Why more sustainability disclosures doesn’t mean greater insight into businesses

SUSTAINABILITY reporting in Asia has cleared its first major hurdle.

Companies are disclosing more information, regulators are raising expectations, and frameworks – such as those from the International Sustainability Standards Board (ISSB) – are bringing greater structure and consistency to the market.

But is this changing business decisions?

Over the past year, I worked with listed companies and investors in Singapore, Hong Kong and Malaysia, as ISSB-aligned reporting took hold.

I also recently led a joint project with the National University of Singapore (NUS), which examined how market participants across the Asia-Pacific use ESG information.

A consistent issue emerged: The problem is no longer a shortage of sustainability data – it is now connecting that data to the economics of the business.

Investors still struggle to obtain basic answers: How does a material sustainability issue affect revenue or operating costs? Will it require capital expenditure? Does it change asset values, requirements or resilience?

These are not sustainability questions in isolation. They are business ones.

The volume paradox

A 2026 research paper, published by the University of Chicago Coase-Sandor Institute for Law and Economics Research Paper Series, analysed more than 15,000 sustainability disclosure documents between 1998 and 2023, from more than 2,100 companies.

It found that as reporting expanded, disclosures became less specific, less quantitatively dense and more promotional, even as the reports appeared more sophisticated.

This does not mean that sustainability frameworks are ineffective. It points to something more fundamental: reporting quantity and information quality are not the same thing.

Once reporting becomes institutionalised, completing the disclosure can itself become the objective. The report becomes evidence that the organisation has responded, but not necessarily that management has changed how the business is run.

The same issue surfaced in our regional research.

The InCorp Singapore-NUS project combined regulatory analysis with interviews of 12 practitioners in five Asia-Pacific markets. While the qualitative sample is not representative, it shows what experienced users find missing.

None of the respondents regarded current ESG disclosures as consistently linked to revenue, costs or valuation.

As one practitioner put it: “Impact on revenue and cost is the missing linkage.”

Other concerns included transition-plan credibility, comparability between companies, and the tendency for ESG reporting in parts of Asia to be shaped more by regulation than investor decision-making. 

Disclosure versus information

It is useful to distinguish between two weaknesses in ESG reports. 

The first is a disclosure-quality gap. Can the reader determine what happened, how much changed, compared with what baseline, over what period and with what confidence?

The second is a financial-linkage gap. Can a material sustainability issue be connected to revenue, operating costs, assets, financing, capital expenditure and, ultimately, value?

A company can close the first while leaving the second almost untouched.

A detailed emissions inventory may be a good disclosure. But without links to procurement, transition expenditure, pricing, financing or capital allocation, its usefulness as a management tool remains limited. 

Consider a transition plan. A 2030 net-zero target provides little useful information on its own. What matters is the pathway behind it: operational changes, investment, milestones, assumptions and consequences if implementation falls behind. 

One practitioner framed the issue simply: Does the transition plan have proper target and capex alignment? That is the test. Not whether a target exists, but whether the capital plan supports it.

The same principle applies to climate risk. Identifying flooding, extreme heat or water stress may meet part of a disclosure requirement. A more useful analysis asks: Which assets, suppliers or routes are exposed? What could that mean for revenue, costs or adaptation investment? 

The value emerges when climate analysis connects hazard to exposure, exposure to financial consequence, and financial consequence to management action.

Scope 3 emissions provide another example. One approach calculates emissions and reports the number. Another uses the exercise to understand supply chain dependencies, future carbon costs, supplier capability, and whether regulation or customer preferences could reshape revenue.

One produces a disclosure; the other produces procurement, resilience and commercial intelligence.

Regulation should remain the floor

A regulatory baseline establishes minimum expectations, improves comparability and brings information into the market.

The danger is treating the regulatory floor as the management ceiling. 

Completing an ISSB disclosure, calculating Scope 3 emissions or conducting a climate-risk assessment meets requirements.

But for boards, management and investors, the question is no longer whether these requirements have been satisfied, but whether the information reveals something material about the business.

Does it change strategy or capital allocation? Can sustainability issues be linked to revenue, costs, assets or financing? Do targets align with investment plans? And does the information help management make better decisions, and investors assess future performance more effectively?

That is the difference between sustainability disclosure as compliance, and sustainability information as business intelligence.

The next phase of ESG reporting

The first era of sustainability reporting was largely about persuading companies to disclose data. The second is about making disclosure credible, financially connected and useful enough to change decisions. 

Asia is moving rapidly from one phase to the other. 

Greater reporting volume and wider framework adoption will not make that transition automatically. Our Asia-Pacific research suggests that the missing connection is the link between sustainability information and financial performance.

The question for leadership is no longer simply: Are we reporting?

It is: What can we decide differently because of what we now know?

The writer is head of sustainability and climate solutions at InCorp Singapore