AUSTRALIA 

APAC Board Member: Jon Cheung, Partner and Claire Jones, Special Counsel, Prolegis Lawyers, Australia

Social Enterprises:  On 10 December 2024, the Global Anti-Base Erosion Model Rules were adopted into domestic law in the form of the Taxation (Multinational – Global and Domestic Minimum Tax) Act 2024 (Cth).  While the income of excluded entities (including non-profit organisations) that are part of multinational groups is not subject to the minimum tax, an entity will not be a non-profit organisation where it carries on a trade or business that is not directly related to the purposes for which it was established. While this is not an unusual position in OECD countries, it is common in Australia for charities to engage in social enterprise through operating business ventures as a means of raising funds to be applied to their charitable purpose.  Where these charities are part of a large global or corporate group, otherwise tax-exempt profits from their business ventures may now be caught in the minimum tax rate net. Further, it remains to be seen whether this concept will now seep across to other areas of charity regulation in Australia.  Similar adoption of the GloBE Model Rules (despite a policy of ongoing encouragement of not-for-profit social enterprise) appears to have occurred in New Zealand also.

Self-assessment of income tax exemption – By 31 March 2025, all self-assessing not-for-profit entities were required to have lodged their first information return to the Australian Taxation Office.  Recent reports from the Assistant Commissioner of the Not-for-profit team, Jennifer Moltisanti, have indicated that by 30 April 2025, only 30,000 entities had lodged their returns, out of an estimated 150,000 required to lodge. Despite there being no change in the self-assessment requirements (and only in the reporting requirements), through this process many organisations are realising that they do not meet the requirements to self-assess income tax exemption, and must instead either register as a charity or become tax paying entities.  The expected outcome is an increase in the number of registered charities, and clearer information in the public sphere regarding the financial impact of non-charitable not-for-profits in Australia.

AUSTRALIA – Mandatory Climate Related Financial Disclosure strengthened

APAC Board Member: Michael Ryland, Director, Centre for Social Finance Law

The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 (Cth) has introduced a mandatory climate-related financial disclosure regime in Australia, commencing 1 January 2025, for listed companies and certain other entities, with phased implementation over the next four years, depending on their size and emissions.

This new legislation is part of a strengthened focus on corporate disclosure of climate risks, requiring disclosing entities to maintain sustainability records and prepare sustainability reports. It is administered by the Australian Securities and Investments Commission (ASIC).  It has been introduced in the context of an increased focus on greenwashing. There has been a steady and increasing volume of enforcement litigation brought by ASIC, Australia’s competition regulator (ACCC) and community associations for misleading conduct and for issues such as exclusionary screening that was not implemented, misrepresenting the carbon neutrality of certain financial products, and overstating emissions reductions.

At a policy level social impact remains on the Australian government agenda with continuing work developing a Commonwealth Outcomes Fund for domestic outcomes-based contracts, an Impact Investment Fund for the Indo Pacific and similar initiatives.  These initiatives sit alongside the more substantial work on social impact bonds undertaken at a State level.

HONG KONG – New Appendix C2 – Environmental, Social and Governance Reporting Code of the HKEX Listing Rules

APAC Board Member: Vivien Teu, Principal, Vivien Teu Law Practice

Effective 1 January 2025, the Listing Rules of Hong Kong Stock Exchange adopted a new Appendix C2 – Environmental, Social and Governance Reporting Code, which has elevated the sustainability or ESG reporting requirements for Hong Kong listed companies.  While this new Code covers the existing mandatory disclosure requirements on board governance structure on ESG issues, reporting principles and reporting boundary for ESG report of a listed company, along with the existing “comply or explain” requirements on three environmental topics (emissions, use of resources, environmental and natural resources) and eight social topics (employment, health and safety, development and training, labour standards, supply chain management, product responsibility, anti-corruption and community investment), in particular the new Code has a new Part D on Climate-related Disclosures.  By this, Hong Kong has adopted by adaptation to local requirements the IFRS Sustainability Disclosure Standards – S2 Climate-related Disclosures, covering the key aspects of: (I) Governance, (II) Strategy, (III) Risk Management, and (IV) Metrics and Targets.   Listed companies which are constituents of the Hang Seng Composite LargeCap Indiex must comply with the requirements in Part D on a mandatory basis in respect of financial years commencing on or after 1 January 2026, whereas other listed issuers are subject to the requirements on a “comply or explain” basis, except that disclosures on Scope 1 and Scope 2 greenhouse gas emissions are mandatory.    

This update aligns Hong Kong with international standards and best practice for sustainability reporting and disclosures, leading with the climate standards, while open to voluntary or further adoption of IFRS Sustainability Disclosure Standards, which would enhance the quality of ESG reporting of Hong Kong listed companies to further support Hong Kong’s development as a global sustainable finance centre.

INDIA – Slow, but steady – Advancement in regulations of impact investment in India

APAC Board Member: Pratik Bakshi, Counsel, BTG Advaya

India’s impact investment ecosystem has in the past few months seen significant regulatory and policy advancements, particularly through the evolution of the Social Stock Exchange (SSE) and the introduction of the Draft Climate Finance Taxonomy.

Social Stock Exchange (SSE): Enhancing Access and Participation

Proposed by the Securities and Exchange Board of India (SEBI) in 2019 and launched on the National Stock Exchange in December 2022, the SSE offers a regulated platform for non-profits and for-profit social enterprises to raise funds. A notable regulatory development occurred on March 19, 2025, when SEBI reduced the minimum investment threshold for Zero Coupon Zero Principal Instruments (ZCZPIs) from ₹10,000 to ₹1,000. This move aims to democratize access to social investments, encouraging broader retail participation in funding social initiatives. ZCZPIs are unique financial instruments that allow investors to contribute to social causes without expecting financial returns, aligning with the philanthropic objectives of the SSE. By lowering the investment barrier, SEBI intends to channel more funds into sectors like education, healthcare, and rural development.

Draft Climate Finance Taxonomy: Structuring Sustainable Investments

In a significant stride towards sustainable finance, the Indian government released the Draft Climate Finance Taxonomy in May 2025. Developed by the Department of Economic Affairs, this taxonomy provides a structured framework to classify and guide investments towards climate mitigation and adaptation activities, supporting India’s commitment to achieve net-zero emissions by 2070.

By establishing clear criteria and preventing greenwashing, the taxonomy aims to mobilize capital effectively towards credible climate solutions across various sectors, including clean energy, transportation, and real estate.

Reserve Bank of India’s (RBI) Draft Disclosure Framework on Climate-Related Financial Risks

The RBI Governor in March 2025 in a public address mentioned that RBI is in the final stages of finalising the Disclosure Framework on Climate-related Risks. RBI had issued a draft disclosure framework in February 2024, mandating regulated entities to disclose climate-related financial risks. The framework emphasizes transparency in governance, strategy, risk management, and metrics, aligning with global standards like the Task Force on Climate-related Financial Disclosures.

JAPAN – Introduction and Phased Implementation of Japan’s First Sustainability Disclosure Standards

APAC Board Member: Sotaro Hotta, Associate, Nishimura & Asahi

On March 5, 2025, the Sustainability Standards Board of Japan published Japan’s first-ever sustainability disclosure standards. These standards are based on the IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) issued by the International Sustainability Standards Board, while also reflecting the specific circumstances of Japanese companies.

Three standards were published: the Application of Sustainability Disclosure Standards, which establishes the universal framework for sustainability reporting; the General Disclosure Standard, which sets out requirements related to governance, strategy, risk management, metrics, and targets; and the Climate-related Disclosure Standard, which specifies disclosure requirements focused on climate-related issues. These standards aim to help companies identify sustainability-related risks and opportunities and disclose information material to investors.

Regarding implementation timing, the standards will become mandatory in stages starting from the fiscal year ending March 2027, beginning with large-cap companies listed on the Prime Market of the Tokyo Stock Exchange. Eventually, all Prime Market-listed companies are expected to be subject to mandatory compliance by the fiscal year ending March 2029. Additionally, to ensure the reliability of disclosed information, a phased introduction of third-party assurance requirements is also planned.

Compared to the current disclosure requirements under Japan’s annual securities reports, companies will be required to provide more detailed and structured sustainability-related information. To comply with these standards, companies will need to develop internal systems to identify relevant sustainability-related risks and opportunities and disclose material information accordingly. Enhancing internal controls and ensuring data accuracy will also be critical to improving the reliability of disclosures.

MAINLAND CHINA – Stock Exchanges Issue Detailed Guidance on Sustainability Reporting

APAC Board Member: Giana Lin, Partner, Fuguan Law Firm

In China in January, 2025, the Shanghai, Shenzhen, and Beijing Stock Exchanges respectively released the Guidelines for the Preparation of Sustainability Reports by Listed Companies (Guidelines), building on the Sustainability Reporting Standards for Listed Companies (Standards) issued in April 2024. These Guidelines and Standards draw on international frameworks, including the ISSB’s IFRS S1 and IFRS. Their release marks a significant step in China’s sustainability disclosure regime, forming a two-tier structure with mandatory standards (Standards) and voluntary best practices (Guidelines). 

The Guidelines are structured in two main parts: (1) “General Requirements and Disclosure Framework,” and (2) “Climate Change Response.” The first section outlines steps for materiality assessment, establishes governance and disclosure mechanisms for sustainability, and provides a reference method for analyzing ESG-related factors. The second section details methodologies for evaluating climate-related financial impacts, conducting scenario analysis, and accounting for greenhouse gas emissions—featuring 22 key disclosure indicators.

It aims to improve the quality and transparency of ESG disclosures and support the high-quality development of listed companies.

PAKISTAN – Recent Impact Law & Policy Developments

GAIL APAC Board：Dr. Ammara Farooq Malik

Impact Law and policy reforms focused on climate change have surged in Pakistan in recent months, signaling a growing commitment to environmental sustainability and climate resilience.

October 2024 witnessed a landmark legal development with the passage of the 26th Constitutional Amendment, introducing Article 9A, which enshrines the right to a “clean, healthy and sustainable environment” as a fundamental constitutional right. This was followed by strengthened institutional frameworks, such as the operationalization of the Pakistan Climate Change Authority and the rollout of provincial climate policies in Balochistan, Punjab, and Khyber Pakhtunkhwa—the latter also launching the country’s first Climate and Health Adaptation Plan in January 2025 (Transparency International Pakistan, 2024; The Nation, 2025).

In parallel, federal regulations on single-use plastics are being phased in, aiming for full enforcement by 2028 (Dawn, 2024). Pakistan has also introduced the National Carbon Market Policy and significantly increased its climate financing allocations in the 2024–25 federal budget, reflecting a shift toward green budgeting.

On the international front, the government secured a $20 billion, 10-year funding partnership with the World Bank and entered negotiations with the IMF for $1 billion in climate-related financing under the Resilience and Sustainability Trust (World Bank, 2025).

Rapid growth in solar adoption has made Pakistan the sixth-largest solar market globally (Vox, 2024), reinforcing the private sector led climate resilience trajectory in the market. With the country now left with surplus energy due to under-used coal powered plants, the government is focusing on directing this towards crypto mining facilities with a national plan to mine bitcoin with 2,000 megawatts (MW) of excess electricity. (Independent, 2025). This move is paving the way for more regulations and strengthening of the Pakistan Crypto Council (PCC) in the near future. This will raise questions for impact lawyers on the sustainable use of energy.

Furthermore, Pakistan became the first South Asian country to endorse the Fossil Fuel Non-Proliferation Treaty, advocating for an equitable transition away from fossil fuels (The Guardian, 2024). However, large-scale projects such as the Cholistan Canal Project under the Green Pakistan Initiative have sparked environmental concerns, particularly regarding potential harm to downstream ecosystems such as the Indus Delta. Pakistan’s climate governance is evolving rapidly and needs to be balanced with equitable implementation, a factor crucial for sustainable development and environmental justice.

GAIL’s new APAC Corporate Member – Vivien Teu Law Practice

Vivien Teu Law Practice is a new Corporate Member of GAIL in Asia Pacific, established with the intention to dedicate efforts towards impact ecosystem building and practice, as an impact platform for purpose, sustainability, integrity.  In dedicating to the impact ecosystem, the firm seeks to contribute to standards and capacity building, developing market practice for the impact economy and impact investing, with its offering of specialist legal services for the financial services industry, asset & wealth management, investment funds, sustainable finance, social finance, for-purpose enterprises and philanthropy sectors.