New Era: The Shift Toward Sustainability and Digital Reporting in South East Asia

The business world is on the cusp of a significant transformation in how annual reports are produced, driven by new sustainability disclosure mandates. These changes require companies across various jurisdictions to adapt to new reporting standards and prepare for further complexities that will reshape the landscape of corporate reporting.

The Push for Sustainability Reporting

In June 2023, the International Sustainability Standards Board (ISSB) under the IFRS Foundation published the IFRS Sustainability Disclosure Standards. These standards consist of two parts: IFRS S1, which covers General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2, which focuses on Climate-related Disclosures. Jurisdictions around the world are starting by mandating localized standards based on IFRS S2 first, with expectations that IFRS S1 mandates will soon follow. Looking ahead, the ISSB is developing additional standards related to nature, biodiversity, and human capital.

Sustainability reporting is rapidly evolving from a trend to a necessity. Investors, regulators, and stakeholders demand transparency, and the ISSB standards are poised to become the benchmark for global reporting practices.

Southeast Asia: Unified Approaches with Local Variations to Sustainability Reporting

Singapore: Starting from fiscal year FY2025, Climate Related Disclosures (CRD) including Scope 1 and Scope 2 GHG emissions will become mandatory for listed companies, and from FY2027 for large non-listed companies with annual revenue larger than 1 billion SG$ and total assets larger than 0.5 billion SG$. Additionally, listed companies will be required to include Scope 3 GHG emissions from FY2026 and obtain external limited assurance on Scope 1 and Scope 2 emissions from FY2027.

Malaysia: Following a consultation period from 15 February 2024 to 29 March 2024 by the Malaysia Advisory Committee on Sustainability Reporting, Malaysia plans to adopt the ISSB standards starting FY2025.

Hong Kong: The government collaborated with financial regulators and stakeholders to create a roadmap for adopting the ISSB Standards. The Hong Kong Institute of Certified Public Accountants (HKICPA) has been designated as the sustainability reporting standard setter. Mandatory disclosure of Scope 1 and Scope 2 GHG emissions will be required for large cap and other main board issuers, including mid-sized and small listed companies, for reporting years starting on or after 1 January 2025. For other disclosures, a "Comply or explain" approach will apply in FY2025, becoming mandatory for large cap issuers from FY2026.

Taiwan: The Financial Supervisory Commission released a roadmap on 17 August 2023 for adopting the ISSB standards. Large cap listed companies with a capital of more than 10 billion NT$ will need to report starting over FY2026. Companies with a capital between 5 billion NT$ and 10 billion NT$ will follow over FY2027, and other listed companies by FY2028.

These timelines and specific group targets across Singapore, Malaysia, Hong Kong, and Taiwan reflect each jurisdiction’s commitment to integrating international standards while accommodating local economic and regulatory landscapes.

Increasing Demands on the Reporting Process

The introduction of sustainability disclosures necessitates significant changes in how companies prepare their reports. More content, more data, and more people involved are just the beginning. There is also a need to integrate with ESG data management systems, which play a crucial role in gathering, cleansing, and consolidating sustainability-related data.

This expansion in reporting requirements imposes greater stress on production processes, requiring enhanced coordination and more robust workflows. The reliance on traditional tools, which may be rigid and error-prone, is being challenged, pushing companies to consider more dynamic and flexible reporting solutions.

The Transformative Impact of Digital Reporting

The transformation extends beyond just content and coordination. The most significant change on the horizon is the shift to digital or electronic reporting formats.

Currently, annual reports are often published in PDF format, with some companies also using microsites to enhance accessibility. However, to achieve full transparency, future reports will need to be made machine-readable. This involves tagging data and narratives based on taxonomies and adopting digital formats for publication.

In the European Union, the Corporate Sustainability Reporting Directive (CSRD) mandates such changes by 2025/2026. Beyond the EU, the IFRS Foundation has introduced the IFRS Sustainability Disclosure Taxonomy to support this transition, and the Global Reporting Initiative (GRI) is also contributing with its own sustainability taxonomy.

This shift to digital reporting signifies a fundamental change in how companies will produce and distribute their annual reports, necessitating investments in new technologies and processes to ensure compliance and maintain competitiveness.

To learn more, see our blog post ‘The Rise of Digital Reporting in Corporate Disclosure’.

Conclusion: The New Reporting Landscape

The landscape of annual reporting is transforming, driven by the dual forces of sustainability mandates and digital evolution. Companies must now prepare not just to meet these new requirements but to leverage them as opportunities to enhance their transparency and engagement with stakeholders. With careful planning and strategic investment, businesses can successfully navigate this new era and set a standard for future reporting practices.