Environmental, Social, Governance and Geopolitical factors are increasingly becoming co-dependent — they influence and reinforce each other in highly complex and competing ways.
ESG- Environment, Social, Governance is no longer just a corporate or investor concern—it is increasingly intertwined with global power structures, political risk, and strategic decision-making codependency.
Geopolitical developments influence ESG risks, disclosure standards, and investment flows — while ESG agendas, in turn, reshape global economic alliances, trade patterns, and strategic priorities. For businesses, investors, and policymakers, treating ESG and geopolitics as separate spheres is no longer viable.
How They Are Co-Dependent:
Geopolitics shapes ESG risks and priorities
Energy security concerns (e.g. war in Ukraine) influence the pace of the green transition, pushing countries to accelerate renewables or, conversely, return to coal or gas.
Trade policies, sanctions, and regional instability affect ESG reporting, supply chain transparency, and ethical sourcing.
International climate agreements and diplomacy (like COP summits or carbon border adjustment mechanisms) directly inform national ESG regulations and investor pressure.
ESG influences geopolitical strategy
Countries are using green industrial policies (like the U.S. Inflation Reduction Act or EU Green Deal) as tools for economic security and influence.
Nations leading in ESG standards (e.g., EU taxonomy, mandatory disclosures) are setting global norms that others must adapt to — a form of soft power.
Multinational companies with strong ESG commitments may withdraw from or reshape operations in geopolitically risky areas, affecting diplomatic and economic relationships.
How is ESG Reporting Interpreted, Implemented, and enforced in Australia and the Asia region.
APAC is the Second Most ISSB-Ready Region. Taking effect globally in January 2024, 13 APAC jurisdictions have already committed to ISSB-aligned regulations, which will phase in by 2025. APAC’s ESG landscape is evolving quickly, driven by regulatory pressures, investor expectations, and corporate sustainability efforts.
The Asia-Pacific (APAC) region is rapidly advancing in ESG (Environmental, Social, and Governance) initiatives, with evolving regulations and sustainability strategies. Countries across APAC are adopting ESG frameworks to align with global standards like the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD).
Note: Acronyms’ alphabet soup explained, ‘below’
Australia
Australia’s mandatory climate-related financial disclosure regime commenced on 1 January 2025, following the passage of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024. The Australian Sustainability Reporting Standards (ASRS), closely aligned with the ISSB’s IFRS S1 and S2 standards, require disclosures from both listed and unlisted entities. The implementation is phased over several years, starting with large entities and gradually encompassing smaller ones. (Allens, Deloitte United States, The Australian)
China
In December 2024, China’s Ministry of Finance released the “Corporate Sustainability Disclosure Standards – Basic Standards,” aligning with ISSB frameworks. Mandatory ESG reporting for large, listed companies is set to begin in 2026, with full compliance across sectors targeted by 2030. These standards emphasize governance, strategy, risk management, and metrics, adhering to the double materiality principle. (casi.net, ESG News, Ogier)
Asia-Pacific Region
Singapore: Mandatory climate-related disclosures for listed issuers are set to begin from financial year 2025, with plans to extend requirements to large non-listed companies thereafter. (Eye on ESG)
Hong Kong: The Hong Kong Stock Exchange has mandated ESG reporting for listed companies since 2016. Enhanced climate-related disclosures aligned with ISSB standards are scheduled to take effect on 1 January 2025, with full compliance required for financial years starting on or after 1 January 2026. (ESGpedia)
Japan: The Sustainability Standards Board of Japan (SSBJ) released its Sustainability Disclosure Standards on 5 March 2025, aligning with ISSB frameworks. (Credibl ESG)
Indonesia: While ESG disclosures are required for listed companies, there is no mandate to use specific international standards. However, Indonesia is progressing towards aligning with ISSB standards. (ESGpedia)
South Korea: Mandatory ISSB-aligned disclosures, including Scope 1 and 2 greenhouse gas emissions, will be required for all listed issuers starting in 2025, and for large non-listed companies from 2027. (Latham & Watkins)
First. Get up to speed with your Acronyms:
ESG : Environmental factors emphasize sustainability efforts like carbon neutrality, pollution control, and ethical treatment of nature and animals. Social criteria examine business relationships, community engagement, and human rights protections across the supply chain. Governance ensures transparency in financial reporting, ethical leadership, and fair decision-making processes for stakeholders.
ESG factors can affect enterprise value of IFRS S1 and IFRS S2 – International Reporting Standards.
Source: https://www.esgprofessionalsnetwork.com/an-infographic-of-the-esg-reporting-landscape/
ISSB stands for the International Sustainability Standards Board. It was established by the IFRS Foundation in November 2021 to develop a comprehensive global baseline of sustainability disclosure standards that provide investors and capital markets with consistent, comparable, and reliable sustainability-related financial information—particularly focusing on climate-related risks and opportunities.
The ISSB’s two key inaugural standards of the International Financial Reporting Standards – Sustainability 1& 2 are: IFRS S1– General Requirements for Disclosure of Sustainability-related Financial Information. IFRS S2– Climate-related Disclosures
How IFRS S1 and S2 relate to ESG:
IFRS S1 and IFRS S2 are part of the ESG landscape, specifically focused on disclosures related to environmental, social, and governance (ESG) risks and opportunities that could affect a company’s financial performance.
IFRS1 & IFRS S2 are financial materiality standards — meaning they focus on how ESG factors affect enterprise value (i.e. risks and opportunities that are relevant to investors) – aligning with a “single materiality” approach. Eg: What sustainability-related issues are material to investors and the company’s financial performance?
These do not require disclosure of a company’s broader societal or environmental impact unless it affects enterprise value (unlike the EU’s CSRD, which uses a “double materiality” lens of impact and financial across the entire supply chain).
IFRS S1 covers:
Governance of sustainability-related risks and opportunities
Strategy and risk management
Metrics and targets used to monitor them
All material sustainability topics (including environmental, social, and governance)
IFRS S2 focuses specifically on:
Climate-related disclosures
Aligned with the TCFD recommendations
Includes Scope 1, 2, and eventually Scope 3 emissions
Transition plans, climate scenario analysis, and risk resilience
These standards are aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and are designed to work alongside traditional financial reporting standards.
