On 11 April 2025, the ASEAN Capital Markets Forum (“ACMF“) launched the ASEAN Simplified ESG Disclosure Guide for SMEs in Supply Chains (“ASEDG“) Version 1, with further consultations planned across Association of Southeast Asian Nations (“ASEAN“) member states over the next six months.
Purpose
The ASEDG Version 1 is a voluntary guide to help:
- Small to medium enterprises (“SMEs”) across ASEAN operating within global and local supply chains with a simplified reference guide to report on environmental, social, and governance (“ESG“) disclosures to various stakeholders including customers, financiers and investors.
- Stakeholders of SMEs such as large companies or financial institutions that are planning to engage SME companies in their supply or value chain through the setting of ESG disclosure requirements.
Scope
The ASEDG Version 1 covers 15 topics under the three pillars of Environmental, Social, and Governance.
- Environmental Pillar: covers emissions, energy, water, waste, and materials.
- Social Pillar: includes human rights and labour practices, employee management, diversity, equity and inclusion, occupational health and safety, and community engagement.
- Governance Pillar: focuses on governance structure, policy commitments, risk management and reporting, anti-corruption, and customer privacy.
A set of 38 disclosures across the topics have been simplified from various global ESG reporting standards and frameworks, such as the IFRS Sustainability Standards, the Global Reporting Initiative Standards, and local guidelines and frameworks from ASEAN member states. This is to ensure universal alignment with current frameworks.
Using the ASEDG
SMEs are encouraged to determine the materiality of the topic and associated disclosures based on relevance to their operations and governing laws and regulations relevant to the company.
Each topic has specific disclosures categorised into Basic, Intermediate, and Advanced levels, catering to the level of sustainability maturity of the reporting SME.
There is no mandatory timeline for the disclosures, and adoption is voluntary. SMEs can update their disclosures if stakeholder needs change.
SMEs would face increasing demands on ESG accountability as larger companies, customers, financiers, and various regulators close in on their own requirements regarding supplier due diligence, environmental risk management, and sustainability reporting. SMEs can get ahead by committing to transparent engagement on material ESG matters, to enhance supply chain resilience and investment attractiveness. As the ASEDG is expected to be revised periodically, SMEs can look to this document for reference to remain relevant as global sustainability standards and ESG compliance requirements evolve.
Companies looking to align their sustainability disclosures with local regulatory requirements or starting out on their sustainability governance to respond to market demands can speak to us. SMEs and mid-sized enterprise can also tap on our ESG legal fee subsidy for environmental or climate related work under the Sustainability Legal Catalyst Programme with Enterprise Singapore (link to website), subject to the applicable terms and conditions. You can reach out to us at info.slcp@rajahtann.com.
Click on the following links for more information (available on the ACMF website at www.theacmf.org):
Disclaimer
Rajah & Tann Asia is a network of member firms with local legal practices in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Our Asian network also includes our regional office in China as well as regional desks focused on Brunei, Japan and South Asia. Member firms are independently constituted and regulated in accordance with relevant local requirements.
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Please note also that whilst the information in this publication is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as legal advice or a substitute for specific professional advice for any particular course of action as such information may not suit your specific business and operational requirements. You should seek legal advice for your specific situation. In addition, the information in this publication does not create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on the information in this publication.
