Pedro Massena with Rahul Prakash
Twenty years ago, if a CEO was asked to merge sustainability with their corporate strategy they would have assumed someone was trying to sabotage the business. Changing the focus away from profits was unthinkable. But in-house legal teams have proven critical for finding ways to make sure sustainability doesn’t need to bite into the bottom line.
In the bustling and diverse Asia-Pacific region, Environmental, Social, and Governance (ESG) principles have rapidly reshaped how businesses operate. From the vibrant markets of Southeast Asia to the technological powerhouses of Japan, China and South Korea, companies are slowly learning how to navigate a complex yet rewarding path toward a more profitable – and sustainable – growth. This journey is not just about compliance; it’s about innovation, resilience and longterm prosperity.
The Asia-Pacific is a dynamic mosaic of cultures and economies, where each company shares the same value of contributing in their own way to a larger, cohesive picture of sustainable development. Here, ESG isn’t just an acronym – it’s written into the business culture. Governments and businesses alike are crafting robust frameworks to combat climate change, enhance transparency into their supply chains and promote social equity. Take Singapore’s Green Plan 2030, for instance. It’s a bold roadmap aiming for carbon neutrality and sustainable living. Or consider China’s ambitious goal to achieve carbon neutrality by 2060, which is already driving a massive shift towards renewable energy and eco-friendly practices.
The stakes are high, given that the planet’s ecosystem may just be at risk. But the rewards of ESG are even higher. Investors are increasingly drawn to companies with strong ESG credentials,recognising that these commitments can prove a company is both mitigating the major global risks and generating long-term returns. Investors see companies which prioritise ESG are not only safeguarding the environment but are also appealing to conscious consumers who value ethical practices. In other words, there’s money in sustainability.
A good example of ESG being beneficial for business is the success experienced at Singapore-headquartered Sustainable Metal Cloud . Its proprietary cooling technology helps to reduce the power consumption of data centres by up to 50% and is immensely helpful in helping data centres and customers who use data centres achieve their ESG targets, said Sustainable Metal Cloud’s senior legal counsel Alex Liam.
“Our internal recycling programme also ensures recycling of electronic waste and general litter from employees, aligning with circular economy practices. Furthermore, our governance policies, like our Code of Conduct, reinforce ethical conduct and accountability across the entire company. These wins are helping to nurture a culture of sustainability within the organisation,” Liam said.
Yet, the ESG journey is not without its challenges. The regulatory labyrinth of ever-changing ESG rules across the region demands that in-house legal teams develop a deep understanding of local contexts and take a flexible approach to compliance. That approach is far more than ticking boxes – ESG is about embedding sustainability into the DNA of the wider business. This means detailed reporting, rigorous risk management and, above all, a commitment to continuous improvement and stakeholder engagement.
Jardine Cycle & Carriage Group GC and CSO Jeffrey Tan said ESG is the story of a region on the rise. He pointed to how ESG has already changed the way companies look at capital allocation for M&A projects and to other assets in an organisation’s portfolio.
“It goes beyond a mere financial returns. In considering each investment, issues such as decarbonisation pathways and stakeholder engagement are now key elements.
“Other factors are also assessed, such as how an investment might affect biodiversity and deforestation; if waste management can be safely organised; whether human rights and labour practices will be respected and, of course, the correct capture of emissions. It’s good to see companies approaching investing in a more holistic and informed manner,” Tan said.
But not all decision-makers are convinced. Some business leaders remain nervous about the looming ESG transition. These people read the same newspapers and scientific studies as everyone else, but something about the message hasn’t quite clicked in their heads.
Carina Wessels, executive of Governance, Legal, Compliance, and Sustainability at AlexForbes in South Africa, hit the nail on the head: despite longstanding regulations, ESG integration in retirement funds often remains superficial.
“Research from the Financial Sector Conduct Authority painted a stark picture for this sector: a mere 2% of these funds in the region align with the Sustainable Development Goals (SDGs), and only 3% verify their environmental and social impact.
“Even in more mature jurisdictions, World Bank findings echo this lag in sustainability measurement and disclosure among retirement
funds. This lag is important for in-house counsels tasked with bridging regulatory mandates and meaningful ESG integration,” Wessels said.
The implications of these findings are profound. In South Africa, the regulatory landscape for retirement funds, guided by Regulation 28 of the Pension Funds Act since 2011, requires the consideration of ESG factors in all investment decisions. Yet, the real challenge lies in moving beyond compliance to truly embed sustainability into the fabric of investment strategies. To deal with this, Wessels is helping to craft sustainable retirement funds that aim to set new industry benchmarks. By focusing on socially anchored product design, she hopes to make sustainability the norm for this sector rather than the exception.
Maree Myerscough, COO and GC at Aquila Clean Energy APAC in Singapore, is also figuring out new ways to balance global ESG policies with local market nuances and turn evolving ESG practices into a standard, business-as-usual model. Myerscough said there was a rising need for legal teams to develop ESG strategies that are both globally coherent and locally relevant.
Her dual strategy – top-down and bottom-up – illustrated the nuanced role of in-house counsels for achieving the goal of ESG. They play an important role in blending international standards with localised insights, solving multiple puzzles with finesse each day in the evolving regulatory frameworks.
Mahashwetha Ghosh, senior legal counsel APAC at Avery Dennison in India, said ESG adds a layer of complexity to all businesses that in-house teams need to find ways to cope with the increasing demands of paperwork and compliance.
The solution? Get everyone talking the same language at the beginning of projects and business plans.
“We develop a detailed ESG plan at the start of every year and ensure the right stakeholders are included in the discussions. Then we communicate the risk and opportunities of this agreed ESG strategy across all verticals, jurisdictions and geographies. “Simultaneously, we will prioritise the development of a robust and repeatable ESG reporting and disclosure mechanism to embed an ESG mindset throughout the organisation,” Ghosh said.
Jeffrey Tan from Jardine Cycle & Carriage agreed that creating a series of clear frameworks is critical. A proactive legal approach that considers the overall business strategy not only enhances the company’s sustainability profile but also positions it favourably for future regulatory landscapes, which are always changing.
“In-house lawyers can help contextualise commercial and investment decisions, considering environmental implications, social stakeholder interests, and the applicable governance framework. In-house counsels now have a seat at the table, providing them with a unique position to influence the development of an impact-driven business model,” Tan said.
Setting clear expectations and building trust involves ongoing dialogue and responsiveness to stakeholder concerns, but it requires continual adaptation to meet evolving ESG criteria and disruptive trends without compromising business efficiency. In a way, it’s a bit like creating a foundation that is made of both concrete and putty. It must be strong and flexible at the same time.
Duc Tran Manh, chief legal & compliance officer at Home Credit in Vietnam, operates just such a strategy with his firm’s financial products and services. The approach has already clocked in some excellent results for ESG to create real outcomes for customers.
“By providing the unbanked with quick, simplified and safe financial solutions, we support our customers in meeting their daily needs and improving their quality of life. With the application of cutting-edge data science and AI, along with strict governance, our responsible financial products benefit customers with more affordable options and serve as their first experience in financial planning.
“After 16 years in Vietnam, Home Credit has given almost 16 million customers their first experience of secure financial products, enabling them to build their credit status and achieve future ambitions. That’s the power of ESG,” Tran said.
Michelle Hung, the GC and company secretary of COSCO SHIPPING Ports Limited said that latest ESG requirements foster corporate responsibility and resilience to fuller extent. “By addressing the challenges to labour issues encountered abroad, we’ve established robust communication channels with local unions, ensuring compliance with labour regulations and managing harmonious relations. We’ve enhanced our compliance management system to cater for the intricate regulatory requirements across our port network worldwide. Through proactive risk management and internal control measures, by aligning with the latest respective local laws and international standards, we safeguard the vulnerability of our operations and enhance shareholders’ value, demonstrating how ESG initiatives can tangibly drive value creation while navigating diverse compliance requirements across wide geographical coverage.”
Turning ESG into a business-as-usual model is important because there are some real teeth behind the ESG rules. As governments take the issue more seriously, they are no longer asking companies to participate – governments are warning businesses that non-compliance isn’t just an option anymore.
For example, Bank Mandiri deputy group head Asa Estheria Vipana said the Indonesian Financial Services Authority has enacted a groundbreaking regulation that requires financial services institutions and public listed companies to issue a yearly sustainable financial action plan.
“We are required to create a strong legal framework from a totally new, yet very minimum, regulation to enable the business to function and at the same time to ensure the governance. Such regulation is a challenge, but we are confident in our ability to balance between business and governance,” Vipana said.
In fact, across the Asia Pacific region, non-compliance can now lead to hefty fines, sanctions and reputational damage for any company caught flouting the regulations. In-house counsels must ensure strict adherence to ESG laws and be prepared to defend against potential litigation for failures to do so. Close collaboration with corporate boards is essential to ensure ESG considerations remain central to strategic decisions and risk management processes.
Dominyka Derbutaite, in-house counsel at Yolk Brands in the UAE, said along with stringent internal policies and thorough risk assessments set up to comply with local regulations, the company’s staff actively help with various clean-up initiatives that contribute to the region’s environmental sustainability.
“Our ESG initiatives are significantly shaped by local legislation. By navigating these regulatory landscapes, we aim to foster impactful environmental and social governance and ensure that our business operations are not only legally compliant but also socially responsible.
“Moreover, gender diversity is a central focus at the C-suite level at Yolk Brands, reflecting our commitment to social responsibility and inclusive governance. We also place a high emphasis on the safety and well-being of our staff,” Derbutaite said.
ESG-related litigation is on the rise as stakeholders increasingly hold companies accountable for their environmental and social impacts. Environmental damage claims against companies are becoming more common, and legal teams play a crucial role in protecting their organisations from legal, financial, and reputational harm. Given this trend and recent legal and regulatory adaptations in ASAP, in-house counsels face mounting pressures to navigate the intricate landscape of ESG litigation.
ESG disclosure and reporting regimes can be a high bar to reach and require good coordination across teams and even at the board level. Companies must adopt frameworks like TCFD, CDP, GRI, or SASB guidelines, which provide clear structures for reporting ESG performance but also ask in-house counsels to align with what can be rigorous and often non-interoperable standards.
Aquila Clean Energy APAC ESG manager Benjamin Roa said strong regulations mean in-house counsels must embed ESG considerations at every stage. ESG demands constant vigilance and cooperation across departments, operations and markets so that everyone can remain compliant even in the most stressful moments.
Roa described a strategic process which included setting up a series of consultation workshops –from intimate one-on-one sessions with senior leaders to dynamic focus groups and town halls. These workshops ensure that ESG strategies can be finely tuned to address the specific risks with granular, tailored approaches, rather than a catch-all model.
Corinne Katz, senior director of group legal affairs at CLP Holding Ltd., highlighted the benefits of this approach, noting that it keeps stakeholders engaged and informed. Katz’s team has learned to collaborate closely with business units as CLP Group embeds sustainability into business strategy and operations, supported by clear policies that maintain the company’s credibility and trustworthiness.
“We have developed a guidance document on climate-related terminology with our sustainability and strategy teams, which aligns our use of climate-related technology to describe our products and services and educates the business on avoiding greenwashing risks. Additionally, our work with commercial and supply chain teams on the risk management framework and supplier code of conduct reinforces our responsible procurement approach,” Katz added.
Michelle Hung of COSCO, said to ensure compliance disclosures are sufficient and complete is no easy task. To help keep pace with the ever-changing disclosure requirements, we conduct regular internal audits and emphasise on transparent corporate governance practices to ensure that our ESG initiatives are clearly communicated. This includes detailed records on environmental sustainability, safety protocols and governance practices. “Our commitment to develop long-term and higher-impact sustainability, embodied by the ‘Ports for ALL’ principle, reflects our dedication to creating enduring value for all stakeholders. Through strategic collaborations and annual risk assessments focusing on geopolitics, economic volatility, labour standards, and regulatory compliance, we ensure our practices are timely, robust and forward-thinking,” Michelle said.
Errol Bong at First Digital said ESG within the digital asset landscape is not as advanced as in other sectors, but it is catching up.
Therefore, he said players in this space should take notice of how other in-house counsels approached ESG and be proactive in setting policies that match existing regimes since regulators are bound to copy those standards for the digital sector.
“Anticipating the coming regulatory trajectory, we have proactively established robust governance mechanisms to instil confidence in our FDUSD stablecoin. Governance has always been a cornerstone of our operational ethos, encompassing rigorous reporting and escalation protocols to ensure our management furnishes pertinent information and articulates pivotal decisions to our board of directors.”
Corinne Katz from CLP Holding emphasized that a forward-thinking approach, continuous monitoring of regulatory changes, and a robust legal strategy are essential to mitigate risks. She noted that what was considered acceptable ESG business practice a few years ago may no longer be adequate today.
“Our business is developing various customer-centric corporate energy solutions and energyas-a-service offerings, and we wanted to align how we use climate-related technology to describe our products and services and educate the business on how to guard against ‘greenwashing’ risks,” Katz explained.
She highlighted that although the concept of sustainability is not new, many businesses are still struggling to determine the best and most pragmatic sustainable practices for their organizations.
Ezisurg Medical senior legal director Ying Feng said there is simply no successful business without ESG compliance.
“In recent years, China’s medical market, for example, has undergone significant regulatory changes driven by the government, including centralised procurement of medical products for public hospitals and national-scale intensive legal enforcement against corruption.
“Legal teams must go out there and engage with stakeholders in re-evaluating, exploring, and updating corporate ESG objectives, rules, tools, resources, measures and practices to meet challenges so as to play a more innovative and positive role in shaping ESG management and safeguarding business growth,” Feng said.
Looking ahead, the future of ESG in the Asia Pacific region seems set for substantial growth and significant evolution.
As regulatory frameworks continue to tighten, companies will face mounting pressure to adapt. The growing awareness among consumers, investors and other stakeholders about sustainability will push companies towards more transparent, accountable and focused business practices. This shift is likely to spur further innovations in ESG rules, with a particular emphasis on technology and data analytics to streamline reporting, due diligence and real-time monitoring of ESG metrics.
For the airline industry, there is currently no definitive law on what constitutes “greenwashing” or “greenhushing” (referring to a company’s refusal to publicise ESG information) as the matters are all being decided on a case-by-case basis, hence it’s difficult for us in-house counsel to offer solid advice to their airlines, said Ina Anzalna Shamsuddin, general counsel at Malaysia Airlines.
“The absence of any uniform or standard regulations for sustainable practices will be a hindrance to many companies, especially for airlines which are still recovering from the impact of the pandemic and are adamant to achieve the net-zero emissions target,” Shamsuddin said.
She added that most airlines are still at the trialand-error phase in terms of rules as they attempt to meet emissions targets.
Because ESG requirements aren’t going anywhere soon, in-house counsels are likely to have a seat at the governance table in almost every major decision. Thankfully, the attitude of leadership towards ESG initiatives is changing from one of fear of lost profits, to seeing how it can improve the bottom line – and wider society. The proof is in the pudding, as the old saying goes.
Standardisation of ESG disclosure should convince all public companies to re-look at their respective ESG compliance matrix and step up their efforts to achieve a more robust sustainability framework, said Microlink Solutions Berhad chief legal officer, Navrita Kaur.
“On a personal front, matters like DEI are close to my heart and it is indeed a positive step that ESG compliance is compelling us to review existing policies and revise them where necessary to ensure we are giving such matters the importance they deserve,” Kaur said. Haleon legal director for Thailand and Indochina Minh Vu Tuyet said one role in-house counsel could play is to be more proactive in providing feedback on the legislative changes at the legislation drafting stage, to ensure that we help the legislators understand the practical challenges industry may face.
“The core of the in-house counsel role is to mitigate against risk. This requires transparency and accuracy of claims and identify the critical areas where we need to get it right by local law requirements,” Vu Tuyet said.
Moreover, companies are tackling unique regional challenges by developing tailored strategies that reflect their regulatory, environmental and social contexts. TLC Industries general counsel, director and CCO Ritankar Sahu emphasized the indispensable role of the General Counsel at the C-suite decision makers’ table.
Experienced in-house counsel can offer a balanced perspective on ESG considerations because their job involves making boardroom decisions and requires them to balance operating and risk-mitigating considerations amidst significant internal and external pressure from constituents to increase their organization’s commitment to ESG.
A significant problem industry-wide is the over-emphasis on ESG audits as opposed to actual commitment behind ESG initiatives. Accordingly, treating climate change as an auditing task will not create a ‘greener’ corporation. My job as General Counsel is to ensure that ESG goals are consistent with industry expectations, stakeholder expectations and organisational capabilities, thereby balancing contractual commitments, disclosure frameworks and applicable legislation.
These leaders are under pressure to engage in ongoing dialogue with each other and external stakeholders, including regulators, NGOs, and the broader community, to forge best practices and tackle emerging challenges together.
By doing so, in-house counsels can help companies not only comply with regulations but also anticipate future rules while influencing positive, impact-driven change. A concerted effort will be vital in shaping a resilient, equitable and sustainable future for the region, boosting both environmental integrity and human rights protection.
Authors
Pedro Massena is a PhD candidate and Research Associate at the University of Lisbon. He’s also the Head of Sustainability at Climate.xyz and a certified EU Green Deal expert.
Co-authored by Rahul Prakash, publisher at In-House Community.
This article is part of the IHC eMagazine June 2024 issue. Click here to read or download the magazine
