Asian Countries Outfront: Hong Kong, Japan, and Malaysia Fully Adhere to International Sustainability Standards Board Regulations
The International Sustainability Standards Board (ISSB) is driving the global push for a unified baseline for investor-focused disclosures on sustainability. However, as the landscape evolves, differences are emerging as jurisdictions adapt or deviate from ISSB recommendations, reflecting local regulatory priorities and market needs.
## Key Differences Between Global Sustainability Reporting Rules and ISSB Standards
One of the main differences lies in the scope and materiality of disclosures. ISSB focuses on material sustainability risks and opportunities from an investor perspective, while some jurisdictions, such as the EU, require broader disclosure scopes that consider both impact on society/nature and financial consequences, a concept known as double materiality.
In terms of climate and sustainability topics, the ISSB mandates climate-first disclosure with a strong emphasis on industry-specific metrics and risk management. However, the EU and other jurisdictions may require more granular or broader sustainability disclosures, including topics like biodiversity and human rights, with stricter or more prescriptive rules on climate, particularly Scope 3 emissions.
Assurance and enforcement also vary. The ISSB encourages transparency and comparability but does not prescribe mandatory audit requirements. In contrast, the European Commission and Council have proposed maintaining limited assurance only for CSRD reports, cancelling the planned transition to reasonable assurance by October 2028.
Flexibility in implementation is another key difference. The ISSB allows for early adoption of amendments and flexibility in measurement methods, while some jurisdictions may require earlier compliance dates or impose additional, local reporting requirements.
## Countries and Jurisdictions with Notable Deviations or Adaptations
The European Union (EU) is one of the jurisdictions with significant deviations. The EU’s Corporate Sustainability Reporting Directive (CSRD) requires double materiality and broader sustainability topics beyond climate, such as human rights and biodiversity. It has also diverged on assurance requirements by not advancing to reasonable assurance.
Asia is emerging as a frontrunner in adopting the ISSB's rules. Over a third of the 36 countries in the process of adopting the ISSB's standards are from the region. Notably, Hong Kong and Malaysia are among the 14 jurisdictions on track to fully adopt ISSB's standards, while Singapore has abandoned its fixed timeline for Scope 3 reporting for listed firms.
## Conclusion
While the ISSB is becoming a global benchmark, major economies like the EU and several other jurisdictions are adopting ISSB Standards with significant adjustments—most notably around materiality, assurance, and the range of sustainability topics covered. These deviations reflect differing policy priorities and stakeholder expectations, shaping a patchwork rather than a uniform global standard. The ISSB is currently consulting on amendments to exclude the disclosures of facilitated and insurance-based emissions from financial institutions, and countries like South Korea, Qatar, Panama, and Bangladesh have made their own unique adaptations to the ISSB's standards. The evolving landscape of global sustainability reporting will continue to be shaped by these differences and the ongoing efforts of the ISSB and other standard-setters to promote transparency and comparability.
- The European Union (EU) requires broader disclosure scopes in line with the concept of double materiality, considering both the impact on society/nature and financial consequences.
- Some jurisdictions, like the EU, may demand more granular or broader sustainability disclosures, including topics like biodiversity and human rights, with stricter or more prescriptive rules on climate, particularly Scope 3 emissions.
- The European Commission and Council have proposed maintaining limited assurance only for Corporate Sustainability Reporting Directive (CSRD) reports, cancelling the planned transition to reasonable assurance by October 2028.
- Asia is adopting the International Sustainability Standards Board (ISSB)'s rules extensively, with over a third of the 36 countries in the process of adopting the standards being from the region, and Hong Kong and Malaysia are among the 14 jurisdictions on track to fully adopt the ISSB's standards.
