While anti-ESG sentiment has gained momentum in the United States and sustainability disclosure requirements are being recalibrated in parts ofEurope, Asia has been gradually– but steadily – strengthening its sustainability reporting frameworks and corporate governance codes.
In Japan, sustainability-related information is already required to be disclosed in annual securities reports, and the scope and depth of such disclosure have been progressively enhanced. Building on this foundation, the country is now preparing for the mandatory adoption of domestic standards (SSBJ Standards) that are designed to be consistent with IFRS S1 and S2. The Financial Services Agency has laid out a phased roadmap for listed companies to adopt the SSBJ Standards, marking a significant shift toward globally consistent sustainability reporting.
In South Korea, the Korea Sustainability Standards Board has been developing ISSB-aligned standards. Following the publication of exposure drafts, discussions regarding the timing and phased implementation of mandatory reporting are ongoing, where the Financial Services Commission aims to finalize the ESG disclosure roadmap by April 2026. Policymakers have emphasized alignment with global capital markets, while also considering domestic market readiness.
Taiwan has also announced a concrete roadmap. The Financial Supervisory Commission has declared that IFRS Sustainability Disclosure Standards (equivalent to IFRS S1 and S2) will be adopted on a phased basis starting from FY2026.
In Hong Kong, the Hong Kong Exchanges and Clearing has introduced the “New Climate Requirements” into its Listing Rules, which are based on IFRS S2, with a phased application beginning on January 1, 2025. The roadmap by the Hong Kong government’s Financial Services and the Treasury Bureau requires large-cap companies to be subject to substantive mandatory requirements from 2026, preceded by a "Comply-or-Explain" approach in 2025. Hong Kong’s strategy positions it as a regional gateway implementing ISSB-aligned climate disclosure.
China has taken notable steps at both national and exchange levels. In December 2024, relevant authorities jointly issued the basic standards (trial version) of a unified national sustainability disclosure framework. In parallel, stock exchanges released sustainability/ESG reporting guidelines for listed companies, with phased implementation beginning with 2025 reporting (to be submitted in 2026). In December 2025, China further published climate disclosure standards structured around the four pillars of governance, strategy, risk and opportunity management, and metrics and targets—explicitly seeking alignment with IFRS S2 in both architecture and substance.
Sustainability disclosure reform is not confined to East Asia; Southeast Asia is also experiencing meaningful progress.
In Singapore, the Accounting and Corporate Regulatory Authority and the Singapore Exchange Regulation have jointly published a roadmap for climate disclosures and assurance. Mandatory climate-related disclosures will be phased in from FY2025, with Straits Times Index constituents prioritized. Assurance requirements will also be introduced from FY2029, reinforcing credibility and investor confidence.
In Malaysia, Bursa Malaysia amended its Listing Requirements in December 2024 to incorporate sustainability reporting based on IFRS Sustainability Disclosure Standards as the baseline. The framework applies to reporting periods beginning in 2025 and beyond. At the national level, Malaysia has also launched the National Sustainability Reporting Framework, which positions ISSB standards as the core reference point. This dual-track exchange and national alignment marks a decisive shift toward global baseline convergence.
Thailand’s Securities and Exchange Commission has articulated a roadmap to strengthen sustainability disclosures in line with IFRS S1 and S2. The plan includes enhanced requirements for listed companies and reflects Thailand’s broader ambition to integrate sustainability considerations into corporate reporting.
Indonesia and Philippines are also moving toward harmonization with international standards, including ISSB.
Sustainability disclosure is only one part of Asia’s evolving corporate landscape. Several jurisdictions are also advancing investor‑friendly corporate governance reforms.
In Japan, the Corporate Governance Code, first introduced in 2015 and revised periodically, has been a key driver of reform. Discussions for the 2026 revision are expected to clarify directors’ responsibilities to continuously assess whether capital allocation is appropriate – for example, whether cash holdings are effectively deployed into growth investments – and to strengthen accountability in explaining resource allocation decisions. This builds upon ongoing reforms by the Financial Services Agency and the Tokyo Stock Exchange to enhance capital efficiency and shareholder engagement.
In South Korea, the National Assembly passed amendments to the Commercial Act in 2025. These amendments expand directors’ fiduciary duties explicitly toward shareholders and strengthen governance by uniformly applying a 3% voting cap in the appointment and dismissal of statutory auditors to both inside and outside directors. The reforms are widely positioned as efforts to address the so-called “Korea discount” by enhancing minority shareholder protection and board accountability.
Taiwan's reform efforts have been driven by a series of Corporate Governance Roadmaps, including "Corporate Governance 3.0 - Sustainable Development Roadmap (2021-2023)," which have promoted gradual reform since 2013. Further enhancing governance, the Company Act mandates the appointment of a Chief Corporate Governance Officer for all Taiwanese listed companies, a requirement that took effect after June 30, 2023.
In Thailand, the Corporate Governance Code for Listed Companies 2017 reinforced board responsibilities, risk management, and shareholder rights protection. From 2025, Thailand has also launched a Corporate Value Up Initiative, further improving sustainability reporting and promoting long-term value creation and market confidence.
Major domestic asset owners exerted significant influence in step with such reforms promoted by regulators in some countries.
In Japan, the Government Pension Investment Fund (GPIF), the world's largest pension fund, signed the PRI in 2015 – the year following the introduction of the Japanese Stewardship Code and the year the Japanese Corporate Governance Code was introduced. Since then, GPIF has required its asset managers to incorporate sustainable investment and active ownership. Last year, GPIF updated its sustainability investment policy, clarifying its stance on sustainable investment.
In South Korea, the National Pension Service (NPS), the world's third-largest pension fund, adopted the Korean Stewardship Code in 2018 and introduced guidelines for exercising active shareholder rights the following year. Unlike Japan's GPIF, NPS conducts its own equity investments, giving it more direct influence through voting rights. These developments have amplified the impact of active ownership in both markets. Indeed, Diligent Market Intelligence data indicates Japanese companies rank second only to US firms in the number targeted by activist campaigns, with Korean firms joining UK companies in the next tier.
In many other Asian countries, the domestic institutional investors’ capital base is not particularly strong, which is one of their concerns. The push for more proactive sustainability disclosure is thought to be largely intended to attract foreign investment.
Nevertheless, such gradual yet steady progress may be enhancing future predictability and leading to investment inflows. Looking at the MSCI indices (USD-based) over the past three years, Europe (18.92%) and the US (20.13%) underperformed the ACWI index (21.28%), whereas South Korea (41.28%), Taiwan (40.79%), Singapore (23.72%), and Japan (22.98%) have outperformed.
Across Asia, skepticism toward sustainability is not gaining traction. Instead, countries are moving forward—gradually but decisively—adapting global standards to local contexts and strengthening governance frameworks to support long‑term value creation. Asia’s trajectory is clear: a steady, forward‑looking commitment to transparency, accountability, and sustainable growth. Such developments in Asia are likely to continue influencing global capital flows.
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The article was first published in the Woodsford ENGAGE Quarterly, March 2026 Edition
Kazuhiko Tahara is global finance and investment expert in corporate governance, sustainability and ESG investing based in Japan. Kazuhiko is also a Senior Partner of Zenvest Partners. He advises on shareholder campaigns, Sustainability, and Corporate Governance, with experience in Asia-Pacific, particular focus in Japan.
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