A risk-based approach to both anti-bribery and corruption as well as ESG could become mandatory in many companies because of emerging regulations, such as the European Union’s Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive. In the United States and Southeast Asian countries including Indonesia, Malaysia, Thailand and Singapore, authorties have introduced new disclosure requirements that will require public companies to enhance their climate-related disclosures.

“Companies ahead of this regulatory curve have the opportunity to streamline and standardise their management across their businesses and value chains – ultimately, mitigating risk and maybe even saving money,” they said.

On the other hand, jurisdictions or businesses that cannot show compliance with ESG principles are likely to lose opportunities or face regulatory scrutiny as a result, say Williams and Ved. To addres these risks, companies should ensure that they clearly articulate anti-corruption policies, practice responsible and strategic sourcing and clearly articulate their environmental and social principles to suppliers.

In the meantime, authorities across Southeast Asia should consider aligning ESG standards to make the ecosystem easier to navigate for international investors and other stakeholders looking to do business in the region. 

“In the medium to long term, Southeast Asian jurisdictions should consider adopting a consistent ESG standard, which would serve to unify an ESG framework that businesses and other organisations can adopt within the region as a whole,” said Williams and Ved.

The article has been updated to include comments from Hogan Lovells’ partner Nick Williams and senior associate Khushaal Ved.