From being seen as just good practice to now being essential to maintaining a competitive edge, corporates in Asia are increasingly being urged to proactively disclose their environmental, social and governance (ESG) activities for the benefit of key stakeholders. These range from how companies are looking to be energy efficient to showcasing how they are positively impacting the communities in which they operate.

Conversely, investors are becoming increasingly aware of sustainable practices and may even exclude corporates that are not seen to be making an effort to direct their respective businesses towards a sustainability pathway. This is especially true for companies in brown sectors that are looking to raise financing from the capital markets, but are unable to tap pools of liquidity as they don’t fit the ESG criteria of their potential financiers.   

The regulatory landscape is also shifting as well, with the emergence of global standards on ESG disclosure influencing local standards in several Asia-Pacific locations. A major influence has been the International Sustainability Standards Board (ISSB) standards released in June 2023 – and among them, the ISSB’s International Financial Reporting Standards (IFRS) S1, which sets out the general requirements on sustainability-related financial risks and opportunities, and IFRS S2, which details disclosures that are specific to climate-related matters. Both provide a global baseline for sustainability disclosures.

The Stock Exchange of Hong Kong, for example, has integrated IFRS S2 into its climate-related disclosure requirements for listed companies. In Australia, the Australian Accounting Standards Board this summer issued proposed standards – in alignment with the ISSB-IFRS standards – for climate-related reporting that apply to medium and large enterprises. Singapore’s Exchange Regulation has incorporated the IFRS into its sustainability reporting regime. Moreover, listed companies are required to provide Task Force on Climate-Related Financial Disclosures recommendations, with full compliance expected by next year.

Outside of Asia, regulations – such as the European Union’s Carbon Border Adjustment Mechanism that focuses on strict environmental standards for cement and iron companies – are reshaping the way some Asian businesses are approaching their supply chains and production processes to the bloc.

Like elsewhere in the world, Asian countries are making significant strides in promoting sustainable business practices. A regional initiative like the Asean Taxonomy for Sustainable Finance, implemented earlier this year, is just one case of interoperability with global standards to tackle thorny issues such as the phase-out of coal power in the region.

As part of Asset Benchmark Research (ABR)’s coverage on ESG practices, we are pleased to showcase below our findings and reveal the full list of winning companies as part of the ESG Corporate Awards 2024.

After engaging with corporates across the region we were pleased, for instance, to see a marked increase in the number of companies setting ambitious targets with their energy consumption. Of the companies engaged by ABR, there was an 11% increase of them with a clear energy consumption target for 2024. Moreover, eight out of 10 companies had a net-zero carbon emission target in place compared with only five in 10 companies a couple of years ago.

However, for several corporates that spoke with ABR, there is still room for improvement, such as setting up an independent third-party provider to assess and score the ESG practices of suppliers – only 24% have actively done this. Moreover, there was just a slight increase of 1% in companies that appoint a third-party to evaluate a board’s independence and effectiveness – a majority of companies surveyed don’t do this at the moment. There is also potential for conflicts of interest as the majority of participating companies had their CEO also serving as chairperson of the board.

Despite the setbacks, the intention is there for companies to do better and disclose how they are embedding the mantra of ESG not only within their organization but with their key stakeholders as well.  

These are just some of the key observations ABR gleaned from its engagement process with corporates. Stay tuned for more insights in the coming months.

For the full list of winning companies, please go here.

To learn more about these awards, please go here.

For more information about the awards ceremony, please contact us at celebrate@theasset.com.