Amidst the increased global attention on climate accountability, companies’ responses to climate change risks, opportunities, and the transition to a low-carbon economy are crucial for investors, regulators, and other stakeholders in corporate reporting. Investors are now placing emphasis on comprehensive and transparent disclosures regarding companies’ approaches to climate-related matters in order to make informed investment decisions. 

Consequently, regulators are highlighting the importance of aligning climate-related targets and risks in annual reports with financial statements disclosures. One specific area of focus is how net-zero commitments impact the assessment of the useful economic lives of long-term assets, which is particularly relevant to companies in the transport and logistics sector.

A thematic review conducted by the Financial Reporting Council in the UK in 2022 revealed that some companies had made commitments to net-zero targets without adequately considering the potential impact on the valuation and useful economic lives of the assets involved. As ESG reporting continues to evolve, such misalignment could be perceived as greenwashing, and the lack of accountability could have a negative impact on the integrity of a company’s climate strategy. 

In Singapore, the government has announced its intention to achieve net-zero emissions by 2050 as part of its Long-Term Low-Emissions Development Strategy (LEDS). The International Chamber of Shipping has also reaffirmed its commitment to reach net-zero by 2050, submitting plans to the International Maritime Organisation (IMO). Furthermore, Singapore has joined the Clydebank Declaration for Green Shipping Corridors, initiated by Britain, along with 22 other signatory states. The objective of this declaration is to establish green shipping corridors between ports, facilitating zero-emission vessel voyages. These targets send strong signals to the industry, energy providers, shipbuilders, and engine manufacturers, emphasising the urgent need to accelerate investments in green fuels and technology.

To develop low-carbon solutions and pursue green growth opportunities, companies must reassess their business and operational risks to evaluate the impact of climate-related policies on their long-term assets. This reassessment is necessary to prevent the occurrence of stranded assets, which are assets rendered obsolete by regulatory or industry shifts before their projected service term expires. Stranded assets pose financial and reputational risks to their owners. For instance, with a typical 25-year lifespan of new oceangoing ships, meeting an ambitious net zero target by 2030 would require thousands of zero-emission ships. If the industry transitions to greener fuels and technology, certain vessels may no longer be usable in the same capacity, leading to significant capital expenditure for modifications or, in some cases, impairment or disposal. 

The International Sustainability Standards Board (ISSB) disclosures

In March 2022, the ISSB issued two exposure drafts, IFRS S1 for General Sustainability-related Disclosures and IFRS S2 for Climate-related Disclosures. The final standards were released on 26 June 2023 and will become effective for annual reporting periods starting on or after 1 January 2024. In line with these global standards, the Accounting and Corporate Regulatory Authority (ACRA) and Singapore Exchange Regulation (SGX RegCo) have recommended that mandatory climate reporting be introduced for listed and non-listed companies in Singapore. The recommendations were published on 6 July 2023, and are currently under public consultation.


The ISSB disclosures are a positive development for the logistics and transportation sector. The sector is a major contributor to greenhouse gas emissions, and it is also vulnerable to the physical risks of climate change. The standards will help companies in the sector to assess and manage their climate risks, and to develop more sustainable business models.


Learn more about the disclosures here and explore its impact on your business.


Assessing Physical Risks

While setting sustainability goals, companies should review their long-term assets and compile a repository of physical risks based not only on regulatory requirements but also on projected climate shifts. By doing so, the annual reviews for impairment of these fixed assets will contribute to the overall assessment of the business model’s viability and the establishment of realistic sustainability targets. This improves the reporting of both climate and financial matters. 

To find out more about RSM’s Logistics & Transportation Practice, please contact our specialists: