ESG, who are the rising stars in the Asia Pacific landscape?

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Pacesetters, Emerging Leaders, and Watchers – these are the three distinct market segments that have emerged in Asia Pacific’s sustainability and Environmental, Social, and Governance (ESG) landscape.

This trend is a result of rapid changes in national policies and regulations, according to a recent study by the International Data Corporation (IDC). Each segment mirrors a country’s sustainability maturity level and points towards the potential market for ESG-related technology products and services.

ESG metrics

The Pacesetters are the frontrunners in the sustainability race, with advanced regulations fostering an environment ripe for the adoption of sustainability and ESG-related technologies. These economies are characterized by a robust demand for these technologies, driven by their progressive regulatory climate. Conversely, Watcher economies are still in the early stages of their sustainability initiatives. Companies in these countries are primarily focused on determining their ESG metrics and understanding the gaps in their emissions data.

Asia Pacific’s emerging leaders

However, the most notable market is the middle segment – the Emerging Leaders. This segment comprises countries on the cusp of a sustainability revolution, where companies are keen on expanding their ESG initiatives. Melvie Espejo, Research Director for Sustainable Strategies and Technologies, IDC Asia Pacific, believes that Emerging Leaders are poised to become hotspots for sustainability strategies and technologies.

Among the eight economies classified as Emerging Leaders – China, Hong Kong, India, Indonesia, Japan, Malaysia, Thailand, and Vietnam – companies are experiencing an increased need for ESG data management, supply chain data management, product lifecycle data management, and decarbonization technologies.

These countries are witnessing a shift in business strategies, influenced to a significant extent by compliance requirements. The IDC research shows that regulatory mandates are giving a new focus to these companies’ sustainability programs.

The emergence of these Emerging Leaders is of paramount significance for two reasons. Firstly, their ESG metrics and sustainability performance are becoming the basis for accessing cheaper capital through green financing. Secondly, in some of these economies, sustainability performance has become a criterion for preferred procurement in government and enterprise contracts. This dual advantage is providing a strong incentive for companies in these countries to invest in sustainability.

ESG Asia Pacific's landscape

Sustainable ESG policies

To succeed in this rapidly changing regulatory landscape, organizations in Emerging Leaders’ economies need to stay updated on sustainability and ESG policies. It requires a commitment of time, resources, and financial investments in ESG-related technologies and services. These investments will enhance their ESG data collection, monitoring, validation, and reporting capabilities, thereby boosting their sustainability credentials.

The market segmentation categorization in this research is based on the IDC Sustainability Research Framework. This framework measures the impact of the driver of rules on the speed of adoption of sustainability strategies and technologies. It considers factors such as the rule of law, public policy implementation, business compliance, and the conversion of international sustainability commitments to national public agendas.

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