ESG Legal Outlook 2025: key Asia themes

We have published our ESG Legal Outlook 2025 highlighting the key global themes set to shape the legal landscape for ESG in the coming year. 

We anticipate that 2025 will be a year focused on implementation, reflection, and recalibration.

The last couple of years have seen ESG policy and regulation across the globe develop at a frenetic pace. However, with many economies concerned about competitiveness and energy costs, it is not surprising that some are asking for a moment of reflection and recalibration, as well as emphasis on the practical implementation of recently adopted regulation. 

Serious questions are being asked about the private sector’s ability to cope with what has been a veritable tsunami of ESG developments, including new disclosure and due diligence requirements, which has led to a certain amount of ESG fatigue. 

Even the EU, which has been leading the ESG charge so far, is about to embark on a simplification (and implementation) phase. And there is no denying that the outcome of the recent US election will have a significant effect on the ESG landscape, not just domestically but also further afield, including in Asia. 

Having said that, 2025 is unlikely to see a full reversal or halt to ESG developments globally or in Asia – the recent UK-China Economic and Financial Dialogue 2025, for example, recognised the importance of sustainable finance in the year ahead. What is more likely is that the pace of change will slow this year and that there will be a pause for thought and focus on practical implementation, to give businesses some much-needed breathing space. 

There are still plenty of significant developments scheduled for 2025 including in respect of transition plans, energy transition, sustainable finance, disclosure, due diligence, and circular economy, as well as a continued focus on greenwashing and ESG litigation - all of which we have highlighted in this year's publication. 

Key themes for Asia include: 

• Energy transition: The transition to clean energy is well underway with Asia seeing sustained growth in offshore wind which is expected to continue throughout 2025 with the latest round of capacity allocations in Taiwan, Japan, Korea and the Philippines. India and Vietnam are also targeting offshore wind as part of their renewable energy mix and have announced regulatory support programmes. The growing attention on low carbon hydrogen will continue to gain momentum particularly off the back of several Asia governments looking to scale the hydrogen economy, as will the focus on the potential for carbon capture utilisation and storage (CCUS) in the region (e.g. Malaysia and Indonesia). Despite the challenging economic climate, investment in low carbon, or net zero tech, such as battery storage, EV charging, nuclear, energy efficiency, and e-fuels will continue in the year ahead, as will developing solutions needed for hard-to-abate sectors such as steel, cement, petrochemicals, shipping, and aviation. Determining how to achieve clean energy, phase out coal-fired power, meet future demand, ensure energy security and facilitate economic growth, however, remains a complex challenge for governments in Asia. See our Energy & Infrastructure Legal Outlook 2025. 
• Transition finance and transition plans: We have seen key developments in the last year encouraging the scaling of the transition finance market – a critical topic for this region. What is clear is that creating the right policies, pathways and signals for investment in the year ahead will be key to unlocking the required finance. Transition plans will play an important role in underpinning the credibility of the transition finance market as they provide vital information for investors and lenders enabling them to make better decisions about capital allocation, as well as guide companies in adjusting their business models and operations and defend against greenwashing claims. Blended finance solutions are also expected to be a key focus for markets in the Global South.
• Sustainability disclosure regimes: The adoption of the first two global sustainability disclosure standards by the International Sustainability Standards Board (ISSB) by Asia jurisdictions is a significant step forward. The move by Japan, Singapore, Hong Kong SAR, South Korea, Malaysia, and mainland China (amongst others) to use the ISSB standards, or taking steps to introduce the standards, in their own frameworks, is expected to help bridge existing data gaps and support informed decision-making. 2025 will be a key year in the implementation of various sustainability disclosure regimes across Asia but questions remain about how these regimes will work alongside other regimes, including the EU’s CSRD, and what this will mean in practice for multinationals having to report in several jurisdictions.
• Sustainability due diligence regimes: The EU is still leading the way with its ground-breaking Corporate Sustainability Due Diligence Directive (CSDDD) – a regime which can apply outside the EU, both in terms of the companies it brings into scope, the diligence that needs to be undertaken worldwide, and the indirect effects the new rules will have as they are cascaded up and down value chains. The CSDDD, along with a Deforestation Regulation and a new Forced Labour Ban Regulation, have significant implications for Asia companies doing business in the EU. 
• Sustainable finance: As sustainable finance regulations evolve, 2025 will be a year for transparency and compliance, with regulators in various Asia jurisdictions focusing on sustainability disclosure requirements, transition planning and anti-greenwashing. The publication of codes of conduct for providers of ESG ratings and data products in Singapore, Hong Kong SAR and Japan introduces voluntary standards for greater transparency. We continue to see the roll out of sustainable finance taxonomies, or further iterations being published (e.g. in Hong Kong SAR, Singapore, ASEAN, Indonesia, Philippines and Thailand), and a growing focus on developing green fintech solutions. In 2024, the sustainable bond market continued to see green use of proceeds bonds dominate the Asia market. 2024 was also marked by a deepening of the market with numerous innovative ESG structuring solutions, including ESG-focused tokenised repackaging notes, multi-currency digital green bonds and sovereign transition bonds. 
• ESG litigation and greenwashing: While the pace of ESG litigation in Asia is not yet comparable to the EU or US, the past year has given clear indications that stakeholders are increasingly ready to take action and we see regular pronouncements from regulators in Asia on their plans and guidance for tackling greenwashing - there is every expectation that this will continue in the coming year. It is clear that anticipating and mitigating the risks of ESG litigation and greenwashing remains a key strategic issue going into 2025.

If you would like to discuss any of these themes, please reach out to the contacts on this post, or to your usual Linklaters contacts.