What’s next for Asia in ESG corporate disclosures

THE series of measures taken by financial regulators to address environmental, social and governance (ESG) claims made by asset managers has become a much-discussed topic. For all asset managers looking to integrate ESG into their investment process, data from companies is the starting point. Therefore, to tackle potential ‘greenwashing’, investors are paying greater attention to where it all begins - in companies’ non-financial and ESG disclosures.

Europe is often viewed as the leader when it comes to ESG, and the region excels in terms of ESG disclosure rate, with 98 per cent of MSCI Europe constituents publishing sustainability reports. However, over the last year, the ESG disclosure rate of corporates in the Asia Pacific has been catching up – 83 per cent of MSCI Asia Pacific constituents have now published ESG reports. This disclosure rate is now on par with that of the US.

Moreover, 56 per cent of MSCI Asia Pacific constituents have stepped up their ESG reporting by adopting international guidelines. Corporates across markets including China, Hong Kong, India, Korea, Singapore, Taiwan, Australia, and Japan have boosted their environmental disclosures in some ways, such as disclosing their carbon emissions and carbon reduction targets, to bring them more into line with the net-zero commitments of these regions.