Many Asian countries are creating and defining Environmental, Social, and Governance (ESG) taxonomies. In some countries, taxonomies for sustainable finance have been created; in others, taxonomies are in various stages of development. So, is this multiplicity an obstacle to a greener future?
To an extent, this divergence is inevitable as regional governments in Asia are keen on maintaining the autonomy of their economies. Hence, they would rather not have systems developed elsewhere parachuted into place. However, for companies operating across Asian jurisdictions, this multiplicity presents difficult and expensive compliance and reporting challenges.
Meeting these challenges will require a considerable capacity-building effort by regulators, policymakers, and adopters in the ESG sphere. It may also require an end to the voluntary nature of many existing Asia-Pacific taxonomies. A mandatory transition would – after a period of testing and trialing voluntary standards – help accelerate the adoption pace.
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