Key themes and observations across APAC

ESG reporting requirements

• Enhancement of reporting requirements continues across much of APAC  
  
  
  • The last edition of our publication saw most of the covered jurisdictions announcing plans to enhance their ESG reporting requirements. Most of these jurisdictions have since implemented or finalised the enhanced requirements, showing the continued progress towards more robust corporate sustainability reporting rules.
  • Enhanced rules have taken effect in Australia, Hong Kong, mainland China, Malaysia and Singapore, and are expected to take effect in Cambodia, Japan, Indonesia, South Korea, Taiwan and Thailand within the next year or two. Hong Kong and mainland China have announced plans to further enhance their requirements in the future.
  • Australia, Hong Kong, Indonesia, Malaysia, Singapore and Thailand have adopted a climate-first approach by enhancing climate-related disclosures first, with plans or future reviews to upgrade requirements for other sustainability topics.  
  • On the other hand, enhanced requirements have been deferred in the Philippines, and India has eased back on its initial proposals for large listed companies to report in relation to its value chain by making such disclosures voluntary. Singapore delayed full implementation of ISSB-aligned climate reporting for smaller listed companies and large non-listed companies by several years (citing the uncertain global economic landscape and readiness of such companies).
  • Japan has indicated it will examine the incorporation of the biodiversity-related TNFD framework (the only covered jurisdiction to do so).
• Significant take-up of the ISSB Standards with varying extent of alignment
  
  
  • APAC continues to take steps to align with the ISSB Standards, with 12 of the 16 covered jurisdictions having implemented, finalised or announced plans for the adoption or incorporation of the ISSB Standards into local climate or sustainability reporting rules.
  • First-movers – Australia, Hong Kong, Malaysia and Singapore are the first of the covered jurisdictions to incorporate IFRS S2 (each adopting a phased approach). The first IFRS S2-aligned reports covered by these rules will be published in 2026.
  • More to come - looking ahead, the following jurisdictions are also expected to implement IFRS S1 and/or IFRS S2: Cambodia, Indonesia, Japan, mainland China, Philippines, Taiwan, Thailand and South Korea.
  • Interoperability and comparability should therefore improve over the region, with a common language and structure built around the four pillars of governance, strategy, risk management and metrics and targets.
  • Some degree of fragmentation will however remain as: (a) some jurisdictions with more bespoke reporting requirements (e.g. Myanmar and Vietnam) have not made indications to incorporate the ISSB or TCFD standards (the latter being the conceptual foundation for the ISSB Standards); and (b) variations exist in how each ISSB-aligned jurisdiction will incorporate and apply the ISSB Standards. For example, some will initially apply the standards only to climate reporting and some will not mandate disclosures such as Scope 3 emissions. Some jurisdictions apply the requirements to listed companies only and some take a more expansive approach.
  • Jurisdictions adopting the “single materiality” approach of the ISSB Standards will be distinct from those that take a “double materiality” approach (like the EU and mainland China), as the ISSB Standards assess materiality by reference to financial materiality rather than a company’s external impact.
  • These differences in approach towards materiality and the implementation of the ISSB Standards may require companies operating in multiple jurisdictions to consider how best to assess and address reporting gaps and overlaps and to respond in a coherent manner.
  • Further alignment with the ISSB Standards is expected to take place after jurisdictions and businesses become more familiar with the new requirements.
• Large non-listed companies are being brought into scope – corporate sustainability reporting rules primarily target listed companies and (in certain jurisdictions) financial institutions. However, large non-listed entities are increasingly being brought into scope - see Australia, Malaysia and Singapore. Cambodia, mainland China, Indonesia and Philippines have also indicated that application will expand to non-listed companies in the future.
• Emissions reporting requirements apply in most jurisdictions – 12 out of the 16 jurisdictions currently have some form of GHG emissions reporting requirements in place. GHG reporting requirements are expected to be enhanced and standardised across much of APAC with the incorporation of the ISSB Standards. 
• More jurisdictions are requiring external assurance
  
  
  • In our last edition, we observed that New Zealand and Taiwan mandated reporting entities to obtain external assurance requirements for their GHG emissions disclosures. Since then, Australia, Malaysia, Singapore and Thailand have announced plans to phase in assurance requirements.
  • More jurisdictions are expected to move towards external assurance requirements. For example, Japan is considering such a move, and Hong Kong has developed local assurance standards with reference to international developments and will consult the market on an assurance regime.
• Beyond reporting towards due diligence?
  
  
  • The UN Guiding Principles on Business and Human Rights (UNGPs) set out the concept of human rights due diligence – requiring businesses to identify, assess, prevent and mitigate human rights impacts in their own operations and value chains. The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD Guidelines) apply the due diligence concept to environmental and social impacts. The EU’s Corporate Sustainability Due Diligence Directive contains due diligence obligations that draw upon the UNGPs and OECD Guidelines. 
  • Although certain of the covered jurisdictions have reporting requirements on due diligence policies, none currently mandate businesses to conduct human rights and/or environmental due diligence in the manner contemplated by the UNGPs and OECD Guidelines, but there is growing pressure in some jurisdictions to do so.
  • The Australian government has agreed in principle to undertake a consultation on this subject, and Thailand’s Ministry of Justice has initiated discussions on a draft mandatory human rights and environmental due diligence law. Some legislators in New Zealand, Philippines and South Korea have been pushing for similar legislation, but it is too early to say whether the relevant bills will progress. The draft Climate Accountability Bill in the Philippines is particularly novel, with stringent due diligence obligations and accountability mechanisms for businesses, but the likelihood of implementation is unclear.  

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