Sustainability reporting, or the disclosure of environmental, social and governance (ESG) information by businesses, has become a key driver of corporate accountability and performance in the Asia-Pacific (APAC) region. As the world faces unprecedented challenges such as climate change, biodiversity loss, social inequality and the COVID-19 pandemic, stakeholders are increasingly demanding more transparency and action from companies on their ESG opportunities and risks.
An Updated View of The Sustainability Reporting Landscape in APAC 2024:
Source: from GC Insights.
A more comprehensive overview of the ESG policy landscape in the APAC region, covering six emerging themes: green taxonomies, climate reporting, carbon pricing, supply chain transparency, corporate ESG disclosures, and ESG fund requirements can be found in our previous article: "APAC Regions ESG Policy Landscape - Dec 2023 Update". Subscribe to GC Insights Monthly ESG Regulatory Watch for the most updated sustainability insights and ESG policy analyses today.
MAJOR PROGRESS IN 2024 (updated in February 2024):
China’s Listed Companies Face New Sustainability Reporting Requirements
China, as the world's second-largest economy and the largest emitter of greenhouse gases, has a significant influence on the global sustainability agenda. In February 2024, China introduced new sustainability reporting requirements for its listed companies, which aim to enhance their disclosure on governance, strategy, impact, risk and opportunity management related to sustainable development, and key issues such as climate change, read our analysis here to discover the key aspects from the Official Guidelines of the New Sustainability Reporting Rules mandatory required by the three Chinese Major Exchanges.
The four-pillar framework (governance, strategy, impact, risk and opportunity management, metrics and targets) under new requirements also aligns with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and The International Financial Reporting Standards Foundation - International Sustainability Standards Board (IFRS-ISSB), which provides a framework for companies to disclose their climate-related risks and opportunities, as well as their governance, strategy, metrics and targets to address them. These frameworks have been widely adopted by global investors and regulators as a common standard for climate reporting. The new requirements are expected to improve the quality and comparability of ESG information disclosed by China's listed companies and facilitate their integration into the global capital markets.
The principle of double materiality as required by the new sustainability reporting requirements also aligns with major global sustainability frameworks such as the EU Corporate Sustainability Reporting Directive (CSRD) and GRI (Global Reporting Initiative).
The Development of the ASEAN-Interconnected Sustainability Ecosystem (ASEAN-ISE)
The Association of Southeast Asian Nations (ASEAN), a regional bloc of 10 countries with a combined population of over 650 million and a GDP of over $3 trillion, has also been advancing its sustainability agenda in recent years. In 2024, Bursa Malaysia together with the Indonesia Stock Exchange, The Stock Exchange of Thailand, and SGX Group announced a collaboration on the ASEAN-Interconnected Sustainability Ecosystem (ASEAN-ISE) in advancing ASEAN's sustainable development through the implementation of common ESG metrics into their respective data infrastructures.
The ASEAN-ISE initiative, which was formalised in 2023, aims to create an integrated ESG ecosystem to promote the progress of sustainable development in ASEAN, by enabling the participating exchanges to achieve economies of scale through cost efficiency and faster time-to-market with fit-for-purpose solutions, and by empowering them to proactively assist ESG-compliant corporates in maximising business value through quality disclosures.
The initiative also involves developing infrastructure solutions to facilitate cross-border trade flows, connecting corporates' supply chains to ESG-oriented investment capital, and providing suppliers with good ESG practices and disclosures to secure more competitive financing rates.
The Participating Exchanges will reconvene to finalise the implementation details before formalising the ISE Governance Framework and Operating Structure at the 37th ASEAN Exchanges CEOs Meeting, scheduled to be held in July 2024 in Malaysia.
The Key Takeaways for Businesses in the APAC Areas
The updated sustainability reporting landscape in APAC 2024 reflects the growing importance and urgency of ESG and sustainability-related issues for businesses in the region, as well as the increasing expectations and requirements from various stakeholders, such as regulators, investors, customers and employees.
Sustainability reporting has become a necessity for businesses to showcase their accountability and performance on ESG and sustainability criteria. It also helps them access opportunities and mitigate risks that arise from these issues. As sustainability reporting frameworks are taking shape in both domestic and international markets, companies are tasked to ensure the quality, consistency, and comparability of ESG information.
To achieve this, sustainability reporting should be integrated with a company's business strategy, governance, and operations. It should reflect the material ESG topics that affect the business and its stakeholders, as well as the goals, targets, and actions taken to address them, and a track record of progress made.
Robust data collection, management, and assurance systems should support sustainability reporting. Companies shall leverage available technologies and platforms, such as GC Insights ESG and Sustainability solutions, to streamline and enhance the efficiency and effectiveness of ESG disclosure and communication. Check out our offerings below and request more solutions here
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