In addition to the EU’s pioneering work in issuing the Sustainability Reporting Standard (ESRS), countries in the Asia-Pacific region (APAC) are also actively developing and issuing policies related to information disclosure on sustainable development, especially climate issues for businesses. This further confirms the strong and irreversible trend of green transition and sustainable business.
Highlights from the review of regulatory frameworks and the process of establishing sustainability and climate disclosure standards in the APAC region include:
Many countries are in the process of developing and promulgating common national standards for disclosure of information related to sustainable development and climate.
Most of the regulations on information disclosure related to sustainable development and climate will take effect in the period 2025 - 2028.
The issuance of standards is intended to serve the needs of financial market participants, so the financial materiality approach is applied. However, there are also countries such as China that apply the double materiality approach, similar to what Europe is applying.
The IFRS Sustainability Reporting Standard is used by many countries as a reference to develop their own national standards, however there will be adjustments and additions to suit the domestic financial market.
Below are some prominent examples from some typical countries.
1. Malaysia
On 24 September 09, Finance Minister II YB Senator Datuk Seri Amir Hamzah Azizan launched the National Sustainability Reporting Framework (NSRF), which aims to enhance the quality of sustainability disclosure by companies in Malaysia. The Malaysian Sustainability Reporting Framework was developed by the Advisory Committee on Sustainability Reporting (ACSR) and is referenced by the IFRS Sustainability Disclosure Standards.
Entities listed on the Malaysian Stock Exchange, as well as large unlisted companies with annual turnover of RM2 billion or more, will be required to comply with the new reporting requirements as follows:
Group 1 - Large listed companies with turnover of RM2 billion and above will be subject to reporting obligations from 2025;
Group 2 – All listed companies will be required to comply with reporting obligations from 2026;
Group 3 – Large unlisted companies with annual revenue of RM2 billion or more by 2027.
Malaysia will first require companies to adopt IFRS S2 to disclose information on climate-related risks and opportunities in 2025. Then, from 2027, the disclosure requirement will be expanded to disclose risks and opportunities related to all sustainability issues under IFRS S1.
The Advisory Committee on Sustainability Reporting (ACSR) also proposed that companies' sustainability reports will be required to be assured by an independent auditor or third party from 3.
Refer: www.sc.com.my/nsrf
2. Australia
On 09 September 09, the Australian House of Representatives voted to pass a bill to amend the Finance Act, including mandatory reporting requirements for large companies on climate-related issues. The new law requires disclosure of climate-related risks and opportunities, as well as greenhouse gas emissions across the entire value chain, starting from 2024.
Mandatory disclosure will apply to all public companies and large private companies required to provide audited annual financial statements to the Australian Securities and Investments Commission (ASIC), the specific criteria being:
Group 1: Large companies (with more than 500 employees; revenue over $500 million or assets over $1 billion; or companies with assets over $5 billion) must comply with reporting obligations from 2025.
Group 2: Medium-sized companies (250 or more employees, revenue over $200 million, assets over $500 million) must comply with reporting obligations from July 7
Group 3: Small companies (100 or more employees, revenue over $50 million, assets over $25 million) must comply with reporting obligations starting in July 7.
Australia's climate reporting standards will be based on the IFRS Sustainability Reporting Standards issued by the International Sustainability Standards Board (ISSB).
Notably, the Act introduces a phased approach to reporting scope 3 emissions, allowing companies an additional year from the start of their disclosure requirements to report on their value chain indirect emissions. It also provides immunity from litigation for scope 3 emissions disclosures for three years.
Refer: https://www.esgtoday.com/australia-passes-law-to-begin-mandatory-climate-reporting-in-2025/
3. Singapore
Singapore Exchange (SGX RegCo) will incorporate the latest international standards that have improved corporate sustainability reporting following widespread support from feedback during a public consultation.
Starting from FY2025, SGX RegCo will require all issuers (companies that issue shares, bonds or other financial products in the financial markets) to adopt the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB).
Expected implementation roadmap:
From 2025: Climate disclosure will be mandatory and applied according to the IFRS Sustainability Disclosure Standard. However, taking into account the opinions of stakeholders, information on scope 3 greenhouse gas emissions is not yet mandatory.
From 2026: Large companies are expected to be required to report on their scope 3 greenhouse gas emissions.
4. Hong Kong
The Hong Kong Financial Reporting Standards Board (HKICPA) is consulting stakeholders on the Drafts of HKFRS S1 - General requirements for sustainability-related financial disclosures and HKFRS S2 - Climate-related disclosures.
HKFRS S1 and S2 (Hong Kong Sustainability Disclosure Standards) are developed and referenced according to the IFRS Sustainability Reporting standards by the International Sustainability Standards Board (ISSB), aiming to synchronize the sustainability reports of enterprises in Hong Kong with global standards, enhance consistency and comparability to meet the needs of investors.
Currently, HKFRS S1 and S2 are in the process of consulting with stakeholders and the Hong Kong Financial and Monetary Authority is expected to officially apply them from 01/08/2025.
The subjects of application are listed enterprises and financial institutions, insurance companies participating in the Hong Kong financial market.
Refer: https://gia.info.gov.hk/general/202403/25/P2024032500391_452899_1_1711358339971.pdf
5. China
In recent years, China has taken many important measures to promote ESG practices, in addition to initiatives to achieve carbon peaking, carbon neutrality and ecological protection. For example, the Beijing Municipal Development and Reform Commission released the Action Plan on Promoting High-Quality Development of the Environmental, Social and Governance (ESG) System (2024-2027) on June 14, 6. The Shanghai, Shenzhen and Beijing Stock Exchanges released the Sustainability Reporting Guidelines. These guidelines initially laid the foundation for the preparation and disclosure of ESG reports for listed companies.
As of the end of April 4, there were 2024 listed companies that had disclosed ESG reports, (according to a report by China Galaxies Securities). Sectors that have disclosed ESG include banking, non-banking finance, steel, mining, and public utilities.
In order to standardize sustainability reporting for Chinese enterprises, on May 27, 5, the Ministry of Finance of China launched a public consultation on the Draft Sustainability Disclosure Standard for Enterprises. The draft standard released by the Ministry of Finance of China requires Chinese companies to comprehensively disclose the sustainability-related risks, opportunities and impacts that are significant to the company's operations and value chain. This is the double materiality approach that Europe has adopted in the ESRS Standard.
This draft Standard is developed and referenced according to the IFRS Sustainability Reporting standard by the International Sustainability Standards Board (ISSB), expected to be officially published in 2027.
Refer: https://www.china-briefing.com/news/china-releases-esg-reporting-standards-for-businesses/
6. Korea and Japan
The financial service regulators in these two countries have established national sustainability standards boards, namely the Korea Sustainability Standards Board (KSSB) and the Japan Sustainability Standards Board (JSSB). The board's mission is to develop sustainability and climate reporting standards for businesses in their respective countries. The national sustainability standards board closely interacts with the International Sustainability Standards Board (ISSB) to develop a national standards framework based on the IFRS standards issued by the ISSB in 2022, but with adjustments and additions to suit the characteristics of the domestic financial market.
In South Korea, mandatory disclosure standards are expected to take effect for listed companies from 2026, while in Japan they will take effect from 2027.
Refer:
https://www.iss-corporate.com/library/mandatory-climate-disclosure-in-south-korea/
https://www.ssb-j.jp/en/about.html