Sustainability in APAC: Trends, Challenges, and 2026 Outlook

Sustainability is becoming a strategic priority for companies across the Asia Pacific (APAC). In 2025, around 36% of APAC businesses have fully integrated sustainability initiatives into operations, while nearly half publish sustainability reports. Many still face challenges, particularly in cost, expertise, and ESG data management.

Looking ahead to 2026, regulatory alignment, measurable impact, and strategic integration will become crucial. Companies that invest in strong governance, digital ESG reporting, and workforce capability are expected to gain a significant competitive edge.

Sustainability in APAC: The 2025 Baseline

Most APAC companies are currently compliance-driven, responding to local sustainability legislation in Australia, Singapore, Japan, and China. Key trends include:

• Reporting activity: 47% of APAC companies publish sustainability reports, slightly below Europe at 53%.
  
• Integration: 36% actively embed sustainability into business operations.
  
• Budget trends: 38% of companies are increasing sustainability budgets, mainly due to regulatory requirements (67%) and corporate net-zero or ESG targets (20%).

Smaller and medium-sized enterprises (SMEs) often struggle with investment, resources, and technical expertise, slowing adoption of sustainability initiatives.

Key Challenges Facing APAC Businesses

Cost and Investment Barriers
SMEs frequently find it hard to allocate funds for ESG initiatives. Presenting a clear business case that demonstrates ROI is essential for management approval.

ESG Data Collection and Management
Large corporations face difficulties capturing accurate data across diverse operations and supply chains, often lacking centralized reporting systems.

Resource and Expertise Gaps
Many companies do not have dedicated sustainability teams, limiting their ability to implement and monitor ESG strategies effectively.

Change Management
Embedding sustainability into corporate culture requires leadership buy-in, structured communication, and employee engagement.

APAC Example:
A mid-sized Singaporean manufacturer struggled to collect ESG data from regional suppliers. By adopting a digital reporting platform and training a small internal team, the company reduced reporting errors by 70% and attracted ESG-conscious investors within a year. This shows that even resource-limited businesses can achieve measurable impact with targeted strategies.

2026 Outlook:
Companies that tackle these barriers with digital reporting tools, centralized ESG platforms, and staff training are likely to gain early-mover advantages.

Value Creation From Sustainability Programs

Even with current challenges, APAC businesses report tangible benefits:

• Reduced environmental impact: 20%
  
• Cost savings: 17%
  
• Talent attraction and retention: 15%
  

2026 Projection:
Companies integrating ESG into strategy are expected to unlock higher operational efficiency, access green financing more easily, and strengthen stakeholder trust.

Strategic Recommendations for 2026

To remain competitive, APAC companies should focus on six priorities, with actionable steps:

1. Conduct Materiality Assessments
   
   • Use a scoring system to rank ESG topics by business impact and stakeholder concern.
     
   • Identify which initiatives deliver the highest strategic value.
     
2. Integrate ESG Into Core Strategy
   
   • Align sustainability initiatives with operations, investment decisions, and KPIs.
     
   • Example KPIs: Scope 1 & 2 emissions, energy efficiency per unit produced, or percentage of suppliers audited.
     
3. Invest in Digital Reporting Platforms
   
   • Centralize ESG data collection and automate reporting.
     
   • Suggested tools: SAP Sustainability Control Tower, Salesforce Net Zero Cloud.
     
4. Strengthen Governance
   
   • Assign clear ESG accountability at executive and board levels.
     
   • Track measurable KPIs for transparency and accountability.
     
5. Build Workforce Capability
   
   • Train finance, operations, and management teams to implement sustainability plans effectively.
     
   • Include basic ESG awareness sessions for all staff to drive cultural adoption.
     
6. Communicate Transparently
   
   • Share progress with investors, partners, and employees to build trust and regulatory alignment.
     
   • Use dashboards or concise reports for quick, impactful updates.
     

APAC Sustainability: 2025 vs 2026

Aspect	2025	2026 Outlook
Integration into operations	36% actively integrating	Expected 50%+ with strategic alignment
Public reporting	47% publish reports	Expected 60%+ due to regulatory and investor pressure
Budget trends	38% increasing budgets	Budgets likely to rise further with ROI-focused investment
Data & digital tools	Limited ESG platform use	Adoption of centralized ESG systems expected to increase
Regulatory compliance	Compliance-driven	Companies will combine compliance with value creation and risk mitigation

This timeline shows how APAC companies are shifting from compliance-focused ESG efforts in 2025 to strategically integrated sustainability in 2026.

From Compliance to Competitive Advantage

Sustainability in APAC is no longer optional. Companies that act now to strengthen governance, integrate ESG into operations, and adopt digital reporting systems will gain measurable competitive advantages. Early movers can leverage sustainability to drive cost efficiency, talent retention, and access to green financing.

As businesses prepare for 2026, turning ESG insights into actionable strategies is key. Battchoo & Yong now offers ESG advisory services to help companies integrate sustainability into their operations, improve reporting accuracy, and measure impact effectively. Partnering with experts ensures your business not only meets regulatory expectations but also positions itself as a leader in sustainable growth across the region.

Ready to get your ESG reporting and governance in shape?
Talk to our team about building a practical ESG roadmap that meets 2026 requirements.