An interesting vote took place in the European Parliament last month. A proposed agreement from the Committee on Legal Affairs, aimed at advancing the ‘Simplification Omnibus’ bill to reduce administrative burdens and simplify corporate reporting obligations, was unexpectedly rejected Oct. 22.
This bill, first proposed in February, is a comprehensive legislative package intended to ease environmental, social and corporate governance (ESG) reporting and due diligence requirements. Most notably, this includes the Corporate Sustainability Due Diligence Directive (CSDDD), which mandates companies to identify and remedy human rights and environmental risks within their global supply chains.
In another vote during a plenary session on Nov. 13, the Parliament endorsed reduced reporting duties for companies, making reporting simpler and only required for large businesses. The situation in Europe, a global standard-setter, raises a pressing question: Where does this leave ESG in Asia, a central hub of the global supply chain?
Coincidentally, the Cambridge Forum on International ESG in Asia-Pacific was held in Singapore from Oct. 13-14. This exclusive event brought together approximately 30 ESG experts — primarily lawyers — from leading global companies and top-tier national law firms.
Participants from across Asia including China, Australia, Japan, Taiwan, India, Singapore and Malaysia, as well as the U.S. and U.K., shared candid insights on government policies and corporate strategies, engaging in open discussions based on concrete case studies.
As a participant in this forum, the first of its kind in Asia, I observed three clear and concurrent directions for ESG in the region: mandating, pragmatism and value creation.
Three directions of Asian ESG
First, Asia’s ESG policies are shifting gradually from voluntary to mandatory. Nations like Malaysia, Singapore, Hong Kong and Japan are transitioning to phased, mandatory ESG disclosure frameworks aligned with international standards.
The initial push is for mandatory climate-related disclosures from listed and large corporations. Singapore and Malaysia plan to phase in mandatory reporting in 2028, with Japan targeting 2027. This trend presents a potential concern: Asia appears to be strengthening mandates just as the U.S. pursues anti-ESG policies and the EU signals potential deregulation. However, this concern is mitigated by the second key direction: pragmatism.
Asian regulators are applying significant pragmatism in implementation. They are adjusting the timing and intensity of new rules to account for real-world constraints while strengthening support systems.
For instance, Singapore originally planned to mandate emissions reporting for listed companies this year. However, it announced an adjusted road map in August, delaying the timeline to account for persistent economic uncertainty and significant gaps in corporate readiness, especially among smaller enterprises.
This pragmatism in Asia is influenced by the moderated pace of regulation in the West. It is crucial to note that Asian experts view the EU’s simplification efforts not as a retreat from ESG goals, but as a practical adjustment in parallel with strengthening industrial competitiveness. The EU’s adjustment to its Carbon Border Adjustment Mechanism is a prime example: While it exempts many small importers, the mechanism remains in place for the large companies responsible for 99 percent of total emissions — a truly pragmatic approach.
ESG is increasingly being leveraged to create tangible corporate value — or at a minimum, to defend existing value. As the initial “ESG bubble” has burst and greenwashing is being punished, companies have become far more sensitive to the associated costs. This in turn has heightened the demand for ESG initiatives that deliver a real, measurable return on investment, and success stories are emerging.
For example, amid the energy transition, an Indian electric vehicle (EV) company invested in developing a premium EV series at an opportune moment. As of September, it has captured 40 percent of India’s passenger EV market.
Beyond direct revenue, this strategy has yielded multi-layered financial benefits, including an enhanced reputation, successful capital raising, improved access to insurance (as insurers may refuse coverage for poor ESG/risk management) and eligibility for government subsidies and tax incentives.
Supply chain as a key driver
A primary driver for all three directions is demand from within the global supply chain. The pressure from developed countries’ ESG requirements is palpable across Asia, prompting active, localized responses. To counter regulations like the EU’s CSDDD, both Taiwan and China are preparing their own domestic laws on supply chain transparency and human rights due diligence. In Japan, the need to respond has become concrete, with a rising number of inquiries from major industry associations representing large corporations on how to comply with these complex foreign supply chain regulations.
This proactive stance from countries like Taiwan and China is not only about compliance; it is a strategic move to maintain their critical position in the global economy, ensuring their exporters are not locked out of key markets like the EU.
In the face of a worsening global economic outlook, some might argue that ESG is a passing fad and that now is not the time for such “leisurely” discussions.
However, the clear trend I observed from leaders across the region is that Asia is moving forward. It is working to mandate ESG, implement it with pragmatism and link it strategically to corporate value. If this direction holds, ESG may prove to be not a burden, but a vital tool for Asia to navigate and overcome the current global crisis.
