ESG Compliance Remains a Key Challenge in Asia/Pacific

ESG Compliance Remains a Key Challenge in Asia/Pacific

A new IDC report, Leveraging AI to Overcome ESG Compliance Challenges, reveals that over 25% of businesses in the Asia/Pacific region identify Environmental, Social, and Governance (ESG) compliance as their top challenge for the next year. The region’s export-heavy economies, particularly those subject to global regulations, are under increasing pressure to transition to sustainable and ESG-compliant practices to remain competitive.

Countries such as Japan, Singapore, India, and Indonesia, which have introduced carbon taxes, are leading in adopting ESG strategies due to their sensitivity to shifts in international regulations. “Economic vulnerabilities combined with the steadily increasing impact of climate change in the region will result in sustainability regulations leaning towards being stricter to ensure economic growth and global competitiveness,” noted Abhishek Kumar, Associate Research Director at IDC Asia/Pacific.

AI-Powered Solutions Driving Sustainability

The report highlights the growing role of Asia-based technology providers in offering AI-driven tools to address ESG compliance. Companies like Impact Intelligence, Alibaba Cloud, ESGpedia, and Unravel Carbon are leveraging artificial intelligence to help businesses meet regulatory requirements and contribute to a sustainable ecosystem.

These solutions are particularly valuable to financial institutions. For instance, Singapore’s OCBC Bank uses ESGpedia’s Nexus platform to support its sustainability-linked loans (SLLs) for SMEs. OCBC has set ambitious decarbonization goals, with its sustainable finance portfolio surpassing SGD$64 billion in the third quarter of 2024, a significant increase from SGD$10 billion in 2020.

The IDC report offers actionable insights and examples of how businesses in the Asia/Pacific region can leverage innovative AI tools to overcome ESG compliance challenges. It underscores the importance of these technologies in creating a sustainable, competitive, and resilient economic ecosystem in a region heavily influenced by global regulatory trends.

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