Regulatory Pressure in Driving ESG Disclosure

Question 1

UK and EU

Answer 1

1. Stringent Requirements : The EU CSRD and SFDR impose strict ESG disclosure mandates on companies and financial institutions, with penalities for non-compliance
2. Taxonomy Pressure : Companies must align activities with the EU Taxonomy to prove sustainability
3. Climate Transparency : TCFD-aligned climate reporting is mandatory for large UK businesses

Question 2

US

Answer 2

1. Evolving Regulations : The SEC’s proposed climate disclosure rule would require reporting of climate risks and GHG emissions, creating legal and compliance challenges
2. Litigation Risk : Growing pressure from stakeholders, including lawsuits over greenwashing or insufficient ESG disclosures

Question 3

APAC (China, ASEAN)

Answer 3

China : Focus on environmental mandates (e.g. emissions disclosure) for polluting industries and increased green finance transparency. Regulatory enforcement supports national carbon neutrality goals by 2060
ASEAN : Stock exchange requirements drive sustainability reporting. Countries like Malaysia and Thailand encourage alignment with global frameworks but face challenges with consistency and enforcement

Question 4

Key Trends in Regulatory Pressure

Answer 4

1. Global Convergence : Increasing alignment with frameworks like GRI, TCFD and ISSB (International Sustainability Standards Board)
2. Accountability Growth : Rising expectations for standardized and transparent ESG data, with penalties for non-compliance
3. Sector-Specific Scrutiny : Heave industries face stricter environmental disclosure rules, especially in Asia