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.

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