Key themes and observations across APAC

ESG reporting requirements

• ESG reporting requirements being strengthened across much of APAC – Over the last year, the majority of covered jurisdictions have enhanced or are in the process of enhancing their ESG reporting requirements, whether through incorporation of the ISSB Standards or otherwise.

• Significant take-up of the ISSB Standards with varying extent of alignment

o APAC is taking steps to align with the ISSB Standards, with 11 of the 16 covered jurisdictions having announced that they will incorporate, or consider the incorporation of, the ISSB Standards into local climate reporting or sustainability reporting rules. The rules will primarily target listed companies and (in some cases) financial institutions, with certain jurisdictions (Australia, Singapore and potentially Mainland China, Malaysia and Philippines) stating they will apply or consider applying the rules to large non-listed companies as well.

o Interoperability of ESG reporting rules and comparability of ESG information are therefore expected to improve over the region, with a common language and structure built around the four pillars of governance, strategy, risk management and metrics and targets.

o Some degree of fragmentation will however remain within the region as (a) some jurisdictions with more bespoke reporting requirements (e.g. Cambodia, 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 (e.g. Australia, Hong Kong and Singapore) or financial institutions (e.g. India) and some may not mandate some of the more challenging disclosures such as Scope 3 emissions. Jurisdictions adopting the “single materiality” approach of the ISSB Standards will also be distinct from those that take a “double materiality” approach (like the EU and potentially Mainland China), as the ISSB Standards assess materiality by reference to financial materiality rather than a company’s external impact. These differences and fragmentation can create challenges for companies operating in multiple jurisdictions.

o Further alignment with the ISSB Standards will likely take place after jurisdictions and businesses become more familiar with the new requirements.

o In relation to the 11 jurisdictions that have announced steps to align with the ISSB Standards, the following is a high-level summary of where they are in the process and the expected scope of application and timing (where known). For many of the jurisdictions, the precise degree of alignment with the ISSB Standards is not yet confirmed as the rules are still under development and the relevant jurisdictional chapters of this publication will highlight the expected degree of alignment.

• Emissions reporting requirements apply in most jurisdictions – 12 jurisdictions currently have GHG emissions reporting requirements in place (though the precise scope of the requirements vary). GHG reporting requirements are expected to be enhanced across much of APAC with the incorporation of the ISSB Standards.
• Gradual movement towards external assurance – Currently, only New Zealand and Taiwan mandate reporting entities to obtain external assurance requirements for their GHG emissions disclosures. Australia, India and Singapore will be introducing such requirement (with India on a comply-or-explain basis for larger listed companies). More jurisdictions are expected to move towards external assurance requirements. For example, Japan is considering such a move, and Hong Kong has announced that it is developing local assurance standards with reference to international developments.

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Greenwashing

• With the exceptions of Australia, and to a lesser degree, New Zealand, Singapore and South Korea, there are no known examples of material legal claims or regulatory enforcement against greenwashing across the covered jurisdictions.
• Australia has been the most active in this regard – its securities regulator has brought three greenwashing civil penalty actions and has so far been successful in two, bringing it towards the top of the list of regulators globally taking enforcement actions against greenwashing. Actions have been brought on the grounds of false or misleading representations and conduct liable to mislead the public in relation to the purported application of criteria that would exclude certain securities from investment products badged as having ESG credentials.
• In New Zealand, several NGOs have recently instigated proceedings against a large energy company for overstating its emissions reduction. New Zealand’s consumer regulator and financial markets regulator have taken some enforcement actions, primarily in relation to unsubstantiated environmental claims for certain products.
• In Singapore, the Advertising Standards Authority made the nation’s first ruling against a company for misleading environmental claims about a product, and a complaint was made to the Singapore Stock Exchange last year by an Australian climate activist group against a power generator on misleading disclosures related to a bond issue on the Singapore Stock Exchange.
• South Korea has seen a complaint lodged by an NGO against major companies for false and misleading advertisements related to statements on their GHG reductions, and an administrative guidance issued by the environmental regulator regarding a claim of carbon neutrality based on carbon credits.
• Some minor actions have also been taken in Mainland China and the Philippines in relation to environmental claims related to consumer products.
• All jurisdictions have grounds on which greenwashing proceedings or action can potentially be launched, with many answers noting that greater scrutiny against greenwashing conduct can be expected as disclosure requirements are enhanced.

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