Time for ESG to talk evidence
FOR years, discussions concerning ESG in Asean, including Indonesia, mostly revolved around commitments and targets.
Governments issued sustainability roadmaps, companies announced green programmes, and global investors set expectations.
However, over the past two years, international regulatory pressure, market expectations and supply chain dynamics have pushed ESG beyond declarations. What matters now is evidence, from emission data and energy footprints to governance performance and corporate responses to transition risks.
In Indonesia, Malaysia and the Philippines, this transformation is becoming more visible. Stricter regulations, increased reporting requirements and stronger transparency demands from export markets are pushing corporations to move faster.
ESG is no longer a decorative element for communication, but a new compliance mandate that determines business continuity.
New ESG pathway in Asean
This shift did not happen overnight. Three major forces are driving the change: international regulatory pressure, global supply chain demands and investor expectations.
At the level of regulators and corporate institutions, ESG implementation has become a strategic necessity.
For example, in an interview with Kontan in April 2025, the Indonesia Corporate Secretary Association (ICSA) stated that ESG is a key element for maintaining long-term corporate sustainability.
ICSA chairwoman Katharine Grace said that corporate secretaries must understand ESG to ensure its implementation aligns with standards. This shows that ESG has become part of corporate governance and compliance.
In addition, sustainability regulations and standards are being strengthened by both governments and market players. Among large corporations, there is real commitment to achieving net-zero targets.
The biggest driver of change in the region, however, comes from external markets.
The European Union’s Carbon Border Adjustment Mechanism (CBAM), which will begin imposing carbon tariffs on several sectors in 2026, places Asean exports under scrutiny. Affected sectors include cement, steel and manufactured goods.
Companies are now required to present verified emission data, including Scope 3, if they want to maintain market access.
Domestically, Asean countries are tightening regulatory instruments. Bursa Malaysia has adopted the National Sustainability Reporting Framework, which applies to all listed companies and large non-listed companies in Malaysia. The Philippines, through Bangko Sentral ng Pilipinas, has raised sustainable finance standards.
Indonesia has emphasised the role of corporate secretaries in ensuring ESG implementation is aligned with good corporate governance principles.
This shift signifies that ESG is no longer positioned as a reputational or strategic communication element, but as part of compliance infrastructure and risk management.
Dynamics in Indonesia
In Indonesia, the shift towards evidence-based ESG implementation is becoming visible in sectors exposed to global transition risk. The cement industry, one of the sectors under the CBAM radar, has responded relatively quickly.
PT Semen Indonesia (SIG) has accelerated the use of biomass and refuse-derived fuel (RDF) to reduce the carbon intensity of its production. This reflects not only sustainability commitment but also a strategy to mitigate trade risk mitigation strategy that could affect export competitiveness.
The digital sector is also moving. The “GoZero – Sustainability Action by Telkom Indonesia” programme outlines a more structural transition approach, including energy efficiency, renewable energy use, green data centre development and waste management. The Net Zero 2060 target is positioned as an operational agenda with a technical roadmap, not just a declaration.
These two examples show that ESG transformation is no longer exclusive to high-emission industries but also extends to the technology, finance and services sectors that are now facing shifting market and investor expectations.
Investors no longer see ESG as ‘hype’
For investors, ESG has entered the risk assessment framework. Although some ESG indices in Indonesia have experienced correction, capital flows have indicated a sustained preference for companies with clear sustainability strategies. Institutional investors are paying more attention to transition risk, energy regulation, carbon exposure and governance.
Malaysia remains a global leader for green sukuk, while the Philippines records significant growth in green bonds for renewable energy. Indonesia maintains its position as one of the most active sovereign green sukuk issuers in the world.
In the banking sector, financial institutions are beginning to include ESG risk scoring as a determining factor in the cost of borrowing.
These developments show that sustainability has become part of financial mechanisms. ESG is no longer an added value but a factor influencing cost of capital and investment feasibility.
Data and capability gaps
Despite progress, ESG implementation in Asean still faces structural challenges. One major challenge is the quality and consistency of sustainability data. Large companies generally have adequate reporting infrastructure, while small and medium enterprises face technical barriers, costs and limited technology access.
Additionally, the absence of a truly harmonised regional standard, be it the Asean Taxonomy, International Sustainability Standards Board or Global Reporting Initiative, makes cross-country and cross-industry performance comparisons difficult. Without consistent guidelines and uniform reporting platforms, data gaps are likely to widen.
This problem suggests that the success of the sustainability transition in Asean depends not only on large corporations but also by the ability of the states to provide an inclusive data and governance infrastructure.
ESG as new economic infrastructure
With the dynamics of global regulation, investor push and corporate response, ESG is now beginning to function as a new infrastructure in the Asean economy.
To move faster, several critical steps must be strengthened. First, regulators must provide standards and incentives that help small and medium enterprises enter the sustainability path.
Second, companies need to integrate ESG into core business strategies, not just reports. Third, investors must continue to link investment decisions with the quality of long-term risk management.
If this ecosystem moves in a coordinated manner, ESG can become a strong foundation for growth, helping Asean maintain global competitiveness and preparing the region’s economy to meet future trade demands.
