Securities regulators from across ASEAN are developing a voluntary corporate transition framework that is expected to be published by the end of 2023.
The project and delivery timeline were referenced in a joint statement issued by the region’s finance ministers and central bank governors following a meeting in Jakarta last week.
The need to end dependency on fossil fuels is particularly acute in ASEAN, due to the popularity of coal and the relatively young age of coal-fired plants. The commodity currently makes up just over half of Southeast Asia’s energy mix.
Responsible Investor understands that the guidance will be principles-based and drawn from the most suitable frameworks currently in use. It will be aimed at helping companies develop, communicate and maintain the transparency of their climate transition planning activities.
Unlike the draft ASEAN taxonomy, which is focused on project-level activities, the guidelines will provide an entity-level overview of how to approach a green transition. They are being developed by the ASEAN Capital Markets Forum (ACMF), a high-level grouping of capital market regulators from the bloc’s 10 member states.
Details on the sectors which will be covered by the first phase of the guidance and its compatibility with the Science Based Targets Initiative, currently the most widely used voluntary target-setting framework, were not immediately available.
Ongoing consultations over the ASEAN taxonomy, which are not being conducted publicly, are expected to be completed by COP28 in November, according to another update from the bloc. They involve targeted stakeholders from financial institutions and industry, government bodies, and regional and international organisations.
Feedback from the consultation will be used to finalise taxonomy criteria for six priority carbon-intensive sectors identified in the first phase of the framework, and inform the development of criteria for other sectors, which will be released over the next two years.
Separately, the ACMF is evaluating the feasibility of adopting global sustainability disclosure standards that have been developed by the ISSB. The development of such a protocol “would serve as a guide for ACMF’s engagement with the ISSB going forward”, according to the recently issued joint statement.
The region’s regulators are also developing a “green lane” to facilitate cross-border offering of ESG funds within the ASEAN Collective Investment Scheme (CIS), a programme that aims to establish a single capital market between Singapore, Thailand and Malaysia.
The CIS uses a streamlined authorisation process to allow investment funds to be sold in all three countries upon approval by domestic regulators.