SustainabilityCountsUnderstandingsustainabilityreportingrequirementsacrossAsiaPacificandinsightsonthejourneytodatewww.pwc.com/asiapacificMay2022PwCSustainabilityCountsContents01Introduction02Achangingworld:Theneedfornewsustainabilityreportingregulationsandstandards03Howsustainabilityreportingstandards,frameworksandenablersarechanging04AnoverviewofsustainabilityreportingrequirementsacrossAsiaPacific05Thestateofsustainabilityreporting:Keyinsights06Otherusefulinformation-AppendixSustainabilityreportingrequirementsinotherkeyjurisdictionsAnoverviewofsustainabilityreportingrequirementsspecificforfinancialinstitutionsacrossAsiaPacificPwCSustainabilityCounts207Ourapproachtosustainabilityreportingexcellence45813223240PwCSustainabilityCountsKeyinsightsfromthestateofsustainabilityreportinginAsiaPacific•Almostallcompaniesacrossjurisdictionsdisclosematerialtopics,with62%disclosing10-20materialtopicsand80%furtherdisclosingtheselectionprocessonmateriality.•Morethan70%ofcompaniesacrossnearlyalljurisdictionsdiscloseclimateriskasasustainabilityissue.However,mostdonotdisclosehowclimateriskintegratesintotheorganisationalriskmanagement.•SDGsandGRI,followedbyTCFDaremostcommonlyused.AsTCFDtobemandatedincertainjurisdictionsinthefuture,weexpectthattherewillbeanuptakeintheTCFD-alignedreporting.•Boardofdirectors’trainingandlinkageofESGperformancetoremunerationappeartobemoderatetolow.However,AustraliahasmoreinstancesintermsoflinkingESGperformancetoremuneration.•Mostjurisdictionsdonothavehighratesofassuranceoversustainabilityreports,apartfromTaiwan(whichhasmandatedspecificassurancerequirements).•TherearemixedresultsoverboardresponsibilityonESGandESGgovernancestructuredisclosures.Australia,HongKong,MalaysiaandSingaporehavehighernumbersofcompaniesdisclosingboardofdirectors’responsibilityandanESGgovernancestructure.3ReporthighlightsWhysustainabilityreportingmatters•Withincreasingexpectationsonsustainability,itmakesgoodbusinesssensetofocusonhighqualitysustainabilityreportingrootedinconsistent,comparableandtrustedsustainabilityinformation.•Qualitysustainabilityreportingcanbuildtrustthroughtransparencyandmanagingrisksandopportunities.Thiscaninturnenhancecorporatevalueandresilience.•However,criticalelementsneedtobeinplacetoachievethisincludinggloballyalignedsustainabilityreportingstandards,andindependentlyassureddisclosures.EvolutionofglobalsustainabilityreportingstandardsandsteppingupofsustainabilityreportingrequirementsacrossAsiaPacific•Thecomplexecosystemofsustainabilityreportingstandards,frameworksandenablersarefastbecomingclearer.•ThecreationoftheInternationalSustainabilityStandardsBoard(ISSB)representsasteptowardsgloballyalignedsustainabilitystandardsthatwilldriveconsistencyandcomparabilityonsustainabilityreporting.•Concurrently,therearenotableincreasingsustainabilityreportingrequirements,includinginclimatereportingrequirements,byregulatorsacrossrespectivejurisdictionsinAsiaPacific.•Reportersneedtostayabreastoftheirlocalrequirements,inadditiontotheglobalstandards.Achievingsustainabilityreportingexcellence•Startingyoursustainabilityreportingjourneyearlyandbuildingaroadmapforsustainabilityreportingexcellence,canputyourorganisationaheadofregulationsandkeystakeholderexpectations.•Todrivesustainabilityreportingexcellenceinyourorganisation,itisimportanttoappreciatethekeyareasforsustainabilityreportingexcellence,whyeachareisrelevantandwhatitwouldentailacrossmaturities.PwCSustainabilityCounts4IntroductionPwCAsthebusinessworldcontinuestoaddresswide-rangingenvironmental,socialandgovernance(ESG)issues,therehasbeenstrongfocusonthedevelopmentofgloballyconsistent,comparableandtrustedsustainabilityreportingstandards.Atthesametime,manyjurisdictionsarerequiringorrecommendinggreatersustainabilityreporting,particularlyfromlistedentities.Therealsoappearstoberisingexpectationsonexternalassuranceofthesereports.Howareglobalsustainabilityreportingstandardsdeveloping?WhatarethelocalrequirementsandrecommendationsforsustainabilityreportinginAsiaPacific?HowhassustainabilityreportingevolvedinAsiaPacificjurisdictions?Inthispublicationweexplorethesequestions.WehavepartneredwiththeNationalUniversityofSingapore(NUS)CentreforGovernanceandSustainability(CGS)toprovideinsightsfromacrossthelargest650listedcompaniesinAsiaPacificbyaccessingkeysustainabilityreportingelements,basedonlatestsustainabilityreportsavailableinmid-2021.Thesefindingsofferguidanceinareasthatmayrequireadditionalfocusascompaniescontinuetodevelopconsistent,comparableandtrustedESGinformationintheupcomingreportingseason.01PwCSustainabilityCountsChangingnormsandexpectationsonreportingInvestorsandbroaderstakeholdersareincreasinglydemandingmorestrategicandholisticinformationaboutlong-termvaluecreationandcompanies’widerimpactonsociety.Theyhavehighlightedtheneedforsustainability(ESGornon-financial)informationtobereportedinawaythatisgloballyconsistent,comparableandtrusted.Companies’purposeinsocietyischangingandsoarethedemandsontheirreporting.Long-termenterprisevalueisbeingassessednotonlyinfinancialterms,butalsowithregardstoacompany’ssustainability.PwCsupportsthedevelopmentofasinglesetofglobalsustainabilityreportingstandardstoaddresstheneedforcorporatereportingthatgoesbeyondfinancialreporting.5Achangingworld:Theneedfornewsustainabilityreportingregulationsandstandards02PwCSustainabilityCountsWhysustainabilityreportingmattersWithshiftingnormsandexpectations,itmakessensetofocusonsustainabilityreporting.Thevalueofsustainabilityreporting1.BuildtrustClearandmeaningfulreportingimprovesconfidenceintheinformationpresented.Articulatingthecompany’sESGstrategy,directionoftravelandprogressonthatjourneyenhancesitsreputationandreinforcesitslicencetooperate.Thehigherthequalityofdata,processesandcontrolsthatsupportreporting,thehighertheconfidencelevel.2.BettertransparencyStakeholdersarenotshyaboutdemandinginformationthatismeaningfultothem.TheusesofESGinformationareincreasinglybroadandcomplexascompanieslookbeyondthemselvesandtheirshareholderstowardtheirwiderimpactonsociety.Asidefromthecompany’sdeterminationofwhatisusefultoreportvoluntarily,manyofthemwillberespondingtodisclosurerequirementsthathavebeen,orwillbe,mandatedthroughcurrentandfutureregulation.3.ManagingrisksandcreatingopportunitiesIfdonewell,thewaysustainabilityinformationisreportedcanbeacompetitiveadvantagetoacompany.Toreduceriskandcreateopportunities,reportingshouldprovideaholisticviewofthecompanyandcomprehensivelyconsiderESGstrategyaspartofthebasisformakingtherightdecisions.4.IncreasedvalueExamplesfromthemarketshowthatreportingtransparent,relevantandreliableESGinformationimprovestrustwithstakeholders,reducesthecostofcapital,promotesmoremeaningfulemployeeengagementandcanexpandaccesstocapitalmarketsorotherthird-partylending:ademonstrablelinkbetweenhigh-qualityESGreportingandenhancingvalue.High-qualityESGreportingthatgoesbeyondcompliancecanbringmeaningfulchangethatcreatesandenhancescorporatevalue.Therehasbeenadrivetowardsgloballyalignedsustainabilityreportingstandardstoenhanceconsistencyandbuildtrust.Atthesametimetherehasalsobeenaproliferationofsustainabilityreportingrequirementsacrossjurisdictions,includingacrossAsiaPacific,drivenbystakeholderneedsandexpectations.Companiesneedtoreshapetheircorporatereportingbeyondtheirfinancials.Thetrendtowardsmandatorysustainabilityreportingsupportsourbeliefthatthestandardsandexpectationsforsustainabilityreportingshouldbeashighasforfinancialreporting.Theuptakeofmandatoryregulationacrosstheworldisapositivemovetowardgloballyalignedsustainabilitystandardstodriveconsistencyandcomparability.602Achangingworld:TheneedfornewsustainabilityreportingregulationsandstandardsPwCSustainabilityCountsPwCSustainabilityCountsOurpointofviews7CompaniesneedtoreshapecorporatereportingtomeetstakeholderdemandsandcomplywithrapidlyevolvingrequirementsWeneedgloballyalignedstandardstodriveconsistencyandtrustStandardsandexpectationsfornon-financialreportingshouldbeashighastheyareforfinancialreportingESGinformationneedstobeindependentlyassuredtobetrustedInthisreport,weanalysethe“twinthrusts”ofsustainabilityreportinginAsiaPacific:1.Developmentsintheglobalsustainabilityreportingecosystem(Section3)2.DevelopmentsinsustainabilityreportingrequirementsinAsiaPacificjurisdictions(Section4)WealsoanalysesustainabilityreportingofthelargestlistedcompaniesinselectedareasacrossAsiaPacificjurisdictionsandhighlightthemostrelevanttakeaways(Section5).TrustedandtimelyinformationWhatstakeholdersvalueinsustainabilityreportingHowacompanyplansanddeliversonitspurposeandsustainabilitystrategyIndependentlyassuredSupportedbycommondisclosures02Achangingworld:TheneedfornewsustainabilityreportingregulationsandstandardsPwCSustainabilityCounts8Howsustainabilityreportingstandards,frameworksandenablersarechangingPwC03Thefollowingsectionhighlightsthenotableplayersofthesustainabilityreportingecosystemincludingtheirrespectivebackground/mission.InformationisupdatedtillApril2022,aroundthetimeofthisreport.PwCSustainabilityCounts9OrganisationBackground/missionType(seekey)WBCSD(WorldBusinessCouncilforSustainableDevelopment)Launchedin1995toinjectabusinessvoiceintotheglobalconversationonsustainability.ACEO-ledorganisationthataimstomakemembercompaniesmoresuccessfulandsustainablebyfocusingonthemaximumpositiveimpactforshareholders,theenvironmentandsociety.EnablerGRI(GlobalReportingInitiative)TheGRIwasfoundedin1997.Theaimwastocreatethefirstaccountabilitymechanismtoensurecompaniesadheretoresponsibleenvironmentalconductprinciples,whichwasthenbroadenedtoincludesocial,economicandgovernanceissues.In2000,thefirstversionofGRIwaslaunchedtoprovidethefirstglobalframeworkforsustainabilityreporting.In2016,GRItransitionedfromprovidingguidelinestosettingthefirstglobalstandardsforsustainabilityreportingwithamulti-stakeholderaudience-theGRIStandards.StandardsCDP(CarbonDisclosureProject)CDPisaglobaldisclosuresystemforcompanies(andcities,statesandregions),launchedin2000.Itisdesignedtohelpentitiesmaketheirenvironmentalimpacttransparenttostakeholders.TheseentitiesvoluntarilysupplyinformationtotheCDPinexchangeforascore-thisdatathentracksglobalprogresstowardsbuildingasustainableeconomyforpeopleandtheplanet.CDPdataandscoresfeedintofinancialmarketsthroughratingagenciesandrankings.SingleissueGHGProtocol(GreenhouseGasProtocol)TheGHGProtocolwascreatedin2001toaddresstheneedforaninternationalstandardforcorporategreenhousegas(GHG)accountingandreportinginthelate1990s.TheGHGProtocolestablishescomprehensiveglobalstandardisedframeworkstomeasureandmanageGHGemissionsfromprivateandpublicsectoroperations,valuechainsandmitigatingactions.SingleissueCDSB(ClimateDisclosureStandardsBoard)TheCDSBFrameworkwaslaunchedin2007andsetsoutavoluntaryapproachforreportingenvironmentalandclimatechangeinformationinmainstreamreportsforthebenefitofinvestors.Itallowsinvestorstoassesstherelationshipbetweenspecificenvironmentalmattersandtheorganisation'sstrategyperformanceandprospects.TheframeworkwasupdatedinApril2018toalignwiththerecommendationsoftheTaskForceonClimate-relatedFinancialDisclosures(TCFD)(seebelow)andotherkeymainstreamreportingrequirements.SingleissueIIRC(InternationalIntegratedReportingCouncil)TheIIRCwasfoundedin2010withinvestorsastheprimaryaudience(butmorerecentlyshiftingtomoreofastakeholderview)withafocusonstrategic,future-oriented,reporting.TheIIRCprovidesanindustryagnosticframeworkbasedonsevenguidingprinciplestodriveconnectedreportingandeightcontentelementsthatgoverntheoverallcontentoftheintegratedreport.FrameworkSASB(SustainabilityAccountingStandardsBoard)TheSASBwasfoundedin2011primarilytodevelopindustryspecificstandardsforuseincorporatefilingsintheUStoprovideinvestorswithcomparablenon-financialinformationaboutfinanciallymaterialenvironmental,social,andgovernancetopicsthatfacilitatecommunicationbetweencompaniesandinvestorsaboutdecision-usefulinformation.StandardsUNGuidingPrinciplesReportingFrameworkLaunchedin2015,thisframeworkprovidesasetof31questionsforcompaniestoreportonhumanrightsissuesinthreeparts:•Governanceofrespectforhumanrights•Definingthefocusofreporting•ManagementofsalienthumanrightsissuesFramework(singleissue)UNSustainableDevelopmentGoals(SDGs)Theseareacollectionof17interlinkedglobalgoalsdesignedtobea"blueprinttoachieveabetterandmoresustainablefutureforall.”TheyweresetbytheUNGeneralAssemblyin2015andareintendedtobeachievedby2030.Theseformtargets/indicatorsandareoftenusedinESGreporting.Enabler03Howsustainabilityreportingstandards,frameworksandenablersarechangingPwCSustainabilityCounts10OrganisationBackground/missionType(seekey)ScienceBasedTargetInitiative(SBTi)Startedin2015,SBTiaimstodriveambitiousclimateactionintheprivatesectorbyenablingcompaniestosetscience-basedemissionsreductiontargets.ThereductiontargetsareinlinewithwhatthelatestclimatesciencesaysisnecessarytomeetthegoalsoftheParisAgreement(tolimitglobalwarmingtowell-below2°Cabovepre-industriallevelsandpursueeffortstolimitwarmingto1.5°C).SBTiisacollaborationbetweenseveralorganisations-CDP(CarbonDisclosureProject),WRI(WorldResourcesInstitute),WWF(WorldWildlifeFund),UNGC(UnitedNationsGlobalCompact).SBTihasestablishedtheacceptedstandardonscience-basedtargets(SBT),settingout24criteriaforSBTsandaprocessforcompaniestodevelopandvalidatetheirtargets.Itcanhelpwithanentity’sresponsetotheTCFDrecommendations.SingleissueTCFD(TaskForceonClimate-RelatedFinancialDisclosures)Establishedin2017,theTCFDpublishedareportingframeworkonthesingleissueofclimatechangesettingoutrecommendationsforcompaniestovoluntarilydiscloseclimate-relatedinformationtoprovideinvestorswithmoreinformationonthefinancialimpactofclimateriskonacompany.Althoughoriginallyintendedtobevoluntary,in2020,thegovernmentsofNewZealandandtheUKbecamethefirsttomandatereportingofTCFDforimplementationinthecomingyears.FinanceministersfromtheGroupofSeven(G7)ofthelargesteconomiesannouncedinJune2021theintentiontomandateTCFDreportingintheirrespectivejurisdictions.SingleissueTNFD(TaskforceonNaturerelatedfinancialdisclosures)TheTNFDbuildsontheworkoftheTCFDandisexpectedtobedeliveredasareportingframeworkin2023.TheTCFDisaclimate-focusedframeworkandthereforeitcoversasubsetofnature-relatedrisks,onlythroughaclimatelens.TheTCFD’sframeworkexcludesothernature-relatedrisks,suchasplasticsintheoceanicfoodchainandlossofsoilfertility.TheTNFDwillbuilduponthestructureandfoundationoftheTCFD,andharnesssynergiestoavoidrepetition.Overtime,thetwoframeworkswillbecomplementary.FinanceministersfromtheG7haveendorsedtheTNFD.Singleissue(inprogress)WorldEconomicForum’sInternationalBusinessCouncil(WEFIBC)ThiswasaninitiativerequestedbytheWorldEconomicForum’s(WEF)InternationalBusinessCouncil(IBC)ofCEOstohelpidentifypriorityuniversalmetricsforlong-termvaluecreationtoenablemoreconsistentandcomparablereportingfortheirstakeholders,includinginvestors.ThegoalistosetacommonbaselineforESGreporting,improvequalityandcomparability,andencouragegreatercooperationamongexistingstandardsetterstocatalyseaglobalsolution.TheWEFIBChaspublishedrecommendeduniversal(industryagnostic)ESGmetricstoamplifyprioritytopicsinmainstreamreporting,usingexistingrobuststandardswherepossible.Theseprioritymetricsarecategorisedunder4pillars:People,Planet,PrinciplesofGovernanceandProsperity.FrameworkKey:Enabler:OrganisationworkingforsustainablecorporatebehavioursthatimpactreportingStandards:WhatshouldbereportedforeachESGtopicFramework:Principles-basedguidancefor"how"ESGinformationisstructuredandprepared,andwhichtopicsarecoveredSingleissue:Astandard/framework/measurementprotocolthatisfocusedonasingleESGissue03Howsustainabilityreportingstandards,frameworksandenablersarechangingPwCSustainabilityCounts11EntertheInternationalSustainabilityStandardsBoard(ISSB)AttheCOP26conferenceinNovember2021,theInternationalFinancialReportingStandards(IFRS)FoundationTrusteesannouncedthecreationoftheISSB.Thegoalistodevelop,inthepublicinterest,asinglesetofhighquality,understandable,enforceableandgloballyacceptedsustainabilitystandardsbaseduponclearlyarticulatedprinciples.TheG7ministersbackedthemomentumtowardsthecreationofglobalsustainabilityreportingstandards,expressingitssupportfortheISSB.ThecreationofISSBrepresentsasteptowardsgloballyalignedsustainabilitystandardsthatwilldriveconsistencyandcomparabilityonESGreporting.KeyannouncementsatCOP26included:•ConsolidationoftheValueReportingFoundation1(SASB+IIRC),andtheCarbonDisclosuresStandardsBoard(CDSB)•EstablishmentofISSBandgovernancestructures•Publicationoftwoprototypes(climateandgeneralpresentation)1On9June2021,theIIRCandtheSASBofficiallyannouncetheirmergertoformtheValueReportingFoundation.TheValueReportingFoundationsupportsbusinessandinvestordecision-makingwiththreekeyresources:IntegratedThinkingPrinciples,IntegratedReportingFrameworkandSASBStandards.Thesetoolshelpbusinessesandinvestorsdevelopasharedunderstandingofenterprisevalueandhowitiscreated,preservedorerodedovertime.TheValueReportingFoundationisalsocommittedtothedeliveryofamorecoherentcorporatereportingsystembyworkingcloselywiththeIFRSFoundationandotherleadingframeworkprovidersandstandard-settersaroundtheworld.StrategicdirectionandmaindirectionsoftheISSBareasfollows:InvestorfocusBuildonexistingframeworksGlobalbaselineSustainabilityscope,prioritisingclimateStrategicdirectionandmainconsiderationsoftheISSB:•Meetinginvestors’informationneeds,withafocusonenterprisevaluedisclosuresthatinfluenceinvestordecisions.•Buildingontheexistingworkofvarioussustainabilityreportingstandardsandframeworks.•Createaglobalbaselinethatenablesinvestorstoaccesstocommoninformationaroundtheworldthatjurisdictionscanadoptandcombinewiththeirspecificlegalandregulatoryrequirements.•Startwithclimateandgobeyondthattocoverotherenvironmental,socialandgovernancematters.03Howsustainabilityreportingstandards,frameworksandenablersarechangingPwCSustainabilityCounts12ProposedIFRSSustainabilityDisclosureStandards(March2022)On31March2022,ISSBpublisheditsfirsttwoproposedIFRSSustainabilityDisclosureStandardswhich,oncefinalised,willformacomprehensiveglobalbaselineofsustainabilitydisclosuresdesignedtomeettheinformationneedsofinvestorswhenassessingenterprisevalue.TheproposalshavebeendevelopedinresponsetorequestsfromG20leaders,theInternationalOrganisationofSecuritiesCommissions(IOSCO)andothersforenhancedinformationfromcompaniesonsustainability-relatedrisksandopportunities.TheproposedIFRSS1GeneralRequirementsforDisclosureofSustainability-relatedFinancialInformation(GeneralRequirementsExposureDraft)wouldrequirecompaniestodiscloseinformationaboutalloftheirsignificantsustainability-relatedrisksandopportunities.TheproposedIFRSS2Climate-relatedDisclosures(ClimateExposureDraft)focusesonclimate-relatedrisksandopportunities.ItincorporatestherecommendationsoftheTCFDandincludesmetricstailoredtoindustryclassificationsderivedfromtheindustry-basedSASBStandards.TheISSBisworkingcloselywithotherinternationalorganisationsandjurisdictionstosupporttheincorporationoftheglobalbaselineintojurisdictionalrequirementsandensuringthatitiscompatiblewithrequirementsaimedatbroaderstakeholdergroups.Stakeholdersareencouragedtorespondtoconsultationsbyjurisdictionsonsustainabilityreporting.Thecommentperiodis120days,withadeadlineof29July2022.TheISSBwillreviewfeedbackontheproposalsinthesecondhalfof2022andaimstoissuethenewStandardsbytheendoftheyear,subjecttothefeedback.PwCSustainabilityCounts03Howsustainabilityreportingstandards,frameworksandenablersarechangingTooperationalisethis,TrusteesoftheIFRSFoundationsetuptheTechnicalReadinessWorkingGroup(TRWG),taskedwithmakingtechnicalrecommendationsonstandardsandstrategyinputtosupportprioritisationandplanning.MembersofthegroupareIFRS,TCFD,CDSB,WEFandtheValueReportingFoundation.ThepurposeoftheTRWGwastoenabletheISSBtobuildonthewell-establishedworkoflong-standinginternationalinitiatives,focusingon:•Enterprisevalue(informationmaterialtoinvestors’decisions)•ESG/sustainabilityscope(prioritisingclimate)•Buildingonexistingstandardsandframeworks(e.g.,TCFD,SASB,GRI)•Adoptingabuildingblocksapproach(workingwithkeyjurisdictions)toachieveagloballyconsistentbaselineISSBproposesforallstandardstobebasedonTCFD4pillarframework(Governance,Strategy,RiskManagementandMetricsandTargets)andhaveissuedtwoprototypes(climateandgeneralpresentation)withtheproposeddraftstobeissuedinthefirsthalfof2022(seenextcolumn).PwCSustainabilityCounts13AnoverviewofsustainabilityreportingrequirementsacrossAsiaPacificPwCSustainabilityreportingrequirementscontinuetoexpandacrossAsiaPacific,althoughrequirementsareuniquetoeachjurisdiction.InformationisupdatedtillApril2022,aroundthetimeofthisreport.04PwCSustainabilityCountsJurisdictionPresentUpcomingAustralia•Thereiscurrentlynocompulsorysustainabilityreporting.•However,corporategovernancecodesrecommenddisclosureofenvironmentalandsocialrisksforpubliclylistedcompanies(PLCs).•Basisofcorporategovernanceprinciplesandrecommendationsfollows‘ifnot,whynot’approach.•Variousregulatorybodies,suchastheAustralianSecuritiesandInvestmentsCommissionandtheAustralianPrudentialRegulatoryAuthorityhavealsoindicatedthatmaterialclimaterisksshouldbeidentifiedanddisclosed.•Australianlegalrequirementsrequirecertainentitiestodisclosenon-financialinformationrelatedtospecificfederalacts,suchastheModernSlaveryAct,theWorkplaceGenderEqualityAct,ortheNationalGreenhouseandEnergyReportingAct.•AustralianSustainableFinanceInitiative(supportedbyAPRAandASIC)issuedtheAustralianSustainableFinanceRoadmapin2020,listingout37recommendationsacrossdifferenttimeframes.•Withinternationalmandatescomingintoforceoncorporatesustainabilityreporting,andincreasingtrendsinthefinancialsectorfavouringresponsibleinvesting,itislikelythatdemandforregulationwillincrease.•TheAustralianAccountingStandardsBoard(AASB)hasaddedsustainabilityreportingtoitsworkprogramandrecentlyissuedarequestforcommentontheISSB'sexposuredrafts.14PwCSustainabilityCountsManyAsiaPacificjurisdictionshaveissuedsustainabilityreportingrequirementsorrecommendations,andsomehaveannouncedadditionalsustainabilityreportingrequirementstobeimplementedinthecomingyears.Thefollowingtableprovidesanoverviewofthesalientdevelopmentsinreportingrequirementsandrecommendations.04AnoverviewofsustainabilityreportingrequirementsacrossAsiaPacificPwCSustainabilityCountsJurisdictionPresentUpcomingChina•ChinaSecuritiesRegulatoryCommission(CSRC)announcednewguidelinesinJune2021forPLCstoadd‘EnvironmentalandSocialResponsibility’sectionsintheirhalfyearandannualreports.Thisincludes:–Disclosureofactionstopreventpollutionofair,water,andsoil–Methodsformanagingwaste–Reportingenvironmentalincidents,especiallyifpenaltiesareinvolved–ReportingofESGrisks-narrativeonly(therulesprovidenometricsforESGrisk)•CSRCencouragescompaniestovoluntarilyreporttheircarbonemissions,carbonreductionmeasures,impactsonbiodiversity,riskposedbysocialissues,povertyalleviationandruralrevitalisation.•CSRCmadenoreferencetoESGframeworksbutitisexpectedtoworkcloselywithinternationalorganisationsondevelopingglobalstandards.ThemostcommonlyusedandgloballyrecognisedreportingframeworkisGRI.•InDecember2021,theMinistryofEcologyandEnvironmentofChinareleasedthe“MeasuresontheManagementofEnvironmentalInformationDisclosureforCompanies”regulationwhichhascomeintoforceon8February2022.Themeasuresapplytokeypollutantemissionsources/corporatesandcompanieswithrequirementsforcleanproductionaudit.•Somelocalauthorities,suchasthoseinShanghaiandShenzhen,havealsoissuedguidanceoncorporatesustainabledevelopmentandsocialresponsibility.•CompulsoryESGreportingguideforA-sharepubliclytradedcompaniesisexpectedtobereleasedaroundtheendof2022.•A-sharepubliclytradedcompaniesisexpectedtobereleasedaroundtheendof2022.•AnnouncedinJanuary2022,theShanghaiStockExchangeissuednewguidanceforKechuang50indexcompanies,requiringthe50componentcompaniestoissuesocialresponsibilityreports.Thecompaniesshallissuetheirsocialresponsibilityreporttogetherwiththeirannualreport,andthereportshallfocusondisclosurerelatedto"carbonpeakcarbonneutrality"goalsandactionstopromotingsustainabledevelopment.15PwCSustainabilityCounts04AnoverviewofsustainabilityreportingrequirementsacrossAsiaPacificPwCSustainabilityCounts16PwCSustainabilityCountsJurisdictionPresentUpcomingHongKong•HongKongStockExchange(HKEX)listingrulesincludetheESGReportingGuide.Therearetwolevelsofdisclosureobligations:(a)‘complyorexplain’provisions;and(b)recommendeddisclosuresthatareencouraged,butnotrequiredtoreport.•Thelargestupdate,effectiveforfinancialyearscommencingonorafter1July2020,requirescompaniestodiscloseadditionalESGinformation.•From2021,therearemorethan30specificESGkeyperformanceindicators(KPIs)tobereportedona‘complyorexplain’basispertheESGReportingGuide.•HKEXrequiresthelistedcompaniestoincludeESG-relatedrisksintheenterpriseriskmanagementassessmentwitheffectfrom1January2022.IntheBoard’sannualreviewontheeffectivenessofriskmanagementandinternalcontrolsystemandcontinuousmonitoringofmaterialrisks,ESGriskswillneedtobeincludedandbeconsidered.•InMay2019,theHongKongMonetaryAuthority(HKM)Aannouncedimportantmeasurestopromotethedevelopmentofgreenandsustainablebankinginthreephases.InDecember2020,theHKMAannouncedplanstomandateTCFDacrossrelevantsectorsnolaterthan2025.•HKEXisexpectedtoconductaconsultationonhowtoimplementISSBrequirementsinHongKonganditisexpectedtoconcludein2023.India•RequirementtoprepareBusinessResponsibilityReport(BRR)inrespectofreportingonESGfortop1,000listedentitiesbymarketcapitalisation.•IntegratedReporting<IR>maybeadoptedonavoluntarybasisbythetop500companies,whicharerequiredtoprepareaBRR.•NewESGreportingrequirementsknownastheBusinessResponsibilityandSustainabilityReport(BRSR)disclosures,includenineprinciplesofthe‘NationalGuidelinesonResponsibleBusinessConduct’(NGRBCs).•VoluntaryforFY2021-2022andmandatoryforFY2022-2023,applicabletotop1,000listedcompanies.•Existingreportingbasedoninternationallyacceptedreportingframeworks(GRI,SASB,TCFDorIntegratedReporting)maycross-referencedisclosurestoBRSR.•TheBRSRaimstohavestandardisedquantitativeandqualitativedisclosuresonESGparameterstoenablecomparabilityacrosscompanies,sectorsandtime.•ThedisclosureshavebeendividedintoEssential(mandatoryreporting)andLeadershipindicators(voluntaryreporting).04AnoverviewofsustainabilityreportingrequirementsacrossAsiaPacificPwCSustainabilityCounts17JurisdictionPresentUpcomingIndonesia•OtoritasJasaKeuangan(OJK)requiresPLCstopublishsustainabilityreportingthroughPOJK51/POJK.03/2017,graduallystartingin2020.•TherearenineprinciplesofsustainablefinancethatshouldbeimplementedbyPLCs.•DetailsofsustainabilityreportsarestipulatedunderSEOJK16/SEOJK.04/2021,andincludesustainabilitygovernanceandperformance.Thesustainabilityperformancecovers:–Economic(productionquantity,revenue,profit,eco-friendlyproductandinvolvementoflocalparties)–Greenenvironment(energy,emission,wasteandbiodiversity)–Socialaspects•IndonesiaStockExchange(IDX)becameaTCFDsupporterinJune2021aspartofitsambitiontosupportsustainabilityinIndonesia’scapitalmarket.•In2021,GRIsignedacollaborationagreementwiththeIndonesiangovernmentthatcommitstosupportandprovidereportingframeworksforthecountry’sUNSDGcommitments.ThenewESGguidancewillmakeclearhowcompaniescanfulfiltheirdisclosurerequirementsbyconnectingtheGRIStandardswithSDGtargetsandindicators.Japan•TheCorporateGovernanceCoderequiresallthelistedcompaniesontheTokyoStockExchangeforgeneralrequirementsandrequiresPrimeandStandardMarketslistedcompaniesforadditionalrequirementsunderacomplyorexplainapproach.•Japan’srevisedCorporateGovernanceCodeadditionallyrequiresPrimeMarketlistedcompaniestomeetTCFDrequirementsafter4April2022.•TheFinancialServicesAgency(FSA)workinggrouponcorporatedisclosuresraisedproposalsformandatoryclimatereportinganddisclosureguidelinesonsustainabilityandgovernance-relatedfactors.Companiescouldberequiredtoreportonclimate-relatedrisks.•Thenewrulesareviewedtobemoreenforceableandextensivethanthecurrent‘complyorexplain’approach.TheFSAhasestablishedanewframeworkforthecertificationofESG-relatedfundsandisexpectedtounveilfinalvoluntaryprocessguidelinesonlocallysoldsocialbonds.•SustainabilityStandardsBoardofJapan(SSBJ)isplannedtobeestablishedtocontributetothedevelopmentofinternationalsustainabilitydisclosurestandardsandtodevelopdomesticsustainabilitydisclosurestandardsbytheendofJune2022.PwCSustainabilityCounts04AnoverviewofsustainabilityreportingrequirementsacrossAsiaPacificPwCSustainabilityCounts18PwCSustainabilityCountsJurisdictionPresentUpcomingMalaysia•ESGreportingisrequiredasalistingrulei.e.todisclosenarrativestatementsofthemanagementofmaterialeconomic,environmentalandsocial(EES)risksandopportunitiesinannualreports.•ThereisnooneconsistentESGframeworkmandatedbyBursaMalaysia,althoughGRIremainsthemostpopular.BursaMalaysiaissuedaSustainabilityReportingGuidein2015andasecondeditionin2018tohelpembedsustainabilityinreporting.CompliancewiththeGuideisvoluntary.•TheMalaysianCodeonCorporateGovernance(MCCG)wasupdatedin2021,withmoregranularcorporatedisclosures,e.g.targetsetting,gapanalysis,andactionstoclosethegapsareexpected.•InMarch2022,BursaMalaysiaintroducedaConsultationPaperonkeyproposalsinrelationtosustainabilityreportinge.g.requiringdisclosureofprescribedsustainabilitymattersandindicatorsalignedwithTCFDrecommendations.•SecuritiesCommissionMalaysiafive-yearCapitalMarketMasterplan3(2021)reinforcesitscommitmenttoclimateactione.g.,promotinggreatertransparencyinthemarketthroughdisclosures.NewZealand•PLCshaveanobligationviacorporategovernancecodestoprovidenon-financialdisclosuresrelatingtoenvironmental,economicandsocialsustainabilityfactorsandpractices.•TCFDreportingforlargelistedissuersandfinancialinstitutionstobemandatoryforreportingyearsfrom2023.ThisincludesarequirementforexternalassuranceontheGHGemissionscomponentfrom2024.•TheReserveBankofNewZealandisdevelopingitssupervisoryapproachtoincludeclimate-relatedrisks.•TheExternalReportingBoardisworkingtodevelopanoverarchingESGreportingframeworkforvoluntaryapplicationincomingyears.Philippines•PLCsarerequiredtoreportontheircontributionstosustainabilitytopicseitherthroughasustainabilityreportthatadherestointernationallyrecognisedsustainabilityreportingframeworksandstandardsorSecuritiesandExchangeCommission’s(SEC)reportingtemplate.•Thesereportsshouldbesubmittedtogetherwiththecompanies’annualreport.•TheSustainabilityReportingFrameworkprescribedbytheSECisbuiltongloballyacceptedstandardsandframeworks,particularlyGRISustainabilityReportingStandards,IIRCIntegratedReportingFramework,theSASBSustainabilityAccountingStandards,andTCFDrecommendations.•TheSECfolloweda“complyandexplain”approachfromthe2019reportingperiod.However,beginning2023(2022reportingperiod),allPLCsaremandatedtocomplywiththeSustainabilityReportingGuidelinessetbytheregulator.TheSECisalsoseekingtointroducevoluntary–andeventuallymandatory–reportingfornon-listedcompanies.04AnoverviewofsustainabilityreportingrequirementsacrossAsiaPacificPwCSustainabilityCounts19PwCSustainabilityCountsJurisdictionPresentUpcomingSingapore•AllSingaporeExchangelistedcompaniestohavesustainabilityreporting(effectivefrom2017)whichrequires5primarycomponentsof:–Reportingframework–Materialityassessment–Policy,practicesandperformancereporting–Targetsetting–StatementbytheBoardForSingaporelistedcompanies:•Minimallysubjectthesustainabilityreportingprocesstointernalorexternalreview(effectivefrom2022)•Mandatoryand‘complyorexplain’TCFDwithprioritisationforhigh-carbonindustries(effectivefrom2022)•Boarddiversitydisclosures(effectivefrom2022)•ProposedcoreESGfactors(27factors)(effectivefrom2022)•Mandatoryboarddirectorstraining(effectivefrom2022)SouthKorea•DisclosureofESG-relatedmattersiscarriedoutthrough:–BusinessReports(mandatory)–KoreaExchangeGovernanceReports(mandatory/optional)–SustainabilityReports(optional)•AccordingtotheFrameworkActonGreenGrowth,PLCsarerequiredtoissueareportwhichincludesdisclosureofGHGemissionsandenergyvolumeonaregularbasis.ThosewhoaredesignatedasGreenCompanyareallowedself-disclosuretoKoreaExchangeatanytime.•DisclosureoftheGovernancereporthasbeenmandatoryforlistedcorporationsonthesecuritiesmarketfrom2019.•ThecompaniesvoluntarilydiscloseESGmattersfollowingglobalstandardsandframework,typicallyGRIStandards,andleadingcompaniesarereportingtheircorporatesustainabilitymanagementstatusbyrespondingtoESGratinginitiatives.•MandatorycompaniesforDisclosureoftheGovernancereportwillbeexpendedbystagesfrom2022onwardsbasedontotalassets.•On14January2021,theFinancialServicesCommissionannounceditsplantoimplementthethirdphaseofthedisclosureoftheSustainabilityReportinthefollowingphases:–Step1:Autonomousdisclosure–Step2:ObligationofKoreaCompositeStockPriceIndex(KOSPI)listedcompanieswithassetsofmorethanKRW2trillion(from2025)–Step3:ObligationofKOSPIlistedcompanies(from2030)•InDecember2021,theMinistryofTrade,IndustryandEnergyannouncedtheK-ESGguidelinesthathavebeenjointlypreparedbyrelatedministries.04AnoverviewofsustainabilityreportingrequirementsacrossAsiaPacificPwCSustainabilityCounts20PwCSustainabilityCountsJurisdictionPresentUpcomingTaiwan•TaiwanStockExchangeCorporationRulesrequirelistedandOTCcompaniestoprepareSustainabilityReports(ESGreports)referringtothelatestGRIStandardspublishedbyGRI.•TherearesectorspecificESGdisclosuresandexternalassuranceforlistedfoodindustry,financialandinsuranceandchemicalsectorsinESGreports.•RegulationsgoverningESGrelateddisclosuresinannualreportsareupdatedtorequiremorespecificandquantitativedata.•CorporateGovernance3.0–SustainableDevelopmentRoadmap,forreportsissuedin2023relatingthe2022result,thethresholdsforESGreportingarereducedfromcapitalstocknolessthanNT$5billiontoNT$2billion.•InadditiontoexistingESGreportingrequirements,ESGdisclosureswithreferencetoTCFDandSASBhavealsobeenadded.•FinancialSupervisoryCommission(FSC)launchesaphasedplanrequiringlisted-andOTC-companiesandtheirsubsidiariestocompleteGHGinventoriesby2027andobtainverificationby2029.Thailand•TheSecuritiesandExchangeCommission(SEC)CorporateGovernanceCoderequiressustainabilityreportingwithchoicesofframework,howeverGRIiscommonfollowingStockExchangeofThailand(SET)guidance.•In2022,itismandatoryforallPLCstoreporttheirESGperformanceviaForm56-1OneReport(effectivefromthefinancialperiodended31December2021).Thesubmissionmustbewithinthreemonthsasfromtheendofthefinancialreport.•On17November2021,SETannounceditssupportfortheTCFD.•SEThasprovidedknowledgeabouttheimpactofclimatechangeonbusinessbyconductingaseriesofTCFD&SDGsworkshopswhichaimtopromoteabetterunderstandingofhowtoaddresstheeconomicrisksandopportunitiesresultingfromclimatechangeandraisethebarinlinewiththeTCFDinternationalbestpracticeofclimatedisclosures.04AnoverviewofsustainabilityreportingrequirementsacrossAsiaPacificPwCSustainabilityCounts21PwCSustainabilityCountsJurisdictionPresentUpcomingVietnam•TheMinistryofFinanceofVietnamrequiresPLCstotakeintoaccountsocialandenvironmentalconsequencesoftheiractivitiesandtheirsocialcommitmentsintheirannualreport.Thisincludes:–Environmentalimpact(e.g.GHGemissions)–Rawmaterialsmanagement–Energyandwaterconsumption–Compliancewithenvironmentalprotectionlaws–Employeespolicies–Reportonresponsibilityforlocalcommunity–Reportongreencapitalmarketactivities•PLCsareencouragedtoapplythegloballyacceptedreportinganddisclosurestandardsinpreparingtheirsustainabilityreports.Nofurtherdevelopmentsnoted.04AnoverviewofsustainabilityreportingrequirementsacrossAsiaPacificPwCSustainabilityCounts22Thestateofsustainabilityreporting:KeyinsightsPwC05WeworkedwiththeNationalUniversityofSingapore(NUS),CentreforGovernanceandSustainability(CGS)togatherinsightsonthestateofsustainabilityreportinginAsiaPacific.Thesecanserveasausefulreferenceasstakeholdersanticipatethesustainabilityreportsbeingissuedin2022.PwCSustainabilityCountsOverviewofsustainabilityreportingstudy23Top50largestlistedcompaniesofeachoftheselectedjurisdictions(13inscope)Basedonlatestsustainabilityreportsavailableinmid-2021AnalysedagainstcommonsustainabilityreportingattributesbasedontheprinciplesofGRIandTCFDToprovideinsightsonthestatus,inanticipationofupcomingsustainabilityreportsAreaSub-areaMaterialityandstakeholderengagement1.DisclosureofmaterialESGfactors2.DisclosureofstakeholderengagementindeterminingmaterialESGtopics3.DisclosureofstakeholderengagementchannelsandrespondingtostakeholderconcernsStrategyandtargets4.Disclosureoflinkagebetweensustainabilitytargetsandfinancialperformance5.DisclosureoftargetsClimatechangeandriskmanagement6.Identificationofclimatechangeasasustainabilityissue7.Identificationandmanagementofclimatechangerisks/opportunities8.Disclosureofintegratingclimate-relatedrisksintooverallriskmanagement9.Disclosureoftargetsand/ortrackingclimate-relatedriskandopportunitiesGovernanceandresponsibility10.DisclosureregardingsustainabilitygovernanceBuildingTrust11.Disclosureofreportingscope12.DisclosureofassuranceInthefollowingpages,weanalysethestateofsustainabilityreportingoftherespectivejurisdictions(basedonthetop50listedcompanies)againsttheseattributes.MethodologyScopeofstudyThisstudyfocusesonthetop50-listedcompaniesbymarketcapitalisationacrossselectedjurisdictionsinAsiaPacific,namely:Australia,China,HongKong,India,Indonesia,Japan,Malaysia,NewZealand,Philippines,Singapore,Taiwan,Thailand,Vietnam.Thecompaniesareidentifiedasthoselistedintherespectivestockexchanges,i.e.,AustralianSecuritiesExchange,ShanghaiStockExchange,HongKongStockExchange,BSE(formerlyBombayStockExchange),IndonesiaStockExchange,TokyoStockExchange,BursaMalaysia,NewZealand’sExchange,PhilippineStockExchange,SingaporeExchange,TaiwanStockExchange,StockExchangeofThailand.Theinformationreviewedwasbasedonlatestsustainabilityreportsavailableinmid-2021.OnlycompanieswhosesustainabilityreportsarecommunicatedinEnglishareincluded.Atotalof650listedcompanies’sustainabilityreportswereanalysed.ResearchframeworkTheassessmentframeworkusedwithinthisstudywasdevelopedinreferencetotheGRIandtheTCFD.GRIwasreferencedasitcontinuestohaveahighlevelofadoption.TheTCFDwasreferencedduetotheincreasingandimportantfocusonclimatechange.Thesustainabilityreportswerethenanalysedagainsttheseattributes:05Thestateofsustainabilityreporting:keyinsightsPwCSustainabilityCounts24StateofsustainabilityreportingstandardsandframeworksusedItcanbeseenfromthecompaniesinscope,thatSDGsandGRI,followedbyTCFDaremostcommonlyused.WithTCFDtobemandatedincertainjurisdictionsinthefuture,weexpectthattherewillbemoreTCFD-alignedreporting.SDGGRITCFDUNGCIIRCSASBCDPOverall76%75%36%23%20%18%17%Australia80%72%80%44%4%24%30%China60%78%14%18%0%2%4%HongKong58%70%36%26%8%20%18%India62%60%12%22%50%4%8%Indonesia82%78%4%8%2%14%6%Japan94%68%64%24%36%22%24%Malaysia88%80%28%16%48%10%12%NewZealand52%38%40%0%28%2%14%Philippines96%88%48%24%24%42%10%Singapore88%96%38%36%18%20%20%Taiwan94%100%80%40%14%64%46%Thailand94%92%24%36%12%14%32%Vietnam42%58%0%2%12%2%0%0to25%ofcompanies>25%to50%ofcompanies>50%to75%ofcompanies>75%ofcompaniesInthefollowingpages,weanalysethestateofsustainabilityreportingwithinthe13selectedjurisdictions(basedonthetop50listedcompanies)againsttheattributesoutlinedabove.Itshouldbenotedthatresults,tosomedegree,maybedrivenbythetimingandscopeofsustainabilityreportingregulationimplementationincompanies’respectivejurisdictions,includingthenatureandfocusofthesustainabilityreportingrequirementsandrecommendations.PwCSustainabilityCounts05Thestateofsustainabilityreporting:keyinsightsPwCSustainabilityCounts25MaterialityandstakeholderengagementWhythismattersIdentificationofESGtopicsthatarematerialtotheorganisation’scorestrategyandlong-termvaluecreationhelpstheorganisationinprioritisingandchannelingitseffortsinmanagingrisksandcultivatingopportunitiesassociatedwiththesematerialESGtopics.DisclosureofmaterialESGfactorsdemonstratesthattheorganisationunderstandsthekeysustainabilityissuesthataremostrelevanttothestakeholders.Suchdisclosurealsohelpsinvestorsunderstandthefactorsthatarematerialtotherisksandopportunitiesoftheirinvestments.Stateofpractice•Mostofthecompanies(62%)disclosedbetween10to20materialtopics.•80%ofthecompaniesfurtherdisclosedtheirselectionprocessformaterialESGfactors.•ThemostcitedmaterialissuesintheAsiaPacificregionpertaintoemployment-relatedmatterssuchasoccupationalhealthandsafety,trainingandeducation,employmentpractices;engagementofthelocalcommunity;andenergy.WhythismattersDisclosureofstakeholderengagementgivesanunderstandingofhowextensivelyandrobustlystakeholderswereengagedindeterminingthemostimportantESGtopicsforanorganisation.Italsodemonstratesthattheorganisation,throughitsactiveengagementofstakeholders,hasconsideredawiderangeofviewsindevelopingacomprehensiveanalysisandthereforehasmadeinformeddecisionsaboutprioritisingandactingonthesustainabilityissuesidentified.Thisinturnreducespotentialinformationgapsandenhancestrust.Stateofpractice•TheAsiaPacificcompaniesdisclosedcomparableratesofengaginginternalandexternalstakeholderswhendeterminingmaterialESGissues.•Here,wenotethatjurisdictionssuchasHongKong,MalaysiaandTaiwanhavehigherpercentageofcompaniesdisclosingmaterialfactorsfrombothinternalandexternalstakeholders.Figure1:DisclosureofmaterialESGfactorsFigure2:DisclosureofstakeholderengagementindeterminingmaterialESGtopicsNote:Basefor“identificationofmaterialESGfactors”isallcompanies;basefor“Disclose10-20materialfactors”iscompanieswhichdisclosedmaterialfactors05Thestateofsustainabilityreporting:keyinsightsPwCSustainabilityCounts26Figure3:DisclosureofstakeholderengagementchannelsandrespondingtostakeholderconcernsWhythismattersUseofappropriateengagementchannelsalongwithatimelyresponsetoconcernsreassuresstakeholdersthatfeedbackonmaterialtopicsissoughtandactedupontosafeguardvalueandmanagerisks.Stateofpractice•81%ofcompaniesdisclosetheengagementchannelsadoptedforthevariousstakeholdergroups.•Whilemanyjurisdictionsshowstronglevelsofdisclosureregardingstakeholderengagementchannels,mostshowroomforimprovementinrespondingtostakeholderconcerns.•Only46%ofcompaniesreportedaddressingconcernsraisedbystakeholders.ThailandandMalaysiademonstratedthehighestlevelsofdisclosureformitigationstrategies.Strategiesreportedincludetheintegrationofproductstewardshipintoresearchanddevelopment,visitstoproductionfacilitiesandmandatorystafftraining.05Thestateofsustainabilityreporting:keyinsightsPwCSustainabilityCounts27StrategyandtargetsFigure4:DisclosureoflinkagesbetweensustainabilitytargetsandfinancialperformanceFigure5:DisclosureoftargetsWhythismattersCompanieswithclearly-definedtargetslinkedtotheirbusinessstrategyareastepclosertotrackingandrealisingthefinancialrelevanceoftheirESGmetrics.Demonstratinggreaterintegrationoftargetsandbusinessstrategyalsoindicatestoinvestorsthedegreetowhichthecompanyhasassimilatedsustainabilityissuesintoitsstrategyandriskmanagementprocesses.Stateofpractice•Over80%ofcompaniesdisclosedtargetslinkedtotheirbusinessstrategy.Targetswerepresentedintheformoflong-termandqualitativegoals,aswellasquantifiablemetrics.•However,onlyaboutone-third(29%)ofAsiaPacificcompaniesreportedthattargetswerelinkedtofinancialperformance.WhythismattersBothshorterandlonger-termtargetscanhelpensureimprovementstoESGareassuchasemissions,water,healthandsafety,thatarematerialtoanorganisation.Stateofpractice•Short-termtargetsaremostcommonlyreported.•Mid-tolong-termtargetsmentionedlessoften.Australiaisanexception,withalmostallcompaniesdisclosingbothmid-andlong-termtargets.•Ofthelong-termtargetscited,reductionofGHGemissions,carbonneutralitygoals,andincreaseinrepresentationoffemalesintopmanagementwerecommonlyreported.•85%ofcompaniesdisclosedshort-termtargets,73%disclosedmedium-termtargetsand71%disclosedlong-termtargets.05Thestateofsustainabilityreporting:keyinsightsPwCSustainabilityCounts281.https://www.pwc.com/gx/en/asia-pacific/net-zero/asia-pacific-code-red-to-go-green.pdfClimatechangeandriskmanagementFigure6:IdentificationofclimatechangeasasustainabilityissueFigure7:Identificationandmanagementofclimatechangerisks/opportunitiesWhythismattersAsiaPacific’svastpopulation,economiesandcommunitiesareextremelyvulnerabletoclimatechange.AccordingtoPwC’sCodeRed–AsiaPacific’sTimetoGoGreen1,publishedinNovember2021,theAsiaPacificregiondecarbonisedatarateof0.9%in2020,farshortofthe12.9%annualdecarbonisationrateneededtoreachthe1.5°CtargetintheParisAgreement.In2020,AsiaPacificwasresponsiblefor52%ofglobalenergy-relatedCO2emissions.Toachievethe1.5°Ctargetandreachnetzero,theAsiaPacificregionurgentlyneedstoaccelerateitsdecarbonisationefforts.Disclosuresrelatedtoclimatechangehavebecomeanincreasinglyvitalpartofsustainabilityreportingandtheworkofaddressingclimate-relatedtransitionandphysicalrisks.Companieswillencounterbothchallengesandopportunitiesastheyadapttheirstrategiesandbusinessmodelstoreflectincreasingregulatoryrequirementsandstakeholderexpectations.Stateofpractice•Themajorityofcompanies(84%)acrossalmostalljurisdictionshaveidentifiedclimatechangeasasustainabilityissue.•Allofthetop50companiesinTaiwanandalmostallofthetop50companiesinAustraliaandJapandisclosedclimaterisksandopportunities.•ThisalignstoourfindingsinthePwC’s25thAnnualGlobalCEOSurveyAsiaPacificwhichhighlightedthatonly18%ofthesampledcompaniesinternalandexternalstakeholderswerenotsignificantlyconcernedaboutclimatechange.WhythismattersGenerally,companieswhohaveidentifiedclimatechangeasamaterialtopichavealsodisclosedthedetailsoftheirclimate-relatedrisksoropportunities,andhavedisclosedtheirprocessesformanagingclimate-relatedrisks.Investorsandotherstakeholdersneedtounderstandhowanorganisation’sclimate-relatedrisksareidentified,assessedandmanaged,andwhetherthoseprocessesareintegratedacrossexistingriskmanagementsystems.Australia,JapanandTaiwanstandoutasjurisdictionsthathaveahighershareofcompaniesthathavedisclosedbothclimate-relatedrisks/opportunitiesandtheirrelatedprocessesformanagingclimate-relatedrisks.Stateofpractice•Althoughalargeproportion(84%)ofthetopcompaniesinAsiaPacificidentifiedclimatechangeasasustainabilityissue,aconsiderablylowershare(41%)discussedhowclimatechangemayimpacttheirbusinessandhowtheyaremanagingtherelevantrisks.05Thestateofsustainabilityreporting:keyinsightsPwCSustainabilityCounts29Figure8:Disclosureofintegratingclimate-relatedrisksintooverallriskmanagementFigure9:Disclosureoftargetsand/ortrackingofclimate-relatedrisks/opportunitiesWhythismattersIntegratingtheclimate-relatedrisksintoriskmanagementiscriticalinmanagingthem,whetherthatentailsadaptationormitigationmeasures.Suchdisclosurehelpsusersofclimate-relatedfinancialdisclosurestoevaluateorganisations’overallriskprofileandriskmanagementactivities.Stateofpractice•Thisisanareathatshowsroomforimprovement.AlthoughalargeproportionofthetopcompaniesinAsiaPacificidentifiedclimatechangeasasustainabilityissue,only36%disclosedhowitisintegratedintooverallriskmanagement.•ThisisconsistentwiththeglobalfindingsofTaskForceonClimate-relatedFinancialDisclosures2021StatusReportwherealowpercentageofreporters(27%)disclosetheintegrationofclimate-relatedrisksintoriskmanagement.WhythismattersTargetsareessentialtotrackingimprovementandprogresstowardsgoalssuchasreductionsincarbonintensityorfinancedemissions.Disclosingtargetsalsohelpstoensureaccountability.Stateofpractice•41%ofcompaniesreportedtargetsforclimate-relatedrisksandopportunitiesand/ordisclosedtheirperformanceagainstsuchtargets.•12%ofcompaniesintheAsiaPacificregionareworkingtowardssettingclimatetargetsbysigningontotheScienceBasedTargetsinitiative(SBTi).•Leadingcompaniesarealsoworkingtowardsdecarbonisingtheirsupplychainsbyengagingwiththeirsuppliers.05Thestateofsustainabilityreporting:keyinsightsPwCSustainabilityCountsGovernanceandresponsibility30Figure10:DisclosureregardingsustainabilitygovernanceWhythismattersDisclosingboardofdirectors’responsibilitiesoversustainabilityissuesandinstallinganappropriateESGgovernancestructurecanhelptoestablishoversightandresponsibility.Thisprovidesconfidencethatthenecessaryframeworkandresourcesareinplaceforthestrategytobedelivered.Upskillingforboardofdirectorsgivesanindicationoftheboard’sabilitytodischargetheirgovernanceandoversightduties.LinkageofESGperformancetoexecutiveremunerationalignssustainabilityperformanceandbehaviourswithsustainabilitytargets.Stateofpractice•Thefindingsrevealanencouragingtrendwhereover80%ofcompaniesstudiedhaveestablishedanddisclosedsustainabilitytargets,75%havedisclosedtheirESGgovernancestructureand67%havedisclosedtheirboardofdirectors’responsibility.Some60%ofcompaniesstudiedhavedisclosedallthree.•Australia,HongKong,Malaysia,SingaporeandTaiwanstandoutfordisclosuresofboards’responsibilitiesandcompanies’ESGgovernancestructures.•ReportingofboardofdirectorstrainingandlinkageofESGperformancetoremunerationwaslow(at24%and16%respectively).Australia,however,standsoutwithmostofitscompaniesreportinglinkagesbetweenESGperformanceandremuneration.•ItisinterestingtonotethatbasedonPwC’s25thAnnualGlobalCEOSurveyAsiaPacific,companiesrankinghighestonourcustomertrustindexaresignificantlymorelikelytohavenon-financialoutcomestiedtotheircompensation.05Thestateofsustainabilityreporting:keyinsightsPwCSustainabilityCountsNote:Basefor“Reportingscopedisclosed”isallcompanies;basefor“Reportingscopeexplained”iscompanieswhichdisclosedreportingscope31BuildingtrustWhythismattersDisclosureofreportingscopegivestransparencyoverwhatisincludedinthesustainabilityreport.Thisisespeciallycriticalgiventheevolvingmaturityofsustainabilityreporting.Stateofpractice•China,HongKong,Malaysia,Philippines,Singapore,andThailandhavehighershareofcompanieswithdisclosureandexplanationsoftheirreportingscope.•Generally,jurisdictionsthathaveahigherpercentageofreportingscopedisclosurearethosethathaverequirementsorrecommendationspertainingtothisdisclosure.WhythismattersAssuranceoverkeyareasofthesustainabilityreportaddscredibilityandbuildstrustinESGdisclosures,increasingconfidencelevelsamongusersofthereports.Italsoprovidesmanagementandshareholderswiththeconfidenceintheorganisation’sperformanceoverthereportingperiod.Stateofpractice•ESGassuranceremainsrelativelylowacrossAsiaPacific,exceptforTaiwan.Figure12:DisclosureofassuranceFigure11:Disclosureofreportingscope05Thestateofsustainabilityreporting:keyinsightsPwCSustainabilityCounts32OurapproachtosustainabilityreportingexcellencePwC06Inthefollowingdiagramweofferourviewonkeystepsinbuildingasustainabilityreport,includingattributesexpectedacrossanorganisation’ssustainabilityreportingjourney.PwCSustainabilityCountsLeading•Extending(andmeasuring)positiveclimateimpact•Product/service/operatingmodelinnovation-drivenbypurpose•Alignmentwithbeneficiaries’viewsLeveraging•Seeingexcessreturnsandnewinvestmentopportunities•‘Future-proofing’benefitsEmerging•ESGconsiderationsfullyintegratedintoriskframework•Ongoingmonitoring,measurementandmanagementofriskstoprotectvalueComplying•Regulatorycompliance•Reputationalrisk•OperationalresilienceApproach:Strategy-led,Transformation-ledorReporting-ledEmbeddataDevelopthereportDefinereportingambitionReviewstatus-quoIdentifygapsArticulateIntegraterisksandopportunitiesDeveloptheimplementationplan33PwC’sdistinctiveESGreportingofferingisdesignedtocreatevalue-forshareholdersandsociety-throughinsightful,roundedandtrustedreportingWhyitmattersBuildtrustImprovedcorporatereputation,andreinforcementoflicencetooperatewithhigherqualitydataandstandardisedESGreportingprocesses,systemsandinternalcontrolsBettertransparencyReportingwhat’smaterialtoyourbusinessusingestablishedstandardsandrespondingtostakeholderdemandandcurrentandfutureregulationOntopofrisksandopportunitiesAholisticviewofthecompanytoinformthedecisionsthatmanagerisk,andcreateopportunitiesIncreasedvalueImprovedemployeeengagement,opportunitiesforgreaterreturnsandaccesstocapitalfundingValuecreated•Aleadingsustainabilityreportingstrategythatharnessesstrategicopportunitiesfromregulatorycompliance•Articulationofstrategyinawaythatraisesstakeholderconfidenceandengagement•CreatinganenvironmentconducivetoreportingwithESGintegratedintocompanyculture,internalpoliciesandstructures•Efficientanddata-enabledreportingprocessesthatencourageachievementofsustainabilityobjectives•IncreasedmanagementcapabilityandESG-relevanttoolsthatoptimisedecisionmakingtoESGstrategicobjectives•Clearcommunicationofthevaluecreatedfromyoursustainabilitystrategy•Demonstrateyourachievementtosustainabilitytargets•PositionedasaleaderinenvironmentalimpactmeasurementandreportingLevelofambitionRegulatoryminimumStrategicriskmanagementLeveragingSustainablevaluecreationandimpactIncreasingmaturityofESGriskapproachPhase1Phase2Phase3Underpinnedbytechnology,robustdataandassurancereadysystemsPhase1DefineyourreportingstrategyPhase3EmbedandreportPhase2ImplementyourstrategyMonitorandrefine06OurapproachtosustainabilityreportingexcellencePwCSustainabilityCountsInthefollowingtable,wehighlightkeyareasforsustainabilityreportingexcellence,whyeachisimportantandwhatitwouldentailacrossmaturities.(Notethatreportingcompaniesshouldalsolooktotheirlocaljurisdiction’sspecificrequirementsorrecommendations.)34WhatWhyHowdoessustainabilityfitwithyourorganisation’spurposeandstrategy?OrganisationoverviewProvideanoverviewofyourorganisation’skeyactivitiesandtheenvironmentinwhichyouoperate.Thishelpstoviewyoursustainabilityinformationagainstthewidercontextofyourorganisation’sremit.Theoverviewisalsoimportantforclarifyingthescopeofthedatainthereporte.g.whichactivitiesarecoveredandwhicharenot.PurposeCommunicateaclearandsuccinctpurposethatexplainsyourorganisation’sraisond'êtrebeyondcreatingafinancialreturnforshareholders.Thisdemonstrateswhyyourbusinessexistsandwhatyouseektoachieve,creatingasharedambitionthatiscoretoyourbusinessandcleartoallstakeholders.StrategyDescribehowyoursustainabilitystrategyisintegratedintoyourcorecorporatestrategyanddemonstratehowitpermeatesyourbusiness.Thisprovesthatsustainabilityisnotjustan‘add-on’foryourorganisationbutisconsideredineveryactivity.Havingashort,mediumandlongtermsustainabilitystrategywillhelpyoutrackyourprogresstowardskeysustainabilitygoalsinthefuture.06OurapproachtosustainabilityreportingexcellencePwCSustainabilityCounts35WhatWhyHowdoyouconsideryourpriorities?MaterialityDemonstratethatyouhaveanunderstandingofthesustainabilityissuesthataremostrelevanttoyourorganisationandyourkeystakeholders.Thisprovesthatyouarefocusingonthemostimportantsustainabilityissueswhereyoureffortswillhavethegreatestimpact.StakeholderengagementExplainhowyouengagewithyourprincipalstakeholdersandhowthishasimpactedyoursustainabilitystrategy.Thisshowsthatyouhaveconsideredawiderangeofviewsandthereforemadeinformeddecisionsaboutprioritisingandactingonyoursustainabilityissues.RisksandopportunitiesExplainthekeystrategicrisksandopportunitiesforyourorganisationthatarisefromsustainabilityissues.Thisgivesconfidencethatyouhaveconsideredtheimpactsthatexternalsustainabilityfactorsmighthaveonthesuccessofyourbusinessandthatyouareactingonthem.06OurapproachtosustainabilityreportingexcellencePwCSustainabilityCounts36WhatWhyHowdoyoumonitorandmanageperformance?KPIsandtargetsIdentifyKPIsthataredirectlyrelevanttoyoursustainabilitystrategyandsetchallengingbutrealistictargetsthatyoucanassessyourperformanceagainst.Clearpresentationofprogresstowardstargetsdemonstratesthatyouareholdingyourselfaccountabletothegoalsyouhavesetforyourorganisation.ImpactsProvideaclearexplanationandquantificationofthesocial,environmentalandeconomicimpactsofyourbusiness.Thisdemonstratesthatyouhaveathoroughunderstandingofyourwiderimpactsonsocietyandtheenvironment.Thisunderstandingwillallowyoutomakemoreinformeddecisionstowardsbeingamoresustainablebusiness.GovernanceProvideaclearexplanationofthecompany’ssustainabilitygovernancestructureandexplainhowdirectorsandstaffareincentivisedtodeliveronthesustainabilitystrategy.Thisgivesconfidencethatthenecessaryframeworkandresourcesareinplaceforthestrategytobedelivered.Havingseniorstaffmemberslistedinthegovernanceframeworkfurtherdemonstratesyourcommitmenttothestrategy.06OurapproachtosustainabilityreportingexcellencePwCSustainabilityCounts37WhatWhyHowdoyouconsiderthebroaderviabilityofthebusiness?ValuechainConsiderrelevantupstreamanddownstreamvaluechainaspectsofyourbusinessinordertotakeaccountofallenvironmental,socialandeconomicimpacts,bothpositiveandnegative.Thisdemonstratesthatyouunderstandthewiderinfluenceofyourorganisationonsustainabilityissuesinsociety.Bythinkingholistically,youidentifyareasthatcreateagreaterpositiveimpactthanyouwouldbyonlyconsideringyourcoreoperations.FutureproofingDisclosethatyouhaveconsideredfutureresourceconstraintsthatmightaffectyourbusiness,e.g.non-financialareasincludingnaturalcapitalandhumancapital.Thisshowsthatyouaremonitoringandminimisinganyresourcerisksinordertopreventdisruptiontoyourorganisationinthefuture.Howdoyoureportwithclarityandtransparency?BalancedreportingPresentinformationinabalancedandtransparentfashionandexplainwhereandhowimprovementswillbemade.Acknowledgementofnotonlyyoursuccessesbutalsoyournegativesustainabilityimpactsgivesconfidencethatyouareaself-awareorganisation-onethatishonestandtransparentaboutprogresstowardssustainabilitygoals.06OurapproachtosustainabilityreportingexcellencePwCSustainabilityCounts38ReportingareasBasicreportingtipsIntermediatereportingtipsAdvancedreportingtipsOrganisationoverviewIntroduceyourorganisationbygivinganoverviewofyoursize,operationsandactivities.Contextualiseyoursustainabilityactivitiesinrelationtotheremitandobjectivesofyourorganisation.Explainboththedirectandindirectsustainabilityimpactsthatmightarisefromyourorganisation’sroleoractivities.PurposeDefineaclearpurposewhichshouldbeasuccinctstatement.Ensureyourpurposeiswell-alignedtoyourcorebusinessactivities.Referencetoyourpurposeshouldbeconsistentacrossallcompanycommunications.Thepurposeshouldformthefoundationtoyourcorebusinessstrategy.StrategyDemonstratehowyoursustainabilitystrategyisintegratedintoyourcorebusinessstrategyandalignedwithcoreobjectives.Clearlydescribeyoursustainabilitystrategyovertheshort,mediumandlong-term.Reportonstructures,systemsandactionplanswhichallowyoursustainabilitystrategytopermeateyourentireorganisation.Whererelevant,alignyourstrategytotheSDGsorincorporateaNetZeroAmbition.MaterialityReportwhichissuesyouhaveidentifiedasmaterialandwhy.Reportontheprocessthatwasundertakentodeterminethemostmaterialissuesandwhichkeystakeholderswereinvolved.Focusyourreportingonyourmaterialissues,linkingthemtoyourstrategyandKPIs.Whererelevant,alignyourmaterialissuestotheSDGs.Offervisualisationofyourissues.StakeholderengagementIdentifyyourorganisation’skeyinternalandexternalstakeholdersanddescribehowtheyhavebeenengaged.Describetheissuesthatstakeholdershaveidentifiedasimportant,howtheyhavebeenaddressedandhowtheywillbeaddressedgoingforward.Showlinkagebetweenstakeholderconsultationsandyourmateriality,strategy,andriskandopportunitiesplanningprocesses.Consideralternativemediaforcommunicatingmessagesfromyoursustainabilityreport.RisksandopportunitiesListthesustainability-relatedrisksandopportunitiesthatyourorganisationismanaging.Describetheactionplaninplacetoaddresstheserisksandopportunities.Disclosetherelevanceandfinancialimplicationsoftheserisksandopportunities.AspertheTCFDrecommendations,identifytheclimate-relatedrisksandopportunitiesfacedbyyourbusiness.Tipsonhowtomakeyourreportingmoreeffective(Notethatreportingcompaniesshouldalsolooktotheirlocaljurisdiction’sspecificrequirementsorrecommendations.)06OurapproachtosustainabilityreportingexcellencePwCSustainabilityCounts39ReportingareasBasicreportingtipsIntermediatereportingtipsAdvancedreportingtipsKPIsandtargetsDisclosethesustainabilityKPIsmostrelevanttoyourbusiness,includinghistoricperformancedatatoillustratetrendsovertimeSetspecificandquantifiableshortandmedium-termtargetsfortheseKPIs.DisclosefinancialimplicationsbehindKPIs.Whererelevant,alignyoursustainabilityKPIsandtargetstotheSDGs.ImpactsDiscussspecificallyandqualitativelywhichareasoftheenvironmentandsocietyyouimpactthroughyouroperationsandsupplychains.Disclosequantitativeindicatorsoftherelativesizeofyourimpactonsocietyandtheenvironment.Inmonetaryterms,discloseyourimpactonsocietyandtheenvironment.GovernanceIdentifytheboardmemberresponsibleforsustainabilityissuesandoutlineyoursustainabilitygovernancestructure.Showcasehowsustainabilitygovernancepermeatesyourbusiness,e.g.throughdepartmentheadswithsustainabilityresponsibilities.Reportonhowstaffareincentivisedtodeliveronthesustainabilitystrategythroughoutthecompany,andincludefinancialandnon-financialincentives.ValuechainConsiderthepositiveand/ornegativeeffectsofyoursupplychain,productsandservices.Reportquantitativedataonmaterialeffectsfromacrossyourvaluechain,bothpositiveandnegative,andstrategiesinplacetoaddressthese.Setspecifictargetsformaterialvaluechaineffectsandreportonprogresstowardsthem.FutureproofingDisclosesignificantuseofnaturalcapitals,e.g.water,land,timber.Explainwhetheryouexpectthattheavailabilityofanynaturalcapitalsmightberestrictedinthefuture.Describeyourstrategyformanagingyourrisk.Buildanunderstandingofyourorganisation’sclimatechangeresiliencebyconductingscenarioanalyses,aspertheTCFDrecommendations.BalancedreportingReportprogressagainstalltargets,whetherperformancehasbeengoodorbad.Explainpoorperformanceandhowyouwilladdressitgoingforward.Ifyoureachtargetsaheadofschedule,setmoreambitioustargetsforthefuture.AssuranceReferenceindependentdata,e.g.externalbenchmarking,toensurethecredibilityofyourreporting.Obtaininternalorexternalassuranceoverthesustainabilitydatainyourreport.Includetheassuranceopinion,whichshouldclearlystatethescopeofthework,theassurancestandardfollowedandtheworkcompleted.06OurapproachtosustainabilityreportingexcellencePwCSustainabilityCounts40Otherusefulinformation–AppendixPwC07PwCSustainabilityCounts41PresentrequirementsUpcomingrequirementsTheUnitedStatesofAmerica(U.S.)In2010,theU.S.SecuritiesExchangeCommission(SEC)releasedaninterpretivereleasetitled“CommissionGuidanceRegardingDisclosureRelatedtoClimateChange”.In2020,theSECadoptedfinalamendmentsunderRegulationS-KaspartofaDisclosureEffectivenessInitiative.Oneofthekeyrevisionsistheadditionofhumancapitalmanagementdisclosure.HumancapitaldisclosuresOnAugust262020,theSECamendeddisclosurerequirementsrelatingtothedescriptionofthebusiness,legalproceedings,andriskfactors.ThesearerequiredonForm10-Kandregistrationstatements(FormS-1).Thefinalrulesrequireregistrantstodisclosecertainaspectsoftheirhumancapitalresourceswithintheoverallframeworkofprinciples-baseddisclosures.Specifically,thefollowingdisclosuresarerequiredtotheextenttheyarematerialtotheunderstandingoftheregistrant’sbusinessasawhole:•Adescriptionoftheregistrant’shumancapitalresources,includingthenumberofpersonsemployedbytheregistrant,and•Anyhumancapitalmeasuresorobjectivesthattheregistrantfocusesoninmanagingthebusiness,potentiallyincludingmeasuresorobjectivesthataddressthedevelopment,attractionandretentionofpersonnel.Ifinformationdisclosedismaterialtoaparticularsegmentofthebusiness,theregistrantshouldadditionallyidentifythatsegment.SEC’sclimatedisclosureproposalOn21March2022,theSECproposednewrulesthatwouldsignificantlyincreaserequireddisclosuresaboutclimate-relatedrisksthatarereasonablylikelytohaveamaterialimpactonacompany’sbusinessorconsolidatedfinancialstatements.Asproposed,thenewruleswouldrequiredisclosuresinregistrationstatementsandperiodicreports,suchasForm10-KandForm20-F.SomeoftheproposeddisclosuresarebasedonthedisclosureframeworkdevelopedbytheTCFD.Theproposalwouldrequiredisclosuresfordomesticregistrantsandforeignprivateissuersasfollows:•Climate-relatedphysicalandtransitionrisksandtheiractualorlikelymaterialimpactsontheregistrant’sbusiness,strategy,andoutlook•Theregistrant’sgovernanceofclimate-relatedrisksandrelevantriskmanagementprocesses•Scope1andScope2greenhousegas(GHG)emissionswithScope3GHGemissionstobephasedin•Informationaboutclimate-relatedtargetsandgoals,andtransitionplans,ifany.InadditiontothedisclosuresrequiredbytheaboveproposedadditionstoRegulationS-K,registrantswouldberequiredtoincludecertainclimate-relatedfinancialstatementmetricsandrelateddisclosuresinanotetotheauditedfinancialstatements.Thedisclosureswouldincludethefinancialimpactsofsevereweathereventsandothernaturalconditionsandidentifiedclimate-relatedrisksontheconsolidatedfinancialstatements.Disclosurewouldnotberequirediftheaggregatedimpactislessthan1%ofthetotallineitemfortherelevantfiscalyear.Otherupcomingproposals:•Upcomingproposedruleonissuers’HumanCapitalManagementDisclosure•UpcomingproposedruleonCorporateBoardDiversity•PreruleworkonthirdPartyServiceProviders•UpcomingproposedrulerelatedtoInvestmentCompaniesandInvestmentAdviserstoaddressmattersrelatingtoESGfactors•SECproposedamendmentstoitsrulestoenhanceandstandardizedisclosuresregardingcybersecurityriskmanagement,strategy,governance,andincidentreportingbypubliccompanies.SustainabilityreportingrequirementsinotherkeyjurisdictionsThetablebelowoutlinescurrentandupcomingsustainabilityrequirementsintheUnitedStatesofAmerica,theUnitedKingdomandtheEuropeanUnion.TheinformationisupdatedtillApril2022,aroundthetimeofthisreport.07Otherusefulinformation–AppendixPwCSustainabilityCounts42PresentrequirementsUpcomingrequirementsTheUnitedKingdom(“UK”)ThecurrentmandatoryreportingrequirementsrelatingtoESGintheUKaresummarisedbelow:•Section172(1)statementofCompaniesAct2006/UKCorporateGovernanceCode2018:Stakeholderengagement•Sections414CAand414CBoftheCompaniesAct2006:Thenon-financialinformationstatement•ModernSlaveryAct•TheEqualityAct2010(GenderPayGapInformation)Regulations2017•MandatoryTCFD•StreamlinedEnergyandCarbonReporting(SECR)•SECRpolicywasimplementedon1April2019,whentheCompanies(Directors’Report)andLimitedLiabilityPartnerships(EnergyandCarbonReport)Regulations2018cameintoforce.Businessesinscopeneedtocomplyforfinancialyearsstartingonorafter1April2019.TCFDhasbeenmademandatoryfrom1January2021forpremiumlistedcompaniesona‘complyorexplain’basis.Morecompaniesarebeingscopedinovertime.Climate-relatedfinancialdisclosuresalignedwithTCFDframeworkhavebeenextendedtoforallotherlistedcompanies,unlistedcompanies,limitedliabilitypartnershipswithgreaterthan£500mturnoverandmorethan500employees,banksandinsurers.Thisappliesforperiodsbeginningonorafter6April2022.•ThegovernmentsetsoutaroadmapfortherestoftheUKeconomyby2025.•In2023,anewUKrequirementwillcomeintoeffectforcompaniestopublish‘transitionplans’,settingouthowtheyplantodecarbonise.Theprecisedetailsremainindevelopment,buttherequirementformoredetailabouttimingsandmilestonesinacompany’splanwilllikelycontributetomoredetailedclimatedisclosuresaswell.•TheFCAhaspublisheditsESGprioritiesthatmayresultinmoredisclosureandoversightonESGissues,includingclimate,diversityandinclusion.•Thereiscurrentlyaconsultationprocessunderwayonsustainabilitydisclosurerequirementsandinvestmentlabels.EuropeanUnion(EU)EUlawrequirescertainlargecompaniestodiscloseinformationonthewaytheyoperateandmanagesocialandenvironmentalchallenges.Directive2014/95/EU,alsocalledtheNon-FinancialReportingDirective(NFRD),laysdowntherulesondisclosureofnon-financialanddiversityinformationbycertainlargecompanies.EUrulesonnon-financialreportingcurrentlyapplytolargepublic-interestcompanieswithmorethan500employees.UnderNFRD,largecompanieshavetopublishinformationrelatedto:•environmentalmatters•socialmattersandtreatmentofemployees•respectforhumanrights•anti-corruptionandbribery•diversityoncompanyboards(intermsofage,gender,educationalandprofessionalbackground).InJune2017,theEuropeanCommissionpublisheditsguidelinestohelpcompaniesdiscloseenvironmentalandsocialinformation.InJune2019,theEuropeanCommissionpublishedguidelinesonreportingclimate-relatedinformation,whichinpracticeconsistofanewsupplementtotheexistingguidelinesonnon-financialreporting,whichremainapplicable.InApril2021,theEuropeanCommissionpublisheditsproposalforaCorporateSustainabilityReportingDirective(CSRD),whichwouldamendtheexistingreportingrequirementsoftheNFRD.Thisproposalisdesignedtoimproveandstandardisethedisclosureofsustainabilityinformationbycompanies.Theproposal,amongothers:•extendsthescopetoalllargecompaniesandallcompanieslistedonregulatedmarkets(exceptlistedmicro-enterprises)•requirestheassuranceofreportedinformation•introducesmoredetailedreportingrequirements,andarequirementtoreportaccordingtomandatoryEUsustainabilityreportingstandards•requirescompaniestodigitally‘tag’thereportedinformation,soitismachinereadableandfeedsintotheEuropeansingleaccesspointenvisagedinthecapitalmarketsunionactionplan.TheEuropeanCommission’sproposalforaCSRDenvisagestheadoptionofEUsustainabilityreportingstandards.ThedraftstandardswouldbedevelopedbytheEuropeanFinancialReportingAdvisoryGroup(EFRAG).InJanuary2022,abatchofworkingpaperswerereleasedtoprovidefurtherinformationonthedevelopmentofdraftEuropeanSustainabilityReportingStandards(ESRS).Includedinthisbatchisaworkingpaperonclimatechange.Itclarifieswhatinformationisimportantwithregardtoclimatetargetsandnetzeroambitions,andinwhatformthisinformationshouldbeprovided.Italsoprovidesacomprehensivestructureforthepresentationofclimate-relatedinformationtosimplifyassessmentandcomparisonbyinvestors.07Otherusefulinformation–AppendixPwCSustainabilityCountsAnoverviewofsustainabilityreportingrequirementsspecificforfinancialinstitutionsacrossAsiaPacificPresentrequirementsUpcomingrequirementsAustralia•TheAustralianPrudentialRegulationAuthority(APRA)releaseditsdraftPrudentialPracticeGuideCPG229(ClimateChangeFinancialRisks)forbanks,insurersandsuperannuationtrusteesonmanagingthefinancialrisksassociatedwithclimatechange.China•AsfinancialinstitutionsinChinalaunchnewproductstosupportsustainableinvestmentinclean-techsolutions,rangingfromexchange-tradedfunds(ETFs)togreenbonds,theChinesegovernmenthassteppedinwiththeintentionofregulatingwhathasbecomeagrowingsub-sectoroffinancialactivity.HongKong•ThestrategicframeworkforthedevelopmentofgreenfinanceinHongKongwasfirstannouncedin2018.In2019,theSFCcompletedandpublishedResultsofthe“SurveyonIntegratingESGfactorsandClimateRisksinAssetmanagement”.•InAugust2021,SFCpublishedtheconsultationconclusionsonthemanagementanddisclosureofclimate-relatedrisksbyfundmanagersIndonesia•FinancialInstitutionsandarerequiredtopublishSustainabilityReporting(IndonesiaFinancialServicesAuthority)andimplementsustainablefinance.Malaysia•In2021,BNMreleasedtheClimateChangeandPrinciplebasedTaxonomy(CCPT)toencouragetheadoptionofESGprinciplesinfinancialinstitutions.•BNMissuedanExposureDraftonClimateRiskManagementandScenarioAnalysis,whichincludesahighlightthatfinancialinstitutionsshallmakeTCFD-aligneddisclosuresby31December2024.•BNM’sFinancialSectorBlueprint2022-2026strategiesincludestrengtheningpracticesinthedisclosureofclimateriskbyfinancialinstitutions.Singapore•TheMonetaryAuthorityofSingaporerequiresallFinancialinstitutionsinSingaporetohaveEnvironmentalRiskManagementdisclosures(effective2021)whichleveragestheTCFDframework.SouthKorea•InDecember2021,theMinistryofEnvironmentannouncedtheKoreanGreenClassificationSystem(K-Taxonomy)Guidelinespreparedovertwoyearstopromotegreenfinancerevitalisationandmovetowardacarbon-neutralsociety4307Otherusefulinformation–AppendixPwCSustainabilityCountsAboutCentreforGovernanceandSustainability,NUSBusinessSchool44TheCentreforGovernanceandSustainability(CGS),formerlyknownasCentreforGovernance,InstitutionsandOrganisations(CGIO),wasestablishedbytheNationalUniversityofSingapore(NUS)BusinessSchoolin2010.Itaimstospearheadrelevantandhigh-impactresearchoncorporategovernance(CG)andcorporatesustainability(CS)issuesthatarepertinenttoinstitutions,governmentbodiesandbusinessesbothinSingaporeandAsia.Thisincludescorporategovernanceandcorporatesustainability,governanceoffamilyfirms,governmentlinkedcompanies,businessgroups,andinstitutions.CGSalsoorganizeseventssuchaspubliclectures,industryroundtables,andacademicconferencesontopicsrelatedtogovernanceandsustainability.CGSisthenationalassessorforthecorporatesustainabilityandcorporategovernanceperformanceoflistedcompaniesinSingapore.MoreinformationaboutCGScanbeaccessedathttps://bschool.nus.edu.sg/cgs/Formorethan50years,NUSBusinessSchoolhasofferedarigorous,relevantandrewardingbusinesseducationtooutstandingstudentsfromacrosstheworld.FoundedinthesameyearthatSingaporegainedindependence,NUSBusinessSchoolstandstodayamongtheworld’sleadingbusinessschools.ItisdistinctiveforofferingthebestofglobalbusinessknowledgewithdeepAsianinsights,preparingstudentstoleadAsianbusinessestointernationalsuccessandtohelpglobalbusinessessucceedinAsia.TheSchoolattractsadiversityofsmartandtalentedstudentstoourbroadportfolioofacademicprograms,includingBBA,MBA,ExecutiveMBA,MScandPhDprogramsinadditiontoourcustomisedandopenenrolmentExecutiveEducationcourses.AdmissiontoNUSBusinessSchoolishighlycompetitive,andweareproudoftheexceptionalqualityofourstudents.Formoreinformation,pleasevisithttps://bschool.nus.edu.sg/.07Otherusefulinformation–AppendixAboutPwCWithofficesin156countriesandmorethan295,000people,weareamongtheleadingprofessionalservicesnetworksintheworld.Wehelporganisationsandindividualscreatethevaluetheyarelookingfor,bydeliveringqualityinAssurance,TaxandAdvisoryservices.Weareacommunityofsolverscombininghumaningenuity,experienceandtechnologyinnovationtodeliversustainedoutcomesandbuildtrust.ItalladdsuptoTheNewEquation.AboutPwCAsiaPacificBecauseofthecross-bordernatureofclientservice,wehaveseenanincreasingcollaborationduringrecentyearswithinthePwCnetworkatregionallevel.ThiscollaborationisalsodrivenbytheneedtomaximisethebusinessopportunityintheAsiaPacificregionandpositionourselvesforthefuture.Wehavemuchgreaterinvestmentandinnovativepowerasaregion.Forthesereasons,thePwCmemberfirmsthathaveoperationsinAustralia,Cambodia,HongKong,Indonesia,Japan,Laos,Macau,Malaysia,China,Myanmar,NewZealand,PapuaNewGuinea,Philippines,Singapore,Taiwan,Thailand,TimorLesteandVietnamhaveagreedonacollaborativearrangement,collectivelyknownasPwCAsiaPacific.Findoutmoreandtelluswhatmatterstoyoubyvisitinghttps://www.pwc.com/asiapacificPwCSustainabilityCountsImplementingIntegratedReportingPwCsustainability-relatedthoughtleadershippublications45Stakeholdersareaskingquestions:HowtotellthemacredibleESGstoryEnhancingthecredibilityofnon-financialinformation:investorperspectivePwC’sGlobalinvestorsurvey,TheeconomicrealitiesofESG01020304Excellenceinsustainabilityreporting:AreviewofleadingUKcompanies(2021)ESGreportinginAustralia-thefullstory,orjustthegoodstory?ClimatechangeinFTSE350annualreports:asnapshotoftrends2020/21ESGReportingStudyforHongKongListedCompanies20210506070807Otherusefulinformation–AppendixPwCSustainabilityCounts46ContactsLeadauthorsEu-LinFangPartner,SustainabilityandClimateChangeLeaderPwCSingaporeeu-lin.fang@pwc.comProfessorLawrenceLohDirector,CentreforGovernanceandSustainability(CGS)NUSBusinessSchoolNationalUniversityofSingaporebizlohyk@nus.edu.sgAndrewChanPartner,SouthEastAsia’sConsultingServicesSustainability&ClimateChangeLeaderPwCMalaysiaandrew.wk.chan@pwc.comAnnabellChartresPartner,ESGLeaderPwCNewZealandannabell.l.chartres@pwc.comAlexanderCabreraPartner,ESGLeaderPwCPhilippinesalex.cabrera@pwc.comEu-LinFangPartner,ESGLeaderPwCSingaporeeu-lin.fang@pwc.comElizaLiLeaderofSustainabilityandClimateChangeServicesPwCTaiwaneliza.li@pwc.comChrisSuradejvibulPartner,ESGLeaderPwCThailandchris.suradejvibul@pwc.comBeeHanThengPartner,ESGLeaderPwCVietnambee.han.theng@pwc.comESGleadersIvyKuoPartner,PwCAsiaPacificESGLeaderPwCChinaivy.ws.kuo@cn.pwc.comJonChadwickPartner,ESGLeaderPwCAustraliajon.d.chadwick@pwc.comAmyCaiPartner,ESGManagingPartnerPwCChinaamy.cai@cn.pwc.comSambitoshMohapatraPartner,ESGLeaderPwCIndiasambitosh.mohapatra@pwc.comJulianSmithPartner,ESGLeaderPwCIndonesiasmith.julian@pwc.comToshiyaBannoPartner,ESGCentreofExcellenceLeaderPwCJapantoshiya.banno@pwc.comYukiIsogaiPartner,ESGCentreofExcellenceTechnicalLeaderPwCJapanyuki.isogai@pwc.comStevenKangPartner,ESGLeaderSamilPricewaterhouseCoopers,SouthKoreasteven.c.kang@pwc.comAuthors&CGSResearchProjectTeamLayHsiahLimSeniorManager,AssurancePwCSingaporelay.hsiah.lim@pwc.comAnnetteAmySinghSeniorResearchAssociateCGS,NUSBusinessSchoolNationalUniversityofSingaporeannette_singh@nus.edu.sgAsterNguyenThiThuyResearchAssociateCGS,NUSBusinessSchoolNationalUniversityofSingaporeaster.nguyen@nus.edu.sgSharmineTanSeniorSustainabilityAnalystCGS,NUSBusinessSchoolNationalUniversityofSingaporesharminetsm@yahoo.comVerityThoiBusinessDevelopmentLeadCGS,NUSBusinessSchoolNationalUniversityofSingaporeverity.thoi@nus.edu.sg07Otherusefulinformation–Appendix©2022PricewaterhouseCoopers.Allrightsreserved.PwCreferstothePwCnetworkand/oroneormoreofitsmemberfirms,eachofwhichisaseparatelegalentity.Pleaseseewww.pwc.com/structureforfurtherdetails.Thiscontentisforgeneralinformationpurposesonly,andshouldnotbeusedasasubstituteforconsultationwithprofessionaladvisors.www.pwc.com/asiapacific
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