25% of Asia/Pacific Businesses Cite ESG Compliance as a Top Challenge

A recent IDC report titled, Leveraging AI to Overcome ESG Compliance Challenges, highlighted that over 25% of businesses in Asia/Pacific rank Environmental, Social and Governance (ESG) compliance requirements as their top challenge in the next 12 months. Being an export-reliant regional economy, the Asia/Pacific region is highly sensitive and influenced by regulations in western markets. Countries and businesses in the region must transition to more sustainable and ESG-compliant economies to ensure economic growth and maintain competitiveness. The small number of countries that have levied some form of carbon tax, such as Japan, Singapore, India, and Indonesia, are export-heavy economies that are more sensitive to shifts in global regulations and, as a result, are the early adopters.

Abhishek Kumar, Associate Research Director, IDC Asia/Pacific.

“Economic vulnerabilities combined with the steadily increasing impact of climate change in the region will result in sustainability regulations in the Asia/Pacific region to lean towards being stricter in order to ensure economic growth and give businesses a competitive edge in the global economy,” says Abhishek Kumar, Associate Research Director, IDC Asia/Pacific. He continues, “As a result, a number of innovative AI-powered solutions are being developed to help businesses tackle their growing ESG-related compliance requirements by Asia-based technology providers such as Impact Intelligence and Alibaba Cloud in China and ESGpedia and Unravel Carbon in Singapore,” ends Kumar.

These AI-driven solutions are becoming key tools in the sustainability ecosystem with financial institutions relying on them to aid in green and sustainable financing decisions. For example, one of the longest-established banks in Singapore, OCBC, uses ESGpedia’s Nexus platform, as part of its process to offer SMEs sustainability-linked loans (SLLs). The bank has set ambitious decarbonization targets and, as of the third quarter 2024, grew its sustainable finance portfolio beyond SGD$64 billion, from SGD$10 billion in 2020.

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