An overview of ESG disclosure regimes in seven Asia-Pacific markets: Australia, China, Hong Kong SAR, India, Japan, Singapore, and Thailand. We show recent trends in ESG disclosures and provide recommendations for regulators, issuers and investors.
Our Position
Meaningful, accurate, timely and comprehensive disclosures of material ESG factors by listed companies are essential for financial professionals as part of their analytical and investment decision-making process. Regulators and exchanges should aim to develop ESG disclosure regimes that result in high quality, consistent and comparable disclosures in their markets.
Main Points
OBSERVATIONS:
- Volume of ESG disclosures in APAC increases, but quality lags
- Solid ESG disclosure practices usually take time to develop, but fast progress is possible
- Disclosure regimes differ widely, in level of obligation, specificity and coverage
- Reporting obligations follow “race to the top” pattern of tightening, from voluntary, to “comply-or-explain”, to mandatory.
- Reporting obligations of large companies tend to be stricter and broader than those of smaller ones
- Governance issues used to dominate, now environmental issues are coming to the forefront
- Global frameworks are used by some regulators, but the number of different ones adds confusion
RECOMMENDATIONS:
For governments, regulators, and stock exchanges
- Ensure meaningful, accurate, timely, and comprehensive disclosures
- Work toward harmonisation of global frameworks
- Articulate benefits of ESG disclosures to issuers
- Offer guidance and training
For issuers
- Educate the board and senior executives on relationship of ESG to strategy and risk management and on the importance of ESG reporting
- Ensure disclosures of relevant and material ESG information
For asset owners and investment managers
- Demand high quality ESG information from issuers
- Articulate the effect of material ESG information on company valuation