An increasing number of Asia-Pacific firms have net-zero commitments in place, however gaps remain in terms of target verification and transparency, a new study by PwC Singapore and the Centre for Governance and Sustainability (CGS) at the National University of Singapore (NUS) Business School has found.
The study, Sustainability Counts III: Sustainability Reporting in Asia Pacific, assessed the sustainability policies of some 700 companies, and found that 53% (371) had net-zero commitments in place, compared to 47% (329) last year.
At the same time, while 37% of the 371 companies with net-zero targets have described said targets as science-based, just 18% have had their targets verified by the Science Based Target initiative (SBTi).
Also, while 63% of companies have disclosed Scope 3 emissions, up from 50% a year ago, most of these disclosures offered minimal category breakdowns.
The study also observed that 51% of companies are adopting a ‘double materiality’ approach – addressing both financial materiality and societal and environmental impacts. Yet, quantifying climate-related risks remains a challenge, with only 45% of companies incorporating both qualitative and quantitative scenario analyses.
‘Substantial gaps remain’
“While Asia Pacific companies have made significant strides in sustainability reporting, particularly with the notable growth in Scope 3 emissions disclosure, substantial gaps remain in verification and transparency,” commented Professor Lawrence Loh, director, Centre for Governance and Sustainability at NUS Business School.
“Few companies have validated their net-zero targets through the Science-Based Targets initiative, emphasising an urgent need for greater accountability. Echoing COP29’s emphasis on urgent climate action, our findings highlight the critical need for robust governance frameworks and actionable climate strategies to drive sustainable development across the Asia Pacific.”
Sustainability at board level
The study highlights continued improvements in sustainability reporting, with 86% of companies now disclosing their boards’ responsibility for sustainability, and tying executive remuneration to sustainability performance (42%).
However, only 6% specify the percentage of remuneration linked to climate targets, falling short of IFRS S2 recommendations.
Other findings from the study include that 62% of firms have included sections on nature and biodiversity, although only 7% referred to the Taskforce for Nature-related Financial Disclosure (TNFD).
In addition, where Scope 3 emissions are being disclosed, the study found that in many cases it focuses on less complex areas, such as business travel.
“We seem to have built strong ‘muscles’ across several areas including sustainability governance, identification of sustainability material topics, identification of climate risks and opportunities and making a good start in acknowledging nature and climate dependencies and impacts,” added Fang Eu-Lin, sustainability and climate change leader, PwC Singapore.
“We will need to continue building ‘muscles’ in better climate risks quantification, Scope 3 comprehensiveness, and application of the TNFD, as we get better data and insights.” Read more here.
