- 3 hours ago
As COP30 ends in Belém, one message is already clear: regions that cannot produce credible sustainability data will struggle to secure their share of climate finance.
ASEAN needs US$3 trillion in climate-resilient infrastructure by 2030, yet negotiations have stalled on scaling global climate finance beyond the US$300 billion figure agreed in Baku.
From ISSB-aligned reporting rules in Malaysia, Singapore and Thailand to EU requirements like CSRD and CBAM, the pressure is rising for businesses — especially SMEs — to produce verified, decision-useful data.
This week, we speak with Sharath Martin, Senior Policy Consultant, ACCA Asia Pacific, on what the numbers mean for Malaysia, sustainability reporting and our regional competitiveness.
ASEAN needs US$3 trillion in climate-resilient infrastructure by 2030, yet negotiations have stalled on scaling global climate finance beyond the US$300 billion figure agreed in Baku.
From ISSB-aligned reporting rules in Malaysia, Singapore and Thailand to EU requirements like CSRD and CBAM, the pressure is rising for businesses — especially SMEs — to produce verified, decision-useful data.
This week, we speak with Sharath Martin, Senior Policy Consultant, ACCA Asia Pacific, on what the numbers mean for Malaysia, sustainability reporting and our regional competitiveness.
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NewsTranscript
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01:30Hello and welcome to Niaga Spotlight with me, Tamina Kausjee.
01:49Niaga Spotlight takes us through the week in economic analysis and future affairs.
01:52Today on Analysis, our spotlight falls on COP30 and ASEAN, looking at sustainability data and prioritizing it in particular.
02:01Following the tail end of COP30 in Belém, Brazil, where the global climate conversation is shifting from ambition to execution.
02:09At last year's COP29 in Baku, developed nations committed to mobilize at least 300 billion USD per year by 2035 for developing countries
02:18and to work towards a broader goal of 1.3 trillion USD annually in external climate finance by the same year.
02:27For ASEAN, the stakes have never been higher.
02:30The region needs roughly 3 trillion USD of infrastructure investment by 2030 to build climate-resilient growth models.
02:38Weak sustainability disclosures and fragmented reporting systems are no longer so-called back-office issues.
02:44They are investment risk issues.
02:46In a moment, I'll be speaking with Sharath Martin, Senior Policy Consultant at ACCA Asia-Pacific and also trustee of both WWF Malaysia and the SHIFT project.
02:56He's been tracking the region's move from reporting as compliance to reporting as more of a credibility perspective.
03:03And today we'll zero in on how ASEAN businesses could be evolving in the new climate finance era.
03:10A very good morning, Sharath. How are you doing today?
03:12Good, good. Sorry, got your name.
03:17So, Sharath, let's move on into the discussion itself.
03:21Now, COP30 has stalled on scaling climate finance from 300 billion USD to about 1.3 trillion USD a year.
03:30From an ACCA and investor readiness perspective, what level of disclosure quality must ASEAN companies look at being able to demonstrate?
03:40Thank you, Tamina. I'm glad you raised the point about stalling because I think what we need to also appreciate is there has been a stalling or a scale back in EU.
03:53For example, very recently, the EU Parliament has decided that more than or close to 95% of its companies would no longer have to report under their CSRD, which is Corporate Responsibility Sustainability Reporting Directive.
04:12Right. Now, against that light, and in the US, they've pulled completely out of the Paris Agreement.
04:19Exactly.
04:20A lot of ASEAN businesses, including Malaysian businesses, are asking, then why should we? Are we being too aggressive?
04:28So maybe let's deal with that question.
04:30Where's the leadership, quote unquote?
04:32And I think there is an economic perspective to what should drive us.
04:38So a few facts. Firstly, we are expected to be the fourth largest economy by 2030.
04:43We've got about 670 or more people in ASEAN, a major trading region, and the third largest labor force outside India and China.
04:54So it's in our fundamental interest how we look at this issue.
04:59Now, what are the kinds of climate risks we probably will face?
05:03So according to some studies, Philippines and Indonesia are number one and number two, followed by Myanmar in terms of most affected by major natural disasters caused by climate change.
05:17Right. That's number one.
05:18Number two, another study, and this is actually by a sort of leading reinsurer called Swiss Re, expects that we might lose up to 35% of our GDP due to the sustainability risks.
05:34So I think it is important that...
05:3635%.
05:3735%.
05:37Right.
05:37Anything that goes above, you know, the one third mark, it should make everyone sit up in shock and take action.
05:43Indeed. And so I think this is why we need to realize that in ASEAN and in Malaysia, we have to do what is right because it's in our interest.
05:54It's not about dovetailing the requirements of another region.
05:58And you've very rightly called out the fact that the climate finance doesn't seem to be coming in.
06:05What is this point to?
06:07That we're going to have to fund ourselves out of this problem ourselves.
06:13The money is not really going to come from all those places that we have expected and seen before in decades past.
06:22But ASEAN, Asia is going to have to start to look at how it's going to fund these problems ourselves.
06:29So we're clearly looking at, well, this brave new world at the tail end of 2025.
06:33Now, ACCA's own research as well, Sharath, as you mentioned, it's warning of that 35% of ASEAN's GDP.
06:40So where do you see these biggest reporting blind spots?
06:44Let's talk a little bit more about them in detail.
06:47Yeah, so I think it'll be helpful to understand and maybe contextualize where ASEAN is in terms of adopting something that we call this Global Sustainability Reporting Standard.
06:59It goes by the name of ISSB, the International Sustainability Standards Board, has issued these standards.
07:06Now, let me roll off a few of these country names that have already adopted the standard in ASEAN.
07:13Indonesia just decided to adopt it in July.
07:17Thailand, I believe it was only last month in October.
07:22Malaysia and Singapore were one of the first few to do so.
07:25And I think Philippines, they're going through a bit of a sort of legislative regulatory overhaul.
07:33And as they do that, they plan to do the same, right?
07:36Now, if you collect these countries, they represent about 85% of ASEAN's GDP.
07:42Exactly.
07:43So I think it's looking pretty positive if you just look at which of the major ASEAN economies are already committed or in the process of just ratifying and harmonizing their local legislation.
07:55So that would be talking about the transition risk in a little bit of a while.
08:02How about let's looking at value chain emissions as well?
08:06Scope three.
08:06Now, that's something which both regulators as well as industry stakeholders are quite sensitive around.
08:13Yeah.
08:14Now, I want to address the point that you raised, which you used the word blind spot.
08:17And I think one of the, because from our conversations with various stakeholders, I would say the issue is less around the physical risk or the transition risk per se.
08:29But rather interestingly, it's the blind spot that many boards and C-suites are looking at sustainability reporting primarily as a compliance-driven issue.
08:44A box-ticking mechanism.
08:45And they're getting concerned because of all these regulator-driven initiatives.
08:50What the blind spot is, they fail to see that actually this is a fundamental and long-term business issue.
08:59And that's how they should be viewing these disclosures that they need to start looking at.
09:04Because it's going to tell them, are they going to lose their competitive advantage?
09:08When?
09:09And how are they going to pivot around these issues?
09:11And that's a major issue, Tamina, because a lot of them, I think some of them are even trying to speak to the regulators about relaxing and loosening some of these regulations.
09:23But it connects to my earlier point, right?
09:28Sustainability risks are so embedded in our economy.
09:32We're going to be faced with it.
09:34We're not going to get all these buttresses and financing that we think we might.
09:39We're going to have to raise it on our own.
09:41And so, how are you going to raise financing, whether from the capital market or from your bankers, if you don't have credible, high-quality, sustainability disclosures?
09:54Can I give you one more little example?
09:56Absolutely.
09:58Today, if you wanted to go to the bank or if you wanted to go and raise money in the capital market, you need good quality financial reporting.
10:07Things are audited.
10:08And, in fact, it's not just the financiers.
10:12If you've got a key customer or a key supplier, they often want to know what your financial health is.
10:19All those prerequisites, yes.
10:21It's a given.
10:22It's a given and it's been around for decades.
10:24I think going forward, people will want to know for the same reasons.
10:28Are you going to be around?
10:29Because if you're going to be around, then I want to do business with you.
10:33If your trajectory looks a bit wonky, then I'm not sure if I want to choose you or go somewhere else.
10:41So, have we started to see these shifts?
10:45It's only just begun, I would say, because, honestly, we're in the first year of reporting cycle for places like Malaysia and Singapore, right?
10:55So, maybe ask me this question a year from now and I'll tell you how people have responded to it.
11:00But, just also let's help the audience to understand that sustainability disclosures are not completely new.
11:09There have been other frameworks around and voluntarily a lot of organizations have been doing it.
11:15What's different is now the regulators have decided, and this is part of a movement with G20, G7 and all of that, that we need to start making these things mandatory.
11:27Mandatory versus voluntary.
11:29Got you on that.
11:30Now, that brings up another little question, which I would really like to get your thoughts on.
11:36So, you've mentioned the big ASEAN economies that are on track and, you know, insofar, it's acceptable, the pace at which it's going.
11:43But the rest of the region, though, Sharad, is still building basic capacity.
11:47Now, what is the economic cost of this, quote-unquote, two-speed ASEAN framework when it comes to sustainability reporting?
11:56Right.
11:56That's a great question.
11:57So, I want to wind us back a little bit to the fact that if we've got these four or five economies which constitute about 85% of ASEAN, I think that takes away the risk of a two-speed economy in ASEAN.
12:13Because, by and large, they're pretty much following the same step of, you know, reporting standards in sustainability.
12:19And they are major economies, right?
12:22So, the value chain impact would be brought along.
12:27Of course, there's Vietnam and we've got to deal with Vietnam because it's also a major part of the supply chain.
12:33But I would be less worried about the two-speed effect.
12:37But to go back to another word that you used around capacity building, yes, that is a major area that needs to be focused on.
12:46It needs to be focused on by even people in my space who are accountants and finance professionals because we need to apply the same kind of thinking, rigor,
12:58and mindset to how we do financial reporting with sustainability reporting.
13:03Correct.
13:03We need ecosystem providers who are doing valuation work, who are looking at the quality of data.
13:09And perhaps maybe even some more reporting around supply chain exclusion, which is already being noted.
13:16You know, I want to bring up this point because it's been kind of bugging me of late, which is a lot of people seem to be trying to sweep too many SMEs into what you described earlier as the scope three emission.
13:30And I think it is important to remember that the regulators intentionally did not roll out mandatory sustainability reporting to SMEs.
13:41It's just too burdensome. Mind you, that's what EU has just done in scoping back 95% of very large companies.
13:51It was because of the EU companies complaining of the administrative and reporting burden.
13:57But in ASEAN, I think we've got the regulatory balance right.
14:02Now, the issue, though, is should we go after all SMEs to make them report just because they're in scope three?
14:09My view is no. And in speaking to a number of people who are in this space, no.
14:14But if they are material, even SME, for whatever reason, is material to the risk that a larger company is reporting, then yes.
14:23But it's often a sort of, how would I put it?
14:26It's a bilateral willing buyer, willing seller relationship.
14:29You want to help your SME do the right thing and provide the right disclosure.
14:35Sure, to thrive and to minimize harm and impact, right?
14:38Absolutely. You're going to invest in the supply chain.
14:40If you take companies like Petronas, they routinely invest into their supply chain, not just for sustainability, but for various other reasons.
14:49And many other companies do the same.
14:52So I think that has got to be a factor that people start having the right balance.
14:59Don't overdo this.
15:01And if I may be a bit critical, I see a lot of people taking advantage of this opportunistic thing where they're trying to push products.
15:12This deadline of sorts, right?
15:14And including a whole bunch of SMEs.
15:17And I think we need to take the chill pill for a while because, you know, honestly, the larger SMEs who are part of a material part of the value chain and risk to a blister company, great.
15:31Go ahead.
15:31You should do it.
15:32And honestly, if you're an SME, you should be thinking about this as a competitiveness lens, right?
15:38A competitive edge, a business edge.
15:40Absolutely.
15:41Sharad, thank you for the conversation so far.
15:42We take a quick break.
15:43Don't go anywhere.
15:44We'll be right back with the rest of this conversation only on Niagara Spotlight.
16:40Welcome back to Niagara Spotlight.
16:56Still with me, Tamina Kausji.
16:58And today we're looking at COP30 and ASEAN and in particular prioritizing sustainability data for businesses, of course, all around the region.
17:07Sharad, so continuing on with the conversation.
17:09Now, you've also highlighted three regional bottlenecks.
17:13There's fragmented standards, uneven regulation, and of course, the oft-repeated shortage of skilled preparers and assurers.
17:22Let's go into each of these sectorally.
17:25Sure.
17:25So I think the first bit is around the whole fragmented reporting.
17:30And I think it would be useful to kind of remind ourselves where we are, right?
17:35Yeah.
17:35So today we have the global standard of the ISSB, which I spoke about.
17:41But in EU, they're using what they call ESRS, which is the European Sustainability Reporting Standards.
17:47And then there are other frameworks like the Global Reporting Initiative, GRI, etc.
17:54Take a Malaysian or Indonesian or a Thai company.
17:57If they were to report under ISSB, but they still are a significant exporter or part of a value chain to Europe,
18:08they may have to report twice under a different standard.
18:12Now, to some, it may sound, well, that's unfortunately how business is.
18:19But I want us to go back a peg, which is in financial reporting, Tamina, there is only one standard.
18:25And that's the international financial reporting standard, which governs the whole accounting space.
18:33So if we can have one standard on financial reporting, I see no reason why we can't scale this back,
18:40just like how our EU friends have scaled back and asked the world to converge to one.
18:46It's in ASEAN's interest that we can't keep, you know, being the ones where the reporting burden is being pushed to.
18:53So we now have to learn how to flex as a supply chain and speak to our colleagues in EU and say,
19:01no, we need to start converging.
19:04So the fragmented standards is a big issue.
19:06It is a big issue.
19:07And it does not seem like one which can be, which will resolve by itself.
19:12It will take a certain amount of perhaps even shareholder advocacy to be able to push this forward, right?
19:19I think it's shareholder advocacy.
19:21It's also, I would call it policymaking advocacy.
19:25What do I mean by that?
19:27So if you look at major policymaking bodies, and in particular, I'm going to focus on, say, the ISSB again.
19:34Sure.
19:35There is no one on the board from ASEAN.
19:37Remember, I talked about 670 million.
19:40That's a red flag.
19:40All of those things, right?
19:41If I go to other policymaking bodies, like IMF and World Bank, you have a similar situation of very significant underrepresentation.
19:50Sure.
19:51So ASEAN needs to learn how it needs to dial up the policymaking advocacy and make sure we are the seat of the table.
19:59Standard setting, Damina, needs to be understood as part of policymaking.
20:05Because once standards are set, you've got to follow it, right?
20:09And we cannot just be recipients just because we've been recipients since our independence.
20:14It's time to be part of the game and to learn how to shape the policies of the future.
20:24Our population demands it.
20:26Our businesses demand it.
20:28We have a lot at stake, you know, the climate risk.
20:31So, yeah, we need to do something.
20:32Absolutely.
20:33Now, I think that brings us to you being able to integrate the various parts of expertise that you are able to bring to the conversation, Sharath.
20:42Now, from your vantage point with WWF Malaysia, let's look at nature-related risks in particular.
20:49There's deforestation, water stress, amongst other, even biodiversity loss, all of which in different measures we are also experiencing in Malaysia and across the broader ASEAN landscape.
21:01Absolutely.
21:02I mean, there are a few things I'd like to say here.
21:04Firstly, there was, in fact, and I'm going to quote a PWC study on this.
21:09Sure.
21:09It was about two years ago where they said about 55% of the world's GDP comes from nature, right?
21:19And it's a very simple point I hope the business community gets.
21:24If that is your bread basket, then look after it.
21:29I mean, a biodiversity loss, deforestation, what we need to understand,
21:33which I don't think business people understand well enough, is the whole value chain.
21:39For example, why should we be concerned about just the tiger conservation?
21:45Yes, it's a species in which we are proud of as a Malaysian, but it's the apex species.
21:51And the apex species is the guardian of the entire health of the ecosystem below it.
21:57Lose that, and it tells you that the ecosystem below is unhealthy and it's going to be a little fragmented.
22:05What does that mean for companies which, you know, basically make their money from agriculture?
22:11The products may be of lower quality.
22:14The volume of the products may get affected.
22:17And you're going to have all kinds of supply chain issues.
22:20Water is another issue that we should be thinking about because water comes from the water cycle.
22:27The forest is a really important part of that water cycle.
22:32So there are a number of things I think the business world needs to lengthen its scope and understand.
22:40Yeah, the expansive lens perhaps.
22:42And also that brings us to perhaps facing the reality, Sharath, maybe, that ASEAN businesses are maybe underestimating how quickly all of these environmentally anchored issues are actually going to become balance sheet issues and reflected very quickly in returns and gains, etc.
23:03It's not a bubble that can consistently continue expanding for infinity, right?
23:08Yes, I would say a few things.
23:10And firstly, we just spoke about the ISSB and they've come up with these two standards.
23:16One is general principles.
23:18The second was on climate.
23:20But they're already working on future standards, one of which is on biodiversity.
23:25It's a long word, sorry.
23:27Biodiversity ecosystems and its ecosystem services.
23:30Maybe in short, we could say it's on nature, right?
23:33So to the business world out there, they need to be expecting that there's going to be a future standard.
23:40Just like there is one on climate, there's going to be a future standard on nature.
23:44Right.
23:44Don't start preparing late and then end up on this whole, oh gosh, the regulators have gone into this compliance frenzy again.
23:55No.
23:55Because of the point we made earlier, nature's your bread basket.
23:59You should start looking at the dependencies and the impact that nature's having on you.
24:05Now, in WWF, we are part of the signatories to something called the Task Force for Nature-Related Financial Disclosures.
24:13And we're doing a study this year, Tamina, with four institutions around how would they be impacted by this reporting framework.
24:22Right.
24:22Because this reporting framework is going to be used by ISSB.
24:24Very useful, yeah.
24:25Absolutely.
24:25And so about next year, we'll be releasing those findings and hopefully it'll give us an opportunity to come and share what those findings are.
24:33Because to your point, the ecosystem is being impacted.
24:37We need to talk about how we're dependent on it and therefore future income generation is going to be dependent on it and impacted.
24:46And how in turn, we are impacting nature.
24:50It's no longer a nice to have.
24:52It's a must-have because that's the only way in which life in its current form is able to perpetuate.
24:59Which brings us to the fact that when it comes to disclosures and sustainability reporting, right, it can also end up being awfully generic.
25:10What type of quality is being looked forward to, particularly, let's say, let's place the goalpost at roughly around 2030 now?
25:18Well, I think we're already beginning to see what we call as illustrative type of sustainability reporting guidance that has been issued.
25:29I think the Securities Commission Malaysia has done that.
25:32I would expect that other regulators would be also providing these sort of guidance and advisory.
25:38I wouldn't use the word templates, but it's things that are out there that would help companies think about how not to be generic.
25:46Because the issues in plantation is going to be very different from the issues in construction.
25:52And it cannot sound the same.
25:55And if I go back to my analogy with financial reporting, Tamina,
25:59no one can prepare their financial reporting on one industry and expect it is going to be the same on another.
26:07Exactly.
26:07Balance sheets will look very different.
26:10Sustainability disclosures will also look very different because of the industry.
26:15But we are at a stage where we're kind of getting off the starting block.
26:19So we don't have those examples just yet.
26:22But give it a year.
26:24I think December will be the first wave of Malaysian companies reporting.
26:28We would start to see how these disclosures are coming about.
26:32But also I would just remind our audience that some form of sustainability reporting,
26:38the voluntary frameworks, have already been used by major companies.
26:45So it's out there.
26:46It's not completely new, but we were not all following the same standard.
26:51Now, maybe I just want to make it very simple to the audience to understand why do we have one standard?
26:57Why should we have one standard?
26:59Because it creates one common language of trust.
27:02If you're using a different way of doing it, I'm using a different way of doing it.
27:06I'm going to have to spend so much time trying to figure out what you mean by your sustainability disclosures.
27:12And likewise.
27:13Sure.
27:13If you're using one standard, same language, same trust.
27:17And smoother transition and harmonization as well.
27:19So, Sharad, let's land this conversation on an issue that you just spent a little bit more time on,
27:25which was very interesting from the top-down perspective, right?
27:29Looking at SMEs and the regulation around it.
27:32But at the same time, whether or not all particular SMEs, especially the smaller ones,
27:38will be given the grace to be left outside of the scope remains to be seen.
27:43So, what then would be the most realistic path to bring SMEs into compliance as a whole without overwhelming them?
27:52And what can, of course, then, you know, governments, auditors and the major corporate representative stakeholders do to aid this?
28:00Well, I think with SMEs, we have to be really careful about enforcing compliance issues on them.
28:08It has to go back to the fundamental business value of what they are doing in relation to how they are impacted by climate risk.
28:19And they themselves, their products or services are impacting another company, which is, say, listed.
28:25I think if we start placing, if you just take a step back and look at how regulators have designed the roadmap,
28:32they have carved out phase one, phase two, phase three, based on larger listed companies,
28:37then the not-so-big ones, and it goes back down.
28:40With SMEs, in fact, even if you take Malaysia and their phase three,
28:45it includes the very large listed, sorry, non-listed companies, which revenues more than $2 billion.
28:51Yes.
28:52So, if you're that big, I think it's fair that you're caught in.
28:56But I'm now speaking of, you know, the majority of SMEs out there.
29:01The MSMEs.
29:02The MSMEs, which are really not that big.
29:05Tamina, I really hope they don't get caught into a compliance frenzy.
29:09They don't have that technological bandwidth, the investment, the infrastructure,
29:16or even the ability to attract talent.
29:18What they need to pivot to is understanding that this potentially is a business opportunity.
29:27If I'm developing a product and it's greener or it's more nature positive than another competitor,
29:34that's the angle I should focus on.
29:38I'll give you a very small example of a city in China.
29:42Sure.
29:43Which one of my colleagues in WWS board wrote about in The Edge.
29:47And it's the city of Kuchau.
29:49Apologize if I'm mispronouncing it.
29:51But in that ecosystem, there were 22,000 vendors.
29:55Right.
29:56Right.
29:56There were pretty much a lot of SMEs in there who had ESG ratings.
30:01Now, that allows them to have the ability to have credible information and products,
30:08which then the buyers of their products and services can decide,
30:11is this the type of company I want to do business with?
30:14I think that's where there's a real opportunity.
30:17I would just dial down on the need for them to be part of the whole mandatory reporting
30:23and compliance-driven initiatives.
30:26Sure.
30:27Thank you so much for the conversation.
30:28It's been absolutely enlightening.
30:31Right.
30:32Well, when we look at ASEAN, credible reporting is now as critical as emissions cut themselves.
30:37Stronger data lowers risk and weak data raises the cost of capital as well.
30:41The question, of course, for our region is simple.
30:43Are we investment ready?
30:45And with that, I'm Tamina Kowstry signing off for now.
30:48Here's to a productive week ahead.
30:50We'll see you next time.
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