Sustainability in ASEAN, ESG criteria and B Corporations

Social and environmental care is today's paradigm for the survival of our common home, the Earth. It is an ethical obligation to protect people, species and biodiversity in general, which becomes a legal duty that extends across the planet.

On the road to a sustainable economy, there is a two-way street where, on the one hand, governments are taking an uneven pace in addressing to a greater or lesser extent the negative economic, social and environmental impacts; on the other hand, the conscience of the entire global community demands an urgent transformation of the economy and thus focus on the obvious reality of climate change, on the regeneration of ecosystems allowing the maintenance and development of planetary life itself.

The need to deepen and speed up this legal extension from the public sector and spill over to the private sector is the great challenge that humanity is waiting for.

ESG criteria, the European Union and the ASEAN Taxonomy

There is an increasingly demanding approach to business management that seeks to balance economic, social and environmental performance and, to this end, there are the ESG (Environmental-Social-Governance) criteria, which evaluate the performance and integration of these dimensions of companies and organisations.

The EU is undoubtedly the leading region in the regulation and application of ESG factors, promoting not only voluntary standards but also making them mandatory laws. European legislation, framed in the CSRD (Corporate Sustainability Reporting Directive), obliges EU companies to report their impact in a standardised and verifiable way, and the ESRS (European Sustainability Reporting Standards), form the binding regulatory axis for EU partners obliged to comply with technical standards, which define what information they must gather to comply with the CSRD.

In line with the above, the Southeast Asian countries associated in ASEAN (Association of Southeast Asian Nations) have been aligning their economic growth with ESG criteria, consolidating themselves as an attractive pole for sustainable investment and responsible production.

Thus, the Taxonomy for Sustainable Finance adopted by ASEAN ("ASEAN Taxonomy"), constitutes a regional framework promoting sustainable economic activities under ESG factors that pursue environmental objectives, such as the protection of biodiversity and natural ecosystems.

ASEAN follows a guiding principle as a unifying philosophy called the "ASEAN WAY", and as a central spirit that has allowed the integration of these nations despite their political, religious, economic and cultural diversity. As an example, several renewable energy projects have been gaining momentum in the region - since 2020 - with international investment, reaching investments of USD 43 MM only in 2022 and which, in the case of Malaysia, has become the cheapest source of energy. Similarly, Vietnam and Indonesia have attracted the highest volume of sustainable Foreign Direct Investment ("FDI") in clean energy, reaching between USD 232 and 242 MM during the last decade, followed by Malaysia and Singapore between USD 153 and 242 MM.

Southeast Asia has been one of the largest recipients of FDI among emerging regions as pioneers in the transition to sustainable development, with flows going to Singapore, among other nations, which tends to act as a regional hub for many investors. Likewise, the plan known as the Asean Comprehensive Recovery Framework, for the recovery of COVID 19, proposed comprehensive strategies ranging from health and wellbeing to care for natural resources (Chapter 3) and a resilient and sustainable future.

Unlike the EU guidelines - true binding norms, we reiterate - the ASEAN Taxonomy does not automatically impose regulation but forms a voluntary framework that member countries adapt and incorporate into their mandatory national regulations, as a guide to convergence.

Just as the European guidelines have a global impact, so does the ASEAN Taxonomy, due to the principle of extraterritoriality that is expressed in the legal adoption of sustainability criteria that each member country of the region incorporates for itself. All this contributes to improving practices and criteria on sustainability and transparency, and has a positive impact on the entire value chain of companies both within and outside the Region.

This strengthens ASEAN's own regulatory capacity and will, and provides an incentive not to rely solely on the influence of other blocs in the search for positive impact of sustainability management solutions. In this quest for regulatory integration, companies are seeing sustainability as a strategic opportunity to identify and positively manage their impacts.

Sectors such as energy, transport, real estate, land use, among others, fall under the care and protection of the ASEAN Taxonomy.

The new B Corps standards

In April 2025 the NGO B Lab launched a new measurement tool - B Lab Standards V2.0 that will come into effect in 2026, bringing a profound change to its last version and thus raising the standards to establish a solid and transparent foundation on the path towards deep and global transformation of the economy under the umbrella of ESG criteria.

The new Measure B is based on inescapable axes that will require reporting on governance and purpose; climate action; human rights; fair labour; environmental stewardship and circularity; justice, equity, diversity and inclusion (JEDI); government affairs; and collective action (including fiscal transparency).

In line with the above, ASEAN has become a relevant actor in the global ESG agenda, and hence also the growth of B Corps in the countries of the region that are raising the standards of business impact, showing a visible sign of genuine commitment to the above criteria and, under the B label, publicly demonstrating their strength and expanding their credibility on the path to sustainability.

Article written by Fernando López Peña, from the ECIJA Argentina team.