by classifying private equity, venture capital, and private debt of private corporates and SMEs in non-fossil fuel sectors with <25% ownership or no board seat as segment D, on which the least stringent requirements are placed. Segment D assets are only required to be included in near-term targets if the target coverage of segment A-C assets is <67%, but it must be phased in to targets from 2040.

What this means for financial institutions

The new FINZ guidance is currently in a period of transition and will take a while to be adopted more widely in the sector. The target-setting tools and associated documentation are not yet published, and there is a generous transition period to prepare key elements of new target-setting requirements, notably portfolio GHG accounting.

The guidance provides increased flexibility in defining climate alignment targets, which is intended to make internal implementation more straightforward. However, this flexibility may also lead to slight discrepancies in target ambition, as it is not always obvious from the standard SBTi target language how ambitious a target really is.

While it will be a few months before the first FINZ-aligned targets start to be validated and published, Anthesis is already supporting clients in navigating the new guidance and the implications for their businesses. The practice of setting SBTs enables companies get on track and future-proof growth, and is one of the best practices for publicly communicating a company’s commitment to limit the effects of climate change. At Anthesis, we view the process of setting Science Based Targets not merely as a checkbox but as a transformative business journey.

Singapore has joined other major global markets in pushing for clearer disclosure of climate risks and opportunities to implement mandatory climate reporting aligned with the International Sustainability Standards Board (ISSB). These disclosures will improve consistency and align corporate practices with global standards, as investors, regulators, and stakeholders demand greater transparency. Climate reporting requirements will be phased in between FY2025 and FY3032 to eventually cover both Singapore Exchange (SGX) listed companies and large non-listed companies.

Whether your organisation falls under Group 1 (reporting from January 1, 2025) or is voluntarily aligning with stakeholder and supply chain expectations, these new standards are likely to affect you. This article answers the most common questions on how to prepare for mandatory climate reporting to the ISSB standards in Singapore, helping you understand the requirements and take your next steps on climate-related financial disclosures.

What are the ISSB standards for climate and sustainability reporting in Singapore?

In 2023, the ISSB, established by the International Financial Reporting Standards (IFRS) Foundation, published a set of standards for sustainability disclosures. These standards were informed by and consolidated several other sustainability disclosure and reporting frameworks, establishing a global baseline for consistent and transparent sustainability reporting aimed to enable investors to make decisions informed by financially material sustainability-related risks and opportunities.

In line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), the previous best practice framework for climate-related financial disclosures, the ISSB standards are structured through four key disclosure areas:

1. Governance: Processes for monitoring and managing climate- and sustainability-related risks and opportunities.
2. Strategy: Identification of risks and opportunities affecting long-term business strategies.
3. Risk Management: Methods for identifying, assessing, and mitigating climate and sustainability-related risks.
4. Metrics and Targets: Disclosure of GHG emissions and climate and sustainability-related performance targets.

IFRS S1 – sustainability-related – sets out how companies should disclose governance, strategy, risk management, and metrics related to sustainability risks and opportunities beyond just climate, building on the TCFD framework. In Singapore, IFRS S1 is not mandatory, except for climate-related aspects. For example, companies must disclose climate risks and opportunities that could affect cash flow, financing, or capital costs.

IFRS S2 – climate-related – is mandatory in Singapore and sets out how companies must disclose climate-related risks and opportunities that could affect cash flow, financing, or capital costs in the short, medium, or long term. IFRS S2 subsumes and builds upon the recommendations of the TCFD.

Learn more about the ISSB International Sustainability Standards Board (ISSB) from the IFRS.

Who is required to report?

All listed companies on the Singapore Exchange must report, with Straits Times Index constituents leading the way, followed by other listed issuers in phases. Large non-listed companies with at least S$1 billion in revenue and S$500 million in assets are also required to report.

Singapore ISSB implementation timeline

The latest update by the Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo) in August 2025 introduces an extended timeline for most reporting requirements. This phased approach is aimed at giving companies adequate time to build internal reporting capacity and adapt to ISSB standards.

Despite the extended timeline, it is notable that the regulators have maintained the requirements for all listed entities to report Scope 1 and 2 emissions, and for the larger issuers to report Scope 3 emissions for larger issuers by FY2026, This signals a clear focus on driving accountability and transparency on decarbonisation, even as companies are given more time to prepare for other aspects of sustainability reporting.

Due to the latest announcement, the climate reporting timeline is:

• FY2025: All listed issuers must begin disclosing Scope 1 and Scope 2 GHG emissions. This requirement remains in place for all companies, regardless of market size or STI status.
• FY2026: Mandatory Scope 3 emissions reporting begins for larger listed issuers, with smaller issuers following based on readiness assessments. No changes announced to this timeline.
• FY2029: External limited assurance will be required for Scope 1 and Scope 2 emissions disclosures by all STI and non-STI constituent listed companies. 
• ISSB-aligned disclosures:
  • STI constituents: FY2025
  • Non-STI listed issuers with market cap ≥ S$1 billion: FY2028
  • Non-STI listed issuers with market cap < S$1 billion: FY2030
• Large non-listed companies (≥ S$1B revenue and ≥ S$500M assets): FY2030

This phased approach maintains Singapore’s direction of travel toward consistent and decision-useful ESG disclosures, while acknowledging operational readiness differences across the market. 

Table 1: Summary of updated climate reporting requirements for listed companies (updates highlighted in yellow). Image: SGX Group

Table 2: Summary of updated climate reporting requirements for large NLCos (updates highlighted in yellow). Image: SGX Group

Are there penalties for non-compliance?

Yes, there are penalties for non-compliance with mandatory climate-related reporting requirements.

For listed companies, failure to meet disclosure obligations under the SGX rules can lead to regulatory actions by SGX RegCo, such as:

• Warnings or reprimands
• Requirements to make additional disclosures
• Fines or sanctions in severe cases

For large non-listed companies, specific penalty frameworks under the upcoming mandatory climate-related disclosure rules are still being clarified, but non-compliance may result in regulatory scrutiny or reputational risk.

Even where not fined, failure to comply can damage investor confidence, affect access to finance and/or new markets, and harm market reputation.

What are the assurance requirements?

• Listed companies will need to obtain limited assurance over their Scope 1 and Scope 2 greenhouse gas (GHG) emissions from FY2029 onwards.
• Large non-listed companies will follow similar assurance requirements when their mandatory reporting begins in FY2032.

This limited assurance means an independent third party reviews the reported emissions data to provide moderate assurance on its reliability, helping strengthen trust and credibility with investors and stakeholders.

Why is Singapore implementing sustainability reporting?

The cornerstone of Singapore’s sustainability agenda is the Singapore Green Plan 2030, launched in 2021. This plan sets ambitious goals such as achieving net-zero emissions by 2050 and is deeply aligned with the United Nations’ 2030 Sustainable Development Agenda and the Paris Agreement. ESG reporting is a practical tool to measure progress toward these national and international goals, ensuring both public and private sectors contribute meaningfully.  

Sustainability reporting is also being implemented to increase transparency, align with global standards, and help companies manage climate-related and broader ESG risks and opportunities.

While financial reports reflect past and present performance, sustainability reports provide insight into future risks and opportunities, giving investors and stakeholders a fuller picture of a company’s financial prospects and the quality of its management. Companies that are able to demonstrate they are ahead in their decarbonisation journeys and understand the impact on their business of climate-related risks and opportunities stand to benefit from increased innovation, access to new markets, customers, and financing.

By following these steps, companies can meet regulatory expectations while strengthening resilience, managing climate risks, and enhancing their appeal to investors in a low-carbon economy.

What to detail in the Sustainability Report  

Companies must prepare and publish an annual sustainability report that includes mandatory climate-related disclosures, structured around four pillars:

1. Governance – Board and management roles in overseeing and managing climate-related risks and opportunities.
2. Strategy – How climate risks and opportunities affect the business model, strategy, and financial planning over the short, medium, and long term.
3. Risk Management – Processes for identifying, assessing, and managing climate-related risks, and integration into overall risk management.
4. Metrics and Targets –
   • Scope 1 and Scope 2 GHG emissions (mandatory)
   • Scope 3 GHG emissions (mandatory, phased in with reliefs)
   • Industry-specific metrics (based on SASB standards)
   • Climate-related targets, transition plans, and progress

How to submit the report

• In Singapore, IFRS S2 climate disclosures must be included within the company’s annual sustainability report, filed through SGXNet, alongside the annual report.
• Reports must follow IFRS S1 principles: materiality, consistency, and connectivity to financial statements.
• The reporting period must match the financial year of the annual report, and both must be published at the same time.
• Scope 1 and 2 GHG emissions require external assurance (Scope 3 phased in).

When to submit the report

Listed companies will submit their sustainability report alongside their financial statements, in line with existing reporting timelines. Where external assurance has been conducted, the sustainability report may be issued separately, but no later than five months after the financial year-end.

Note the SGX has an expectation that large issuers will be required to report on Scope 3 GHG emissions and thus the content in their climate reporting will be aligned with the climate-related requirements in the IFRS Sustainability Disclosure Standards for CY26.

Preparing for compliance to mandatory climate reporting

1. Conduct a gap analysis of current ESG and climate reporting practices against SGX and ISSB (IFRS S2) requirements.
2. Develop an actionable roadmap to address gaps, set priorities, and prepare for upcoming disclosure deadlines.
3. Enhance data collection and governance systems to accurately track GHG emissions, including Scope 1 and 2, and prepare for future Scope 3 reporting.
4. Build capacity and awareness across the board, executive, and management levels to strengthen governance and accountability.
5. Conduct scenario analysis to identify key climate-related risks and opportunities, covering both short- and long-term impacts.
6. Engage stakeholders across departments to ensure disclosures are complete and aligned.
7. Seek expert support and external assurance to navigate complexity and obtain limited assurance over GHG data where required.

Sustainability Reporting Grant

The Sustainability Reporting Grant (SRG) is a Singapore government initiative that supports large companies (with revenues above S$100 million) in preparing their first sustainability reports aligned with ISSB standards. It co-funds up to 30% of eligible costs, capped at S$150,000, covering consultancy, assurance, tools, and training. The grant, administered by Enterprise Singapore and the EDB, aims to help businesses meet upcoming mandatory disclosure requirements.

What are the benefits of sustainability reporting?

Key benefits of sustainability and climate-related reporting aligned with ISSB standards (IFRS S1 and S2).

• Global alignment: Positions Singapore companies alongside global peers, meeting international benchmarks for sustainability reporting.
• Consistency and clarity: Provides a standardised framework, helping companies understand strengths, gaps, and areas for improvement.
• Investor transparency: Gives investors clear insights into climate risks, opportunities, and sustainability performance.
• Stronger governance: Improves board and management oversight of climate risks and opportunities.
• Sustainable performance: Enhances risk management, fosters innovation, builds resilience, and embeds sustainability into business strategy.
• Stakeholder trust: Strengthens credibility with regulators, investors, and customers by demonstrating meaningful climate action.
• Better data and insights: Using digital tools to manage disclosures improves data quality, reporting efficiency, and informed decision-making.
• Strengthen cross-team collaboration: Reporting takes input from teams across the business, creating stronger alignment across functions and building a more integrated, resilient business.

Need support with climate or sustainability reporting in Singapore? Anthesis can help

As established climate experts globally and in APAC, we offer advice based on years of experience on reporting to regulatory standards and frameworks such as ISSB, ESRS, ASRS, CSRD, and many more, to manage your climate risks, seize opportunities, and drive compliance and sustainable performance across your business now and into the future. We’ll help discover efficiencies, create stakeholder value and increase your positive impact.

Officially licensed by:

Anthesis Consulting Group Ltd. licenses and applies the IFRS® Sustainability Disclosure Standards and the SASB® Standards in our work.

Emerging markets – nations that are progressing through rapid growth and industrialisation – represent increasingly attractive opportunities for corporate global expansion. At the same time, governments, financial institutions, and consumers across such markets in Latin America, Africa, and Asia are driving a shift toward more sustainable economic models to accelerate growth, respond to growing investor interest, and align with global regulatory developments. Credible environmental, social, and governance (ESG) strategies can therefore be powerful enablers for companies looking to enter these new markets and to grow their business.

This article will explore three ESG-related opportunities in emerging markets:

1. Access to ESG-linked financial instruments
2. Unmet demand for sustainable products and services
3. Regulatory harmonisation

We’ll also examine how companies with robust ESG strategies may be better positioned to successfully enter these markets.

Greater access to sustainable finance incentives

Governments and financial institutions in emerging markets have recently introduced a range of sustainability-linked financial instruments to attract investment and incentivise companies to pursue ambitious sustainability objectives. Among these is the fast-growing sector of sustainability-linked loans (SLLs), offering preferential terms such as potential interest rate reductions or increases, depending on the borrowers’ performance against predefined ESG performance targets (e.g., emissions reduction or gender equity).

The market for SLLs in emerging markets has expanded significantly, growing by nearly 60% between 2017 and 2021, and the adoption of SLLs is expected to continue accelerating, with the Asia-Pacific market leading at a projected compound annual growth rate (CAGR) of 27.8% through 2033. This growth is fueled by heightened awareness of climate risks, expanding public regulations on sustainable finance, and increasing technical assistance and investment from Development Finance Institutions (DFIs).

Notable SLL examples include the International Finance Corporation (IFC)’s $85 million loan to Precious Shipping Limited (PSL) in Thailand, tied to freshwater-use reduction targets for its vessels, and a $30 million loan to the Izmir Water and Sewerage Administration (IZSU) in Turkey, linked to a gender equity target of hiring at least 300 women in industries in which they are underrepresented. Similar financing arrangements have also been rolled out by multi-lateral development banks such as the African Development Bank and the Asian Development Bank.

Companies with robust ESG strategies supported by clear KPIs and measurable sustainability performance targets are best positioned to secure SLLs, as they effectively fulfill the eligibility requirements set by issuers. These strategies not only demonstrate alignment between business and sustainability objectives but also reflect strong internal performance management and mature performance relative to peers. This strategic positioning also supports market entry in regions where sustainable development is a national priority.

Unmet demand for sustainable products

Consumer preferences have long played a pivotal role in emphasising the business value of ESG, particularly in regions like the EU and North America. Recent research indicates that the demand for sustainable products is similarly rising in other parts of the world, especially in emerging markets across Asia, Latin America, and Africa. Consumer segments such as “zero-wasters” are now actively seeking sustainable product alternatives in these regions, signaling a shift toward more conscious consumption.

Additionally, another report found that over 80% of survey respondents in emerging markets indicated they care about the sustainability of products such as leisure travel, laptop computers, and apparel. Companies such as Kärcher are recognising this trend and strategically aligning their business expansion to respond, investing in the growth of sustainable and efficient cleaning technologies and addressing the growing demand for “green cleaning” in countries such as India.

Presently, this growing consumer demand in emerging markets remains unmet, as barriers such as unclear sustainability labelling still deter purchasing behavior. Companies that can identify and address these challenges are well-positioned for growth. For companies who do not yet have clearly articulated products or services related to sustainability, the development of an ESG strategy can help focus effort and investment into product innovation related to ESG that aligns with a company’s values, core competencies, and responds to evolving consumer expectations.

Regulatory harmonisation

Driven by rising investor and trading partner expectations for transparency, country-level ESG regulations in emerging markets have expanded and aligned with leading global frameworks and standards. For example, Brazil’s adoption of the ISSB standards integrates key elements from both the TCFD and SASB, signaling a shift toward internationally harmonised reporting. Similarly, Rwanda’s green taxonomy is deliberately structured to align with the TCFD and GRI frameworks, ensuring consistency in climate-related and broader sustainability disclosures. Aligning with global ESG frameworks is also expected to accelerate in emerging markets as global investors and companies continue to advocate for streamlined standards to reduce reporting and compliance complexity.

Companies with robust ESG strategies are well-positioned to recognise and respond to these shifts. By proactively aligning with foundational frameworks such as ISSB, TCFD, SASB, and GRI, they can embed regulatory readiness into their operations, reducing the cost of compliance that is often tied with expanding into new markets. This forward-thinking approach not only facilitates smoother market entry but also enables companies to meet growing expectations for transparency and performance measurement from regulators, investors, and other key stakeholders. Ultimately, a strong ESG strategy equips businesses to navigate multiple stakeholder demands simultaneously, enhancing trust, reducing regulatory risk, and creating competitive advantage in both domestic and international markets.

While increasing political and economic shocks have caused markets in North America and Europe to retreat and slow down on their sustainability agendas, some other regions such as Asia and Latin America are viewing these shocks as opportunities to accelerate their sustainability efforts. A recent survey revealed regional differences in attitudes toward sustainability, as 91% and 71% of respondents in North America and Europe, respectively, reported backlash against the sustainability agenda in their countries, while only 38% in Asia reported similar sentiments. Coupled with the continued development of mature financing instruments, unmet consumer demand, and increasing regulatory harmonisation, ESG has evolved beyond a resilience strategy and into an opportunity for business growth and value.

How Anthesis can help

At Anthesis, we specialise in guiding organisations to develop and implement robust ESG strategies or refresh existing strategies to keep pace with change. Our team of global experts can support your company to develop ESG programs and strategies that support entry into emerging markets through regulatory horizon scans, mandatory reporting readiness, materiality assessments, and stakeholder engagement. We are experts at identifying and mitigating ESG-related risks, uncovering opportunities for innovation through ESG, and making the business case for sustainability.

For more information about how our ESG advisory services can support expansion into emerging markets, please get in touch using the form below.