Published 27.01.20
Sustainability Reporting: Asia Pacific
Varying regulations per country can be irritating and hard to oversee. In our series, we go through the world’s continents and parts with the most significant industries and give an overview of what sustainability reporting is mandatory or becoming mandatory in the next years.
Companies underlie various regulations about what they must report depending on where they are located and selling their products. Changing rules for each country can be irritating and hard to oversee. In our series, we’ll give an overview of what sustainability reporting is already and what will be becoming mandatory. Today we’re covering the region, Asia Pacific:
As in other parts of the world, environmental, social, and governance reporting (ESG) has become increasingly critical for companies. While part of the reason lies in the risks of climate change, health and safety measures, and reputation, many companies have now understood that sustainability is a way to gain an advantage over their competitors.
Also, investors and governments now include ESG in their decision-making and regulations. More and more mandatory sustainability reporting measures are emerging worldwide – the Asia Pacific is no exception.
Non-financial ESG reporting
In most countries located in the Asia Pacific, non-financial ESG reporting has evolved a lot in the past years. Non-financial means businesses disclose certain information unrelated to their finances, including information on human rights, the environment, etc.
Today, all Asian stock exchanges have implemented some ESG reporting as a listing requirement. The definite requirements for reporting vary between countries, which affects the reports’ effectiveness. Before we look at the different reporting requirements in the Asia Pacific, we will briefly introduce the two most used reporting frameworks in the region.
Global Reporting Initiative (GRI) Standards
Both the standards of the Global Reporting Initiative (GRI) and the Task Force on Climate-Related Financial Disclosures (TCFD) are voluntary reporting frameworks. They were put into place to help companies report on their non-financial disclosures.
The GRI standards enable organizations, no matter their size, to understand and report on their impacts on the economy, environment, and people comparably and credibly.
In countries with high overall disclosure rates, a large share of companies is using the GRI framework. In Japan and Taiwan, around 60 percent of the largest 250 publicly listed companies are referencing the GRI framework; in China, it’s nearly a third of companies.
Task Force on Climate-Related Financial Disclosures (TCFD)
The Financial Stability Board created the TCFD in 2015 to develop international climate-related financial risk disclosures. Companies, banks, and investors are supposed to use them to provide critical information to stakeholders.
Today, TCFD reporting frameworks are highly valued in climate reporting. Especially as many governments are planning to make sustainability reporting on TCFD-basis mandatory, companies like to choose the framework to be prepared.
ESG reporting by country
Hong Kong
Hong Kong Exchanges and Clearing Limited (HKEX)
- What? Guidance on climate disclosures
- Who? All HKEX-listed companies
- Reporting method? TCFD framework
- By? Annual reporting by 2025
Hong Kong Monetary Authority (HKMA)
- What? Supervisory policy manual for climate risk management
- Who? Financial institutions
- Reporting method? TCFD framework
- By? First reporting by 2025
Singapore
Singapore Exchange (SGX)
- What? Climate disclosure rules
- Who? All SGX-listed companies
- Reporting method? TCFD framework
- By? Annual sustainability report by 2023, some companies by 2024
Japan
Corporate Governance Code
- What? Sustainability reports
- Who? Prime Market-listed companies
- Reporting method? TCFD framework
- By? April 2022
Australia
Australia does not currently have any mandatory sustainability reporting rules in place. The corporate governance codes recommend publicly listed companies disclose environmental and social risks.
India
Securities and Exchange Board of India
- What? Business Responsibility and Sustainability Reports
- Who? Top 1000 listed companies
- Reporting method? Based on GRI, SASB, and TCFD
- By? 2021
China
China Securities Regulatory Commission
- What? Guidelines for environmental and social topics in their annual reports
- Who? Publicly listed companies
- Reporting method? GRI framework
- By? To become compulsory by the end of 2022
How has sustainability reporting in the Asia Pacific evolved during the last years? Sustainability reporting rates across Asia-Pacific have improved notably over the last years. It must be said that many of these improvements start from a very low base. However, big enterprises from the Asia Pacific are partly reporting more than North America and Europe.
Why you better start early
The primary difficulty with ESG reporting is gathering and analyzing the necessary data. Companies struggle to get the information they require, particularly when disclosures are expanded to the Scope 3 category of emissions (read more on Scope 3 reporting here). To have an accurate view of their impact and risks, organizations must collaborate with an extensive network of stakeholders inside and outside the organization. Digital tools, however, provide solutions to this issue by enabling organizations to centralize data management efforts and utilize cutting-edge technology to process, analyze, and report this data.
