Ernst & Young’s Arina Kok says Asia’s ESG future will be shaped by execution, collaboration, and scalable transition pathways

Sustainability in Asia is entering a more commercially grounded phase shaped less by ambition alone and more by how effectively organisations deliver outcomes in practice. 

Across the region, organisations are moving beyond setting environmental, social and governance (ESG) targets to embedding sustainability into core business strategy, increasingly linking it to competitiveness and measurable progress.

At the same time, energy expansion and security remain key priorities in a more volatile operating environment. Whilst renewable energy is growing at a faster pace than fossil fuels, deployment has yet to keep up with rising demand. Bridging this gap will depend on technologies, infrastructure and financing models that can scale quickly.

Asia is also becoming more influential in shaping the global sustainability agenda. As a central hub for global manufacturing and supply chains, the region plays a critical role in the shift towards a lower-carbon economy. The pace at which businesses in Asia decarbonise operations, reshape supply chains and expand clean energy adoption will have a significant impact on global progress.

Providing perspective on this transformation is Arina Kok, Asia-Pacific Climate Change Advisory Leader, EY ASEAN Climate Change and Sustainability Services Co-Leader, Malaysia Climate Change and Sustainability Services (CCaSS) Leader, and Partner at Ernst & Young Malaysia. Arina works closely with organisations to integrate sustainability into strategic decision-making across areas such as ESG strategy, stakeholder management, due diligence, and impact measurement.

Kok has also collaborated extensively with regulators, policymakers, and businesses to advance sustainability initiatives. Her contributions extend to capability-building programmes under the Joint Committee for Climate Change since 2020, led by Bank Negara Malaysia and the Securities Commission Malaysia, and supported by the UK Prosperity Fund’s ASEAN Low Carbon Energy Programme.

As a judge for the ESGBusiness Awards 2026, Kok shared her insights on how ESG implementation is evolving across Asia and why the region is well positioned to shape the next phase of the global sustainability agenda.

Which industries in Asia do you believe are currently leading the ESG transition, and why do you think so?

Several industries in Asia are playing a key role in advancing the ESG transition, most notably manufacturing and supply chains, energy and renewables, and financial services. Each contributes in a different way, from driving operational change to enabling the flow of capital that supports the transition.

Across the region, sustainability is increasingly being integrated into business decisions. The 2025 EY Global Climate Action Barometer, which analysed 857 companies across 50 countries and 13 sectors, shows that Internal Carbon Pricing (ICP) is already widely adopted, particularly in Asia-Pacific where uptake stands at around 65% compared to 39% in the Americas. This signals a broader shift from ESG as a reporting exercise to one that is increasingly shaping how businesses operate.

Against this backdrop, manufacturing and supply chains are where transition is most visibly taking place. As carbon costs, emissions targets and regulatory expectations are increasingly built into business decisions, organisations are moving beyond target-setting towards tangible operational changes. This includes decarbonising production processes and reworking supply chains through lower-carbon sourcing, localised procurement, improved circular economy practices such as waste management and more efficient logistics. The sector’s central role reflects its position at the heart of production and global trade, where emissions are most directly generated and managed.

At the same time, the energy and renewables sector is critical to enabling the transition. Declining renewable energy costs, rising electricity demand driven by economic growth and electrification, and constraints in fossil fuel supply are accelerating the shift towards cleaner energy systems. This also increases the need to balance energy security, affordability and reliability. Across Asia, efforts are increasingly focused on scaling up solutions that are commercially viable, supported by stronger system integration as seen in the deployment of smart meters to smart grid advancement that integrates digital technology with diverse power infrastructure.

In ASEAN, this is evident in cross-border initiatives such as the Laos–Thailand–Malaysia–Singapore Power Integration Project (LTMS-PIP), alongside national mechanisms including Malaysia’s Battery Energy Storage Systems (BESS), Corporate Renewable Energy Supply Scheme (CRESS) and Community Renewable Energy Aggregation Mechanism (CREAM). Together, these are improving grid flexibility and access to renewable energy. CRESS enables Malaysian corporate entities to procure renewable energy directly from developers via an open grid access system, supporting Malaysia’s clean energy transition roadmap.

The financial services sector plays a critical enabling role by directing capital and embedding ESG considerations into risk and investment decisions. Regulatory frameworks such as Bank Negara Malaysia’s Climate Change and Principle-based Taxonomy (CCPT) and Climate Risk Management and Scenario Analysis (CRMSA) are accelerating ESG integration across lending and portfolio management. This is reinforcing the shift towards more structured and transparent capital allocation, starting with evaluation of economic activities based on their climate objectives, sustainability practises and contributions to climate change mitigation and adaptation. Reflecting this momentum, the Intercontinental Exchange Sustainable Bond Analysis 2026 report shows that global sustainable bond issuance has exceeded US$1t, highlighting strong investor demand and the continued flow of capital into sustainable activities.

Taken together, these key industries illustrate how ESG is being advanced across Asia, from production and supply chains to energy systems and capital markets, supporting a transition that is becoming increasingly integrated, scalable and commercially grounded.

In what ways should ESG standards in Asia be adapted to reflect regional realities whilst still maintaining alignment with global frameworks?

ESG standards in Asia are steadily evolving to strike a balance between global consistency and regional realities. The focus is on aligning with international frameworks, whilst ensuring implementation remains practical, scalable and relevant to local markets. This is being done in several keyways:

Aligning with global baseline standards, whilst allowing local flexibility
Global frameworks such as those set by the International Sustainability Standards Board (ISSB) provide a common baseline for consistency and comparability. As of 2026, more than 20 jurisdictions have adopted or committed to adopting ISSB standards, signalling strong global convergence.

Across Asia, momentum is also building. A survey by the Asian Development Bank Institute, covering 12 financial regulators, found that around 70% are moving towards mandatory sustainability disclosures, whilst more than 40% are progressing towards full Scope 1, 2 and 3 emissions reporting. Whilst these developments align the region with global expectations, countries are retaining flexibility in how standards are implemented by tailoring disclosure requirements, timelines and scope based on local market readiness and regulatory priorities.

Incorporating transition pathways suited to Asia’s economic structure
Many Asian economies remain reliant on emissions-intensive sectors such as manufacturing, energy and heavy industry. ESG frameworks are therefore evolving to reflect this reality.

The ASEAN Taxonomy for Sustainable Finance, for instance, recognises both green and transition activities. This allows organisations to access financing whilst committing to time-bound and measurable decarbonisation pathways. Such an approach supports a more realistic and inclusive transition, whilst remaining aligned with global ESG principles.

Phasing implementation based on market maturity and organisational readiness 
Rather than applying a one-size-fits-all model, ESG requirements are being introduced progressively.

In Malaysia, ISSB-aligned standards (IFRS S1 and S2) have been adopted under the National Sustainability Reporting Framework (NSRF) as a baseline, with staged implementation based on organisation size and readiness. In parallel, proposed amendments by Suruhanjaya Syarikat Malaysia (SSM) extend sustainability reporting to non-listed organisations using thresholds such as revenue exceeding RM15m or more than 100 employees, supported by a “comply or explain” approach. This ensures broader adoption without overburdening smaller organisations.

Supporting practical implementation, especially for SMEs
Beyond formal regulation, there is a strong emphasis on making ESG adoption accessible in practice.

Initiatives such as the MITI i-ESG Framework and the Simplified ESG Disclosure Guide (SEDG) provide structured guidance for organisations, particularly SMEs, to integrate ESG into their operations. At the global level, platforms such as the UN Global Compact SDG Action Platform offer tools, methodologies and training to support implementation across business processes and value chains. These initiatives help bridge the gap between global standards and on-the-ground execution.

Shifting focus from standard-setting to execution
Across the region, there is a broader shift from defining ESG standards to enabling their implementation.

The emphasis is increasingly on embedding ESG into business decisions, operations and capital allocation, ensuring that frameworks are not only aligned with global expectations, but also practical and scalable within local contexts.

As sustainability expectations increase, how should organisations balance short-term profitability and long-term climate commitments?

As sustainability expectations rise, organisations are increasingly approaching this not as a trade-off between profitability and climate commitments, but as a question of how capital is allocated and how effectively plans are carried through to deliver value for multi-stakeholders. The focus has shifted from whether climate investments create value to how they are prioritised, sequenced and delivered alongside short-term financial pressures such as rising costs, tighter margins and the need to manage cash flow.

In this environment, organisations are aligning sustainability more closely with core financial priorities. The 2026 EY-Parthenon CEO Outlook Survey, which reflects the views of 1,200 global CEOs including those in key Asia-Pacific markets, shows that sustainability remains a strategic priority. At the same time, 24% of CEOs in the region identify financial resilience such as cost optimisation, capital reallocation and cash preservation as a key response to current risks. This indicates a growing overlap between sustainability initiatives and core financial priorities.

In practice, this balance is being managed by focusing first on actions that deliver immediate cost savings and efficiency gains, such as energy efficiency and resource optimisation. At the same time, more capital-intensive investments are being phased in over a longer period, allowing companies to continue progressing towards climate goals without placing undue strain on cash flow or profitability.

There is also a growing shift towards embedding climate and nature considerations directly into financial decision-making. Rather than being treated as a standalone initiative, sustainability is now being built into capital expenditure planning, investment appraisals and portfolio management. This ensures that climate-related investments are assessed with the same level of financial discipline as any other business decision.

What is emerging is a more integrated approach, where climate commitments are increasingly being used to improve efficiency, strengthen decision-making and support long-term business performance.

How can organisations avoid “greenwashing” whilst still communicating their sustainability ambitions confidently?

As scrutiny from investors and regulators increases, avoiding greenwashing is less about lowering ambition and more about ensuring that sustainability claims are clear, consistent and supported by evidence and measurable progress.

A key risk lies in disclosures that lack clarity or supporting data, which can erode trust and affect decision-making. This is reflected in the EY-Parthenon Institutional Investor Digital Assets Survey, where the proportion of investors citing regulatory uncertainty as a major concern rose from 52% in January 2025 to 66% in January 2026, highlighting how unclear or inconsistent information can weaken confidence.

Regulators across Asia are also tightening enforcement. In South Korea, greenwashing cases increased by 172% between 2020 and 2024, whilst markets like Singapore are holding sustainability disclosures to the same standards of accuracy and accountability as financial reporting.

To address this, organisations are strengthening how they communicate sustainability across four key areas:

Clear and consistent disclosure
Disclosures need to be complete, comparable and easy to understand. Frameworks such as those developed by the ISSB help reduce the risk of selective reporting by requiring companies to provide decision-useful information on material sustainability risks and opportunities.

Measurable targets and credible plans
Ambition needs to be supported by clear targets, timelines and delivery pathways. This means defining Scope 1, 2 and 3 targets, setting interim milestones, and outlining how these will be achieved in practice. The 2025 EY Global Climate Action Barometer shows that whilst around 64% of organisations have developed transition plans, progress remains uneven as 17% have yet to make any progress and 7% have regressed in their commitments. This reinforces the need for organisations to move beyond high-level commitments and put in place plans that are specific, measurable and consistently executed.

Reliable data and assurance
Unverified or low-quality data increases the risk of misleading claims. Independent assurance helps strengthen the credibility of sustainability disclosures and brings them closer to the level of rigour expected in financial reporting. Organisations that have digitalised ESG reporting are advancing towards real time monitoring, scenario analysis and stress testing to build resilience. It also significantly reduces inefficiencies in data collection, enhances audit processes and improves capabilities of employees who are now empowered with useful tools and information.  

Linking commitments to business decisions
Sustainability claims become meaningful when they are reflected in how organisations make decisions and deploy resources. This means embedding ESG considerations directly into capital expenditure, investment approvals and performance incentives, so that commitments are backed by clear accountability and funding.

When sustainability is integrated into these core processes, it shifts from a stated priority to a measurable part of how the business operates. This makes it easier for stakeholders to assess whether commitments are being delivered, rather than relying on high-level disclosures.

How do you envision Asia’s role in shaping the future global sustainability agenda?

Asia is set to play a defining role in shaping the next phase of the global sustainability agenda, given its central position in global manufacturing and supply chains, and the speed at which sustainability is becoming part of business and investment decisions across the region.

One clear signal of this shift is the growing adoption of structured climate frameworks. Data from the Science-Based Targets initiative shows that the number of organisations with validated targets rose by 40% in 2025, with Asia emerging as the fastest-growing region at 53%. This indicates that climate action is no longer driven primarily by early adopters or developed markets, but increasingly by businesses across Asia that are helping to shape the direction of the global transition pathways.

This influence is also reinforced by the region’s role in global production and trade. Asia sits at the centre of supply chains that are being reshaped as organisations respond to cost volatility, regulatory pressures and sustainability expectations. The ASEAN Investment Report 2025 shows that ASEAN remained the leading recipient of foreign direct investment (FDI) amongst developing regions for a fourth consecutive year, with inflows rising 8.5% to US$226b even as global FDI declined. This underscores Asia’s growing role not only as a manufacturing and investment destination, but also as a region where sustainability standards and transition requirements are increasingly being put into practice.

As the sustainability agenda matures, what will distinguish Asia’s role is not only the level of ambition, but how effectively it is delivered. Across the region, organisations are embedding sustainability into how they operate, reworking supply chains, investing in cleaner energy and improving efficiency. This reflects a broader shift towards execution, where progress is increasingly measured by tangible outcomes rather than commitments alone.

There are already signs of where this next phase is taking shape. In aviation, Asia is on track to become one of the world’s largest producing regions for sustainable aviation fuel, with production capacity expected to reach about 1.6 million metric tonnes a year by 2026, even as local demand frameworks continue to develop. In agriculture, platforms such as AGRITECHNICA ASIA 2026 are highlighting growing momentum in smart farming, automation, precision irrigation and climate-resilient production systems tailored to Asian conditions. Together, these developments suggest that Asia’s influence will increasingly come from building and scaling practical transition solutions in sectors that matter globally.

The opportunity for Asia is not simply to follow the global sustainability agenda, but to define what effective implementation looks like in a more resource-constrained and volatile world. If businesses across the region continue to translate ambition into investable, scalable and practical solutions, Asia will lead in shaping a more grounded and credible next chapter for global sustainability.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organisation or its member firms.