Sustainability reporting pioneers

‘This is not a region waiting to be shown good practice,’ says ACCA chief executive Helen Brand. ‘It’s building the architecture of sustainability reporting faster than anywhere else.’

Common baseline

The clearest evidence for the region’s pioneering approach is its adoption of the International Sustainability Standards Board’s IFRS Sustainability Disclosure Standards. Reporting has already begun in Australia, Malaysia, Pakistan, the Philippines, Singapore and Sri Lanka, with Indonesia, Japan, South Korea and Thailand to follow.

These first-wave and approved adopters of the ISSB standards account for more than 80% of the ASEAN bloc’s GDP. Add in China (where application is still voluntary, as part of a phased adoption), and these ISSB-aligned economies generate close to US$60 trillion in goods and services.

The report notes this convergence is striking given developments elsewhere. The US has withdrawn from the Paris Agreement and proposed rescinding climate disclosure rules, while the European Union has scaled back its corporate sustainability reporting directive.

Adopting a standard, however, is not the same as acting on it. The report finds first-wave reporters range from those with a compliance-focused ‘minimum viable’ mindset to those using sustainability information to drive strategy, capital allocation and risk management.

Encouragingly, early adopters that began with compliance in mind have tended to evolve towards the leveraging of sustainability information for business value. Size is not the determinant, as smaller or mid-sized export-oriented companies often embed sustainability earlier. As one roundtable participant put it: ‘In certain industries, you can’t even quote for a particular sale without having a decarbonisation plan or product-level carbon footprint.’

Where is the CFO?

A consistent theme from interviews is that CFOs and finance functions remain relatively passive. ‘These CFOs are not seeing sustainability as a strategic business driver,’ said another roundtable participant. ‘They see it as another thing to do.’

Suggesting that CFOs may fear what sustainability analysis will reveal about business viability, one interviewee concluded: ‘Climate reporting therefore needs to be reframed as a question of business resilience, future cashflows and balance sheet viability – not as environmental advocacy or a standalone disclosure exercise.’

The report argues that boards should set clear ownership of sustainability reporting through a RACI (responsible, accountable, consulted, informed) matrix. Otherwise, weak internal controls over sustainability data – unclear ownership, poor traceability and disconnected spreadsheets – create assurance risks.

Decarbonisation as resilience

Two ongoing major conflicts – the Russia-Ukraine and US-Iran wars – have shown how exposed the region is to fossil-fuel shocks. In 2024, 84% of oil and 83% of liquefied natural gas shipped through the Strait of Hormuz was bound for Asia, and its 2026 closure has forced several Asian governments to impose four-day weeks and work-from-home orders and to release strategic reserves.

The report describes a ‘transition paradox’, with subsidies and cash handouts that cushion citizens from price shocks eating into development expenditure on clean energy, grids, education and healthcare. Countries that have not already decarbonised find themselves unable to fund the transition precisely when they most need it.

Finance remains the stumbling block. Asia Pacific’s emerging economies need at least US$1.1 trillion annually for climate mitigation and adaptation, yet actual investment falls short by around US$800bn.

‘There is no shortage of projects,’ one interviewee pointed out. ‘There is, however, a definite shortage of projects that are in a fit enough state to be commercially viable for funding.’ Improving bankability, the report suggests, is an opportunity for finance professionals.

Water and heat

The report singles out water and heat as potentially ‘the defining issues of the 21st century’. Without action, the water crisis could shave 8% off GDP in high-income countries by 2050, and 10–15% in lower-income countries. Asia, warming at twice the global average, has more to lose than most. But China proves growth need not mean more water: use fell 3.2% between 2012 and 2024 while GDP more than doubled.

ACCA urges companies to put water on the corporate risk register and move on from simply managing water risk to stewarding the resource itself. Governments, meanwhile, should put cryosphere risks – including melting glaciers and polar ice – onto the agenda in their dialogue with other states.

Shared responsibility

On business and human rights, the EU’s corporate sustainability due diligence directive will put market-access pressure on Asia Pacific suppliers. The report warns against ‘risk-shifting’, where buyers demand ‘gold human-rights standards’ but are unwilling to pay even ‘a bronze price’, and recommends cost-sharing clauses and collective negotiation through industry bodies.

Finally, the report casts AI as a multiplier that amplifies the incentives already in place. It can optimise resources and streamline carbon accounting, but it also consumes vast amounts of energy and water, and efficiency gains tend to be offset by greater use. With governance rules differing sharply across the region, ACCA calls for interoperable frameworks and a structured push to upskill the profession.

‘The accountancy profession can be a major force in building a more sustainable and resilient future for Asia Pacific, and what happens here will shape what happens everywhere else,’ Brand concludes.