Singapore

Relevant legislation or guidelines

Legislation

1. The Consumer Protection (Fair Trading) Act 2003 (“CPFTA”) is meant to protect consumers against unfair practices generally.

Section 4 of the CPFTA states that it is an “unfair practice” for a supplier to:
(a) deceive or mislead consumers;
(b) to make false claims; or
(c) to take advantage of a consumer if the supplier knows or ought reasonably to know that the consumer is not in a position to protect his own interests, and/or is not reasonably able to understand any matter related to the transaction;

2. The Misrepresentation Act (“MA”) allows consumers to claim damages against a trader for losses suffered, including because of greenwashing claims. The Consumer must be able to prove that it was induced to enter a transaction because of a false statement of fact made by the trader and has thereby suffered a loss;

3. The Singapore Code of Advertising Practice (“SCAP”) is an industry guideline which promotes high standards of ethics in advertising. Although it has no force of law, the Advertising Standards Authority of Singapore may sanction advertisers that do not comply with the SCAP.

Chapter II, clause 5 of the SCAP states that advertisements in general should not mislead in any way by inaccuracy, ambiguity, exaggeration, or otherwise.

Specifically, Chapter IV, appendix L of the SCAP also provides specific rules relating to environmental claims;


4. The Securities and Futures Act 2001 (“SFA”) regulates the activities and institutions in the securities and derivatives industry.

Under section 199 of the SFA, a person must not make a false or misleading statement which induces the subscription of securities, induces sale or purchase of securities, or affects the market price of securities. The person will be liable if he/she does not care whether the statement is true or false, or if the person knows or ought reasonably to have known that the statement or information is false or misleading.

Guidelines

1. The Singapore Exchange (“SGX”) has implemented climate disclosures requirements starting from 2022, which are applicable to listed companies on SGX.

- From 1 January 2022, all issuers must provide climate reporting on a “comply or explain” basis in their sustainability reports. In this regard, SGX has published 27 core metrics relating to environmental, social and governance (“ESG”) factors to assist issuers in assessing their ESG compliance on a standardised basis.

- Starting from 1 January 2023, climate reporting has been made mandatory for issuers in the financial, agriculture, food and forest products, and energy industries;

2. On 28 July 2022, the Monetary Authority of Singapore (“MAS”) released Circular No. CFC 02/2022, “Disclosure and Reporting Guidelines for Retail ESG Funds”. The Circular applies to all prospectuses of ESG funds that are lodged with MAS on or after 1 January 2023.

An “ESG Fund” is defined in the Circular as an authorised or recognised scheme which: (a) uses or includes ESG factors as its key investment focus and strategy, or (b) represents itself as an ESG-focused scheme.

Section B of the Circular provides naming requirements for ESG Funds. ESG Funds should “be appropriate, and not be undesirable or misleading”. If the scheme’s name uses ESG-related terms, the scheme should reflect such an ESG focus in its investment portfolio and/or strategy in a substantial manner and comply with the relevant guidelines in the Circular.

Section C of the Circular also provides disclosure requirements relating to: (a) an ESG Fund’s prospectus, (b) the annual report of an ESG Fund, and (c) additional information of specific areas regarding an ESG Fund which should be disclosed to investors or prospective investors. These requirements generally relate to disclosures of the ESG fund’s ESG investment focus and strategy.

The MAS will also consider whether an ESG Fund is compliant with the relevant ESG rules in their home jurisdictions. For instance, if an ESG Fund which is classified as falling under Articles 8 or 9 of EU’s Sustainable Finance Disclosure Regulation would be deemed to have complied with the disclosure requirements under Section C of the Circular.

To facilitate ESG disclosures by SGX-listed companies, the MAS and SGX launched the “ESGenome” portal on 12 September 2022. Using the ESGenome software, companies are able to carry out sustainability reporting based on SGX’s core ESG metrics, and make additional disclosures in line with globally recognised ESG standards and frameworks.

The Ministry of Finance had issued a Singapore Green Bond Framework in 2022 to provide a governance framework for green bonds issued in Singapore under the Significant Infrastructure Government Loan Act 2021. The framework sets out how proceeds from green bonds can be used, the criteria for selecting and evaluating projects, as well as other r

Is there any upcoming relevant legislation or guidelines?

The SGX climate disclosure requirements will be made mandatory for issuers in the materials and buildings industry as well as the transportation industry from 1 January 2024 onwards.

The MAS has convened a Green Finance Industry Taskforce (“GFIT”) to develop best practices and identify key resources to develop the green and sustainable finance ecosystem in Singapore. One of the key proposals is to develop a taxonomy for Singapore-based financial institutions to identify and classify green and transition activities, so as to channel financing appropriately towards decarbonisation activities. Public consultations are underway to determine the method of classification and the factors to consider.

Who are the responsible authorities or bodies?

• The Competition and Consumer Commission of Singapore administers and enforces the CPFTA;
  
  
• The Advertising Standards Authority of Singapore regulates the advertising industry through the SCAP;
  
  
• The Consumers Association of Singapore and Singapore Tourism Board assist local consumers and tourists to seek redress and/or compensation from errant retailers for unfair trade practices;
  
  
• The Singapore Environment Council administers various certification programmes such as the Eco-Certification Programme and Singapore Green Labelling Scheme. These are voluntary certification schemes which endorse environmentally friendly products and services. For instance, the Singapore Green Labelling Scheme covers products such as building materials, lighting, cleaning products, office supplies, and generic products;
  
  
• The Monetary Authority of Singapore is the financial regulatory authority in Singapore, administering various legislation and regulations pertaining to the securities and financial sector (among others);
  
  
• The Ministry of Finance is a ministry of the Singapore government, which is responsible for managing Singapore’s fiscal policies generally and the structure of the economy.

What are the enforcement measures?

The Competition and Consumer Commission of Singapore (“CCCS”) is able to:

• Gather evidence against persistent errant retailers;
  
  
• File injunction applications against persistent errant retailers; and
  
  
• Enforce compliance with such injunction orders.

The District Court or General Division of the High Court of Singapore may, upon the application of the CCCS, make a declaration that a supplier is engaging in an unfair practice, grant an injunction restraining a supplier from engaging in the unfair practice, and make other accompanying orders (Section 9 CPFTA).

The Consumers Association of Singapore and Singapore Tourism Board can assist local consumers and tourists to negotiate with retailers to resolve disputes and facilitate mediation. Furthermore, the Consumers Association of Singapore and Singapore Tourism Board may invite suppliers engaging in unfair practices (under Section 4 of the CPFTA) to enter into voluntary compliance agreements with affected consumer(s) (Section 8 CPFTA). A voluntary compliance agreement may contain an undertaking from the supplier to compensate the affected consumer for loss or damage resulting from an unfair practice.

The Advertising Standards Authority of Singapore is able to:

• Request for amendments or withdrawals of advertisements which are contrary to the SCAP;
  
  
• Rule on disputes relating to breaches of the SCAP arising between members of various advertising associations in Singapore; and
  
  
• Sanction parties which violate the SCAP (e.g. by publishing details of investigations into false advertising practices by recalcitrant offenders, or referring the matter to the Consumers Association of Singapore for action to be taken under the CPFTA).

Who can pursue infringements?

• Individuals who have entered a consumer transaction involving an unfair practice (under Section 4 of the CPFTA) may commence an action in court against the supplier, unless the amount of the claim exceeds S$30,000 (Section 6 CPFTA)
  
  
• Individuals can seek monetary redress or other remedies by filing a claim based on a dispute against a supplier for an unfair practice (under Section 4 of the CPFTA) against a retailer through the Small Claims Tribunal for amounts of up to $20,000, or $30,000 if there is a Memorandum of Consent from both parties.
  
  
• Damages may be claimed by consumers who are induced to enter into a transaction by a trader’s misrepresentation and thereby suffer a loss (Section 2 MA).
  
  
• Local consumers and tourists may lodge complaints against errant retailers to the Consumers Association of Singapore and Singapore Tourism Board.
  
  
• The CCCS may conduct investigations against suppliers if there are reasonable grounds for suspecting:
  
  (a) that the supplier has engaged or is likely to engage in an unfair practice under Section 4 of the CPFTA; or
  
  (b) that a person knowingly abets, aids, permits or procures a supplier to engage in an unfair practice (Section 19(1) CPFTA).
  
  
• Government bodies, state bodies, competitors and individuals may file complaints about errant advertisers to the Advertising Standards Authority of Singapore.

What are the general rules of thumb for green claims?

Chapter IV, Appendix L of the SCAP provides for the following rules of thumb:

• The basis of any claim should be explained clearly and should be qualified where necessary;
  
  
• Claims such as “environmentally friendly” or “wholly biodegradable” should not be used without qualification unless advertisers can provide convincing evidence that their product will cause no environmental damage;
  
  
• Qualified claims and comparisons such as “greener” or “friendly” may be acceptable if advertisers can substantiate that their product provides an overall improvement in environmental terms either against their competitors’ or their own previous products;
  
  
• Where there is significant division of scientific opinion or where evidence is inconclusive, this should be reflected in any statements made in the advertisements;
  
  
• If a product has never had a demonstrably adverse effect on the environment, advertisers should not imply that the formulation has been changed to make it safe;
  
  
• The use of extravagant language should be avoided, as should bogus and confusing scientific terms.

Do green claims need to be substantiated by evidence?

Unsubstantiated claims may be deemed:

• False, deceptive or misleading under section 4 of the CPFTA.
  
  
• Misleading due to inaccuracy or exaggeration under Chapter II, clause 5 of the SCAP;
  
  
• Unacceptable for lack of “convincing evidence” or for having omitted “significant information” under Chapter IV, Appendix L of the SCAP;
  
  
• False or misleading under Section 199 of the SFA