Year in review across APAC

The bigger picture

ESG regulations are strengthening in APAC – Although ESG has faced headwinds in other markets,^[1] and geopolitical developments have heightened concerns on balancing the transition with energy security and economic development priorities, APAC jurisdictions have generally continued to strengthen their ESG regulatory frameworks in a pragmatic and phased manner. This has been driven by factors including the region's acute exposure to sustainability-related risks, the economic opportunities presented by the transition, and the impact of overseas measures targeting global value chains and carbon leakage. With the transition in APAC alone requiring an estimated US$79-89 trillion by 2050, many jurisdictions are also enhancing the market infrastructure needed to facilitate fund flows to support the transition.
From Ambition to Action and Accountability – Regulatory measures to address corporate environmental and social impacts are increasing in number and coverage, impacting entities within direct scope of the regulations, as well as their value chain partners. Mandatory carbon pricing and circularity measures are expanding through the region, and as transparency increases with mandatory sustainability reporting regimes, businesses are facing growing pressure to demonstrate credible plans and actions in support of a just and sustainable transition. Early-stage developments in value chain due diligence and climate litigation are emerging in several APAC jurisdictions, with the Philippines considering a landmark bill on corporate climate accountability. These developments point to sustainability as an area that will increasingly require credible corporate action and accountability.
Looking Beyond Net Zero – Whilst climate change remains the primary regulatory focus, APAC is seeing emerging developments under the "S" (social) pillar, with several jurisdictions considering value chain due diligence regimes and introducing forced labour import bans. These developments are being driven by domestic policy goals and market access pressures.^[2] At the same time, certain countermeasures^[3] have been imposed in response to the impact of foreign due diligence regulations. Businesses should be prepared to navigate evolving and potentially competing expectations on responsible business conduct.

[1] The US Securities and Exchange Commission has proposed the rescission of requirements on climate-related disclosures in registration statements and annual reports. The EU has enacted reforms to simplify their sustainability regime and substantially narrow its application scope due to concerns with the regulatory burden on businesses and the impact on EU competitiveness.

[2] For example, the US’ investigations and tariffs on 60 trading partners for alleged failures to prohibit the import of goods produced with forced labour.

[3] Such as the Chinese Mainland’s measures relating to supply chain investigations and countermeasures targeting certain organisations involved in supply chain tracing and audits.

ESG reporting

Comparable and decision-useful sustainability-related information is seen as a key part of enhancing capital allocation and scaling sustainable financing. Almost all of the covered jurisdictions have progressed from proposing to implementing enhancements to their sustainability reporting regimes – shifting from voluntary or narrative requirements to mandatory and/or more granular requirements.

The ISSB Standards are investor-focussed reporting standards that comprise IFRS S1 – which covers sustainability-related risks and opportunities (i.e. not just climate) – and IFRS S2 – which covers climate-related risks and opportunities. Together, these standards aim to establish a global baseline for the disclosure of sustainability-related risks and opportunities that could reasonably be expected to affect an organisation's prospects. 10 out of the 16 covered jurisdictions have mandated ISSB-aligned reporting, with a further three indicating plans to move towards this. Interoperability and comparability will improve over the region, with a common language and structure built around the four pillars of governance, strategy, risk management and metrics and targets. Jurisdictions are typically mandating a climate-first approach that is aligned with IFRS S2, with broader sustainability topics to follow.

In force, subject to phased implementation

Jurisdiction	Applicable to reporting periods commencing on or after	Scope
Australia	2025 - 2027	Climate disclosures - large entities, large asset owners and entities that meet specified GHG emissions and energy production / consumption thresholds
Hong Kong	2025 - 2026	Climate disclosures – listed entities Sustainability disclosures from 2028 - large listed entities and financial institutions with significant weight in Hong Kong (proposed)
Malaysia	2025 - 2030	Climate disclosures for first two reporting periods followed by sustainability disclosures – listed entities and large non-listed entities
Singapore	2025 - 2030	Climate disclosures – listed entities and large non-listed entities
Japan	2026 - 2028	Sustainability disclosures – listed entities
Philippines	2026 - 2028	Climate disclosures for first reporting period or first two reporting periods (depending on entity) followed by sustainability disclosures – listed issuers and large non-listed entities
Taiwan	2026 - 2028	Climate disclosures for first reporting period followed by sustainability disclosures – listed entities

In progress – roadmap issued

Jurisdiction	Applicable to reporting periods commencing on or after (proposed)	Scope (proposed)
Indonesia	2027 - 2030	Sustainability disclosures - listed issuers, financial sector entities and public companies
South Korea	2027 - 2028	Climate disclosures – listed entities
Thailand	2027 - 2030	Climate disclosures for first five reporting periods followed by sustainability disclosures – listed entities

In progress

Jurisdiction	Status	Applicable to reporting periods commencing on or after	Scope
New Zealand	Consultation	2033 (proposed)	Climate disclosures (proposed)
Cambodia	Voluntary	Mandatory timing to be confirmed	IFRS S1 and S2 have been adopted
Chinese Mainland	Voluntary	Mandatory timing to be confirmed	Standards functionally aligned with IFRS S1 and S2 have been issued

Some jurisdictions with more bespoke reporting requirements (India, Myanmar and Vietnam) have not formally announced plans to incorporate the ISSB Standards or TCFD Recommendations (the latter being the conceptual foundation for the ISSB Standards), whilst the Chinese Mainland and Cambodia have yet to officially confirm the timing for mandatory ISSB-aligned reporting. There is also some variation in the extent of alignment with the ISSB Standards – for instance, some jurisdictions apply the standards only to climate reporting and some exempt Scope 3 GHG emissions (see below).

Jurisdictions adopting the “single materiality” approach of the ISSB Standards will be distinct from those that take a “double materiality” approach (like the EU, Chinese Mainland and India), as the former assesses materiality by reference to financial materiality rather than a company’s external impact.

In line with the ISSB’s investor lens, listed entities are the primary reporting entities, but some jurisdictions have expanded beyond this to capture large non-listed entities (Malaysia, Indonesia, Philippines, Singapore) and major emitters and energy producers / consumers (Australia) as well.

GHG transparency and comparability will improve as IFRS S2-aligned reporting is phased in, requiring the disclosure of Scope 1, 2 and 3 GHG emissions and generally adopting the GHG Protocol as the default measurement methodology. However, GHG emissions disclosures will not be fully harmonised as some jurisdictions have indefinitely carved out Scope 3 disclosures (Cambodia, Chinese Mainland, India, Indonesia and Vietnam) and some permit domestic methodologies for particular emissions (Australia, Chinese Mainland, Japan and Taiwan) or have not mandated the use of the GHG Protocol (Cambodia, India and New Zealand). Myanmar currently has no GHG emissions disclosure requirements.

External independent assurance is a key element of ensuring data integrity and credibility of sustainability reporting. Mandatory assurance requirements are already in place or being phased in in Australia, India, New Zealand, Philippines and Singapore, and has been proposed in Hong Kong, Indonesia, Malaysia, Japan, South Korea and Thailand. However, the scope, level and timing of assurance is not fully harmonised across jurisdictions.

Although New Zealand has strengthened its climate reporting framework in recent years and is consulting on IFRS S2-aligned climate reporting, it has also announced changes to narrow the scope of entities subject to existing climate reporting requirements and further defer Scope 3 reporting. India has made value chain-related ESG disclosures voluntary, while Singapore has deferred ISSB-aligned reporting requirements for smaller listed entities and large non-listed entities. However, these measures represent targeted adjustments rather than wholesale retreat from mandatory sustainability reporting.

Internationally, nature-related reporting has been discussed as the next area of focus after climate. To date, none of the covered jurisdictions have announced plans to mandate this, but a few have indicated it will be under consideration. The ISSB has announced that it will consult the market on a nature-related practice statement, drawing on the TNFD framework, rather than issuing a dedicated reporting standard as originally envisaged.^[1] It remains to be seen if nature reporting will become mandatory in the same way as for climate reporting. Modern slavery reporting is another area to monitor – comprehensive requirements are already in place in Australia (and are proposed to be strengthened), and a bill to introduce a similar regime is progressing through the legislative process in New Zealand.

[1] ISSB agrees proposed way forward on nature-related disclosures.

Coherent reporting approach – The differences in approach towards materiality and the implementation of the ISSB Standards require businesses subject to reporting regimes in multiple jurisdictions to assess and address reporting gaps and overlaps and to respond and comply in a coherent manner.
Getting assurance-ready – with increasing mandatory assurance requirements and greenwashing risks as reporting obligations expand, reporting entities should strengthen their processes and controls for collecting, validating and documenting sustainability information, with the same rigour as for traditional financial reporting.
Look to the first movers - As some of the first jurisdictions globally to mandate ISSB-aligned climate reporting, Australia, Hong Kong, Malaysia and Singapore will provide useful precedents and guidance for businesses preparing for ISSB-aligned reporting. Sustainability reports of leading industry peers in these markets may provide insight on reporting practices and transition plans.
Reframing from compliance to value creation – Businesses are better able to unlock strategic value and build long-term resilience if they approach sustainability reporting as an opportunity to understand the sustainability risks and opportunities most relevant to their stakeholders and to communicate their strategy for managing and capitalising on them.

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Transition

Continued growth of carbon pricing tools

With all of the covered jurisdictions having announced net zero and/or decarbonisation commitments, many have implemented policy instruments to drive businesses to decarbonise. Carbon pricing is a key policy tool, with 13 out of the 16 covered jurisdictions having introduced or in the process of introducing some form of mandatory carbon pricing tool, primarily targeting high-emitting sectors. These tools put a price on carbon to incentivise businesses to reduce their emissions, as well as mitigate against the impact of the EU’s CBAM, which would otherwise impose a charge on certain goods to reflect the carbon emitted during their production. However, current carbon pricing levels in the region are generally considered to be insufficient to meet climate goals.
Mandatory ETS are in place or being operationalised in Australia, Chinese Mainland, India, Indonesia, Japan, New Zealand, South Korea and Vietnam. The number of jurisdictions with mandatory ETS has been increasing year-on-year, with further jurisdictions (Malaysia, the Philippines, Taiwan and Thailand) in the process of developing or implementing their mandatory ETS. Notably, the Chinese Mainland is expected to further expand its national ETS coverage by 2027 and introduce absolute caps by 2030.
Carbon taxes (of varying scope) are in place in Singapore, Taiwan, Thailand and the Malaysian State of Sarawak. Taiwan collected approximately US$154 million in carbon fees in its first implementation cycle. Looking ahead, Indonesia and Malaysia are planning a national carbon tax and Singapore will be raising its carbon tax rate progressively. Taiwan and Thailand are also considering plans to implement their own CBAM.
The coverage of carbon pricing and pricing levels are therefore expected to gradually increase in the region.
The Philippines’ Climate Accountability Bill, if implemented as drafted, would be the first of its kind in the region on corporate climate accountability. It has been under legislative consideration since late 2023.

Climate transition plans

For jurisdictions that are implementing IFRS S2-aligned disclosures, the disclosure of any transition plan and climate-related targets that a corporate may have established will be a key aspect of ISSB-aligned reporting. The transparency is expected to create knock-on pressure for corporates to put in place credible transition plans and targets in order to demonstrate to stakeholders that they have developed a robust climate strategy. Indonesia plans to go further by making it mandatory for entities subject to sustainability reporting requirements to develop a transition plan in accordance with a specified framework to be issued.

Towards a circular economy

The concept of circularity can be seen as a regenerative system in which resource input, waste and emissions are minimised. Examples of circularity regulations include: (i) green product and packaging design e.g. requiring recyclability and minimum recycled content; (ii) extended producer responsibility or EPR schemes making producers operationally and/or financially accountable for the entire lifecycle of their products. Typically, this requires producers to collect and recycle product or packaging waste or cover the operating costs of doing so, with such schemes tied to statutory collection and recycling targets. This should also have the impact of incentivising producers to (re)design their products and packaging to be circular; and (iii) green public procurement.
We are seeing circularity regulations growing in momentum across the region. Mandatory EPR schemes have been introduced in over half of the covered jurisdictions (including in Cambodia, Chinese Mainland, Hong Kong, India, Philippines, Singapore, South Korea, Taiwan and Vietnam). The coverage and enforcement of EPR schemes vary, with some currently limited to electronic waste, whilst others cover a broader range of products and packaging. Looking ahead, many of the covered jurisdictions, including Australia, Cambodia, Chinese Mainland, Hong Kong, Indonesia, Malaysia, New Zealand, Singapore and Thailand, have announced plans to introduce or further enhance regulations or enforcement in this area. In particular, more comprehensive and holistic circularity regimes are being considered in Australia, Chinese Mainland, Malaysia and Taiwan.

Regulatory signals on value chain due diligence

Together, the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct (OECD Guidelines) set out the concept of human rights and environmental due diligence (HREDD) – requiring businesses to identify, prevent and mitigate human rights and environmental impacts in their own operations and value chains. The EU’s CSDDD contains due diligence obligations that draw upon the UNGPs and OECD Guidelines.
Although some of the covered jurisdictions have reporting requirements on due diligence policies, none currently mandate businesses to conduct HREDD. However, the regulatory landscape is rapidly evolving, driven by domestic policy goals and market access pressures (e.g. arising from the EU’s CSDDD and US’s forced labour concerns):
- The Philippines, South Korea and Thailand have legislative bills under consideration which, if enacted, would impose requirements on in-scope businesses to conduct HREDD on their value chains. Australia has announced a proposed criminal “failure to prevent modern slavery” offence for larger companies subject to a reasonable steps defence, with a consultation expected. Indonesia and Taiwan have indicated they may move towards a more mandatory human rights due diligence regime in the future.
- Cambodia and Indonesia have each introduced forced labour import bans. While these measures do not impose direct due diligence obligations, they have the practical effect of encouraging more robust supply chain due diligence to avoid penalties such as goods being seized at the border.

The IMF estimates that emerging and developing Asia alone faces a climate financing gap of approximately US$800 billion. Against this backdrop, governments are deploying several interconnected policy tools to mobilise private capital at scale:

Sustainable finance taxonomies - now issued in 12 of the 16 surveyed jurisdictions – provide classification frameworks to guide capital allocation by defining green and transition activities. There is an increasing focus on transition finance to support the transition of hard-to-abate sectors which do not meet strict “green” criteria but are on credible decarbonisation pathways, with specific taxonomy coverage and sectoral roadmaps observed in multiple jurisdictions.
Blended finance - the use of public capital to de-risk and mobilise private investment - is gaining traction as a tool to bridge the gap, with Singapore's Financing Asia's Transition Partnership initiative providing an important test case, and Indonesia's Energy Transition Platform serving as a government-backed blended finance mechanism to mobilise capital for the country’s energy transition.
Carbon credits offer a market-based solution to improve the commercial viability of emissions reduction and removal projects, helping to unlock financing to enable projects that may otherwise not proceed. With APAC hosting a significant share of projects, jurisdictions (including Australia, Chinese Mainland, India, Indonesia, Malaysia, the Philippines, Thailand and Vietnam) have introduced, or are developing, their own carbon crediting mechanisms and related frameworks, with some indicating plans to facilitate the international trading of such credits through Article 6 of the Paris Agreement.
The sustainable finance ecosystem is being strengthened through mandatory sustainability disclosures (aligned with the ISSB Standards in most jurisdictions), sustainability assurance regimes, and guidance on transition planning - all aimed at mobilising private capital by improving the quality and comparability of information available to investors and mitigating greenwashing risks.

Transition pressures on businesses and value chains are increasing – The scale, timing and nature of transition pressures will vary by sector and company, but the direction of travel is clear - regulations to address corporate environmental and social impacts (such as carbon pricing, circularity and forced labour measures) will harden. Those not directly in scope of such regulations can expect to face cascading pressure where customers, suppliers and/or other stakeholders are subject to these regimes. Businesses, particularly those in higher-emitting or export-intensive sectors, should monitor developments and evaluate the impact on their business models, strategy, operations, procurement and compliance.
Use of strategic tools – with regulatory signals indicating more robust regulations beyond climate, a credible transition plan should address sustainability in a holistic manner that is integrated into core business processes and financial planning. With the coverage of carbon pricing mechanisms and pricing levels expected to increase, an internal carbon price can help businesses with financial analysis and risk management.

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Greenwashing

Greenwashing-related regulatory enforcement remains the most active in Australia and South Korea. The Australian Competition and Consumer Commission commenced further cases in 2025 concerning "renewable gas" and "reef-friendly" claims. In South Korea, over 13,000 cases of unfair environmental labelling and advertising were detected over a five-year period resulting primarily in administrative guidance, and the Korean Fair Trade Commission issued warnings and corrective orders against major brands and a steel company for unsubstantiated eco-friendly claims.

Australia saw emerging developments in “blue” washing (social responsibility) cases, with an Australian NGO commencing Federal Court action relating to modern slavery statements made by Kmart Australia. An advocacy group commenced the first Australian private greenwashing action in 2021 concerning an energy company’s climate claims and net zero target - however, the Federal Court of Australia recently dismissed all claims (subject to appeal). In Singapore, a climate activist group filed complaints with SGX against a bank for potentially misleading disclosures regarding its exposure to coal-fired power plants and its transition plan – however this has not resulted in formal public enforcement action to date. In Malaysia, an environmental watchdog filed what is described as the country's first climate litigation, seeking judicial reviews against government ministries for failing to investigate complaints of misleading "carbon neutral" claims by Shell Malaysia. The applications remain at leave stage.

The New Zealand Supreme Court’s decision in Smith v Fonterra Co-operative Group Ltd marks one of the first times in the common law world that a court has recognised an arguable possibility that tort law can be used to challenge the GHG emissions of private entities. However, the New Zealand government is taking legislative action to prevent findings of tortious liability for climate change damage caused by GHG emissions.

Regulatory frameworks are being strengthened, though dedicated greenwashing laws remain rare. South Korea has announced plans to clarify and expand its substantiation regime for environmental labelling and advertising. Japan revised its Guidelines for Environmental Representations in March 2026 - the first revision in 13 years. Taiwan announced plans to introduce anti-greenwashing guidelines for sustainability awards and labels by end-2026.

Examples of significant sustainability-related litigation and regulatory action remain limited outside of a handful of jurisdictions, but there are growing developments. We expect proceedings, actions and scrutiny to encompass traditional product greenwashing but also potentially broaden to climate and transition plan reporting and supply chain / social impact statements to reflect the growing regulations in these areas. Businesses should prepare for the heightened scrutiny that mandatory sustainability reporting will bring and anticipate broader categories of sustainability-related claims and complaints.

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