ESG in Southeast Asia: Time to Stop Watching and Start Acting

The Indonesian startup ecosystem shook last week as the authorities detained the CEO of MDI Ventures and former director and president of Tanihub for alleged money laundering and corruption. Add to that the growing scrutiny over eFishery’s financial reporting, and it’s clear that questions of governance and transparency are rising to the surface.

While these incidents don’t reflect the region’s vibrant ecosystem as a whole, they have made one thing clear: good governance is no longer optional.

ESG practices in Southeast Asia are quickly becoming a badge of legitimacy and a key to unlocking long-term growth.

Companies that sideline Environmental, Social, and Governance (ESG) do so at their peril, as it has become a crucial lens through which investors, customers, and regulators evaluate their credibility and future-readiness.

The Rise and Rewards of ESG

Why has ESG gained so much momentum lately?

Simply put: the stakes are higher, and the spotlight has never been brighter. Investor sentiment is now anchored in sustainability, not just balance sheets. Whether you’re a young tech startup in Jakarta or an established conglomerate in Singapore, ESG credentials are a magnet for global capital.

This shift is driven partly by the realization that companies with strong ESG performance tend to have better valuations, enjoy lower capital costs, and face fewer surprises from regulatory or reputational risks.

In fact, the value of ESG-aligned investments and stocks has consistently outperformed traditional benchmarks in this region over recent years, as sustainable performance becomes inseparable from financial returns. More importantly, Asian governments and exchanges are making it impossible to ignore: ESG is increasingly mandated by law.

Mandated by Policy, Not Just Morality

Southeast Asia’s governments are racing to embed ESG into regulation. Singapore, already a leader, requires all listed companies to file annual sustainability reports with climate-related disclosures outright mandatory for several key industries, such as finance, agriculture, energy, and soon, for materials, buildings, and transportation sectors as well.

The Philippines’ securities regulator took a big leap by mandating annual sustainability reporting for listed firms by 2026, while Thailand requires all publicly listed companies to file dedicated ESG reports within strict timelines. Malaysia and Vietnam aren’t far behind, with their own frameworks requiring substantial ESG disclosure and performance transparency by either phased rollouts or “comply or explain” mandates.

These rules aren’t just about box-ticking. Regulators are using them to push companies towards real, measurable progress, raising industry benchmarks and ensuring that investors can tell the difference between lip service and lasting change.

Take the case of the Sunway Group in Malaysia. Not so long ago, Sunway was just another property developer, but its founder saw an opportunity: to turn an abandoned mining site on the edge of Kuala Lumpur into an exemplar of urban sustainability.

Today, Sunway City is a living, thriving community, hosting thousands of businesses and homes built entirely on the principles of environmental and social responsibility. Sunway’s ESG strategy over the years has created trust, attracted strategic investors, and positioned the company as a respected leader in Malaysia’s real estate and infrastructure landscape. Their experience is a solid testament to how an authentic commitment to sustainability can transform brand equity, open investment doors, and futureproof a business model.

How Companies Can Weave ESG Into Their DNA

Success in today’s Southeast Asian business landscape starts with clarity, that is, knowing what truly matters to your company and your stakeholders. It means understanding the unique environmental impacts, social responsibilities, and governance risks tied to your business operations. When you match your strategy with these larger realities, you mitigate risk, build trust, and create long-term value.

Here are a few best practices that companies across the region are adopting:

• Materiality assessment: Identify which ESG issues are most relevant to your business and stakeholders.

• Set actionable goals: Don’t just set targets; make them specific, measurable, and relevant to the realities of your sector and geography.

• Engage your teams: Create working groups, loop employees in on the “why,” not just the “what,” and empower team-driven innovation.

• Transparency and reporting: Adopt robust, internationally aligned frameworks (like the Global Reporting Initiative or TCFD). Disclose consistently and openly; what gets measured gets managed.

• Continuous review: Set up mechanisms—internal audits, external verification, regular progress reviews—to ensure ESG efforts are driving real impact and aren’t just for show.

• Collaboration matters: Many Southeast Asian businesses are collaborating with regulators, civil society, and even competitors to drive sustainability at scale.

• Culture of improvement: Celebrate early wins, but treat setbacks as learning opportunities—embedding ESG in your corporate culture ensures efforts are authentic and evolving.

Singapore-based Sembcorp Industries Ltd offers another example of how integrating ESG principles can drive both business success and long-term resilience.

Traditionally rooted in fossil fuels, Sembcorp made a bold pivot towards renewable energy, investing in solar, wind, and hydropower projects throughout Asia. The result? Not only did Sembcorp attract major international and regional investors seeking “green” portfolios, but it also locked in long-term contracts and partnerships that would have been impossible without a transparent, aggressive sustainability strategy.

Sembcorp’s consistent ESG initiatives have helped the company reduce risks, improve financial returns, and lead the transition toward sustainable energy at scale.

In 2025 alone, Sembcorp signed deals spanning Malaysia, Singapore, Indonesia, and Vietnam, including renewable energy projects, utility-scale solar installations, and partnerships across sectors, cementing its reputation as a regional sustainability leader.

In Southeast Asia, ESG is fast becoming the new reality for doing business. Ignore it, and risk being left out of the next wave of growth and innovation. Embrace it, and you’ll not only futureproof your business but also unlock doors to new markets, capital, and partnerships.

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