Board Responsibility and Sustainability‑Related Disclosure in Asia

3. Enforcement

Abstract

This chapter examines the different enforcement strategies for sustainability-related disclosures and claims. Then, it distinguishes legal actions through two vectors: who initiated the legal action – i.e. a private party or a regulator –; and on what ground these actions were based – i.e. whether it relates to a violation of the corporate and securities law framework or other laws. Finally, this chapter discusses the interface between the discussed strategies in the context of developing the enforcement landscape to tackle sustainability washing in Asia.

Globally, enforcement relating to misleading or deceptive sustainability disclosures is gaining momentum. A leading study identifies around 120 cases of ‘climate-washing’ globally during the period of 2016-2023 (Juliana Vélez-Echeverri, 2024[83]). This chapter examines both private and public enforcement.

3.1. Private Enforcement

The G20/OECD Principles recommend that “corporate governance framework should facilitate and support institutional investors’ engagement with their investee companies”. Shareholder engagement on sustainability issues has also gathered momentum in the jurisdictions under study. Further, shareholders have various rights – to request information, exercise voting rights, appoint and remove directors of the company, and initiate legal proceedings against the directors on behalf of the company. Shareholders may first engage with the board of directors to address governance issues, including on sustainability matters. If engagement does not yield the desired outcomes, they may escalate by exercising their shareholder rights – such as voting against directors or submitting resolutions or initiating a legal proceeding – to hold the board accountable.

In the context of sustainability-related matters, institutional shareholders have led several campaigns against certain companies and their directors. While these mechanisms or strategies do not strictly fall within the realm of enforcement, they have yielded results. Further, such campaigns may lead to a settlement which may be beneficial for various stakeholders. These campaigns have also resulted in legal actions against company directors as well. Most importantly, these campaigns may also invite public and regulatory scrutiny, thereby imposing reputational costs or possible sanctions by regulatory authorities.

The aim of investor campaigns and investor-led legal actions is both to ensure that the company and directors are held accountable for breach of sustainability disclosure requirements and to raise the overall quality of sustainability disclosure among all listed companies. This is particularly true with certain emerging markets where data availability, expertise in sustainability practices or disclosure and reporting frameworks, or private enforcement in general, are at a nascent stage.

3.1.1. Investor-Board Engagement

Shareholders may ‘voice’ their concern regarding different sustainability matters with the board of directors and the senior management through multiple means (OECD, Forthcoming[84]). Shareholders may meet the board to discuss a variety of sustainability-related matters and try to convince directors to reconsider any decisions. Shareholders may also file a shareholder proposal to require enhanced disclosures on sustainability matters or vote against a management resolution at the annual general meeting.

Other stakeholders such as consumers or environmental activists are also effectively engaging with companies to hold them to account for their sustainability commitments. There have been certain instances worldwide when investors have collectively engaged with management of companies on sustainability matters (Puchniak and Varottil, 2025[85]).

If the shareholders or stakeholders are not satisfied by the company’s response let alone their actions following their engagement, they may explore the possibility of initiating a legal action against the company. These legal actions may stem from obligations under corporate and securities law or under other laws such as financial regulation, consumer protection law, and advertising standards. Ultimately, if shareholders’ concerns are still not addressed, they could divest their investment from a given company.

While this report focuses on corporate and securities law enforcement for ‘sustainability washing’, it is important to highlight the interface of enforcement actions within the realm of other laws and corporate and securities law enforcement. Thus, this report also discusses private and public enforcement within other laws and regulations aimed at remedying ‘sustainability washing’.

3.1.2. Corporate and Securities Law Enforcement

The question of enforcement of directors’ duties is an ongoing preoccupation of policymakers, regulators, courts and market practitioners. The enforcement of directors’ duties to consider stakeholders’ interests is complex – would shareholders have enough incentives to initiate an action upon failure of the board of directors to consider stakeholders’ interests (including related to sustainability matters)? Would the court allow shareholders or stakeholders raising concerns on behalf of the company to initiate an action against allegedly delinquent directors? If yes, what judicial standards would be applicable, what would the nature of the remedies be, and to whom would they be available?

Corporate Law Enforcement

Shareholders may initiate legal actions to hold the board accountable for failure to consider sustainability matters. Recent research highlights that an allegation or legal proceedings on failure to meet a company’s climate-related commitments may lead to a fall in the company's share price in the short term (Juliana Vélez-Echeverri, 2024[83]). Such a fall in share prices could also compel shareholders to hold directors accountable. Additionally, other public law avenues for initiating litigation against companies are also available, which have also been successful (Climate Change Litigation Database, 2024[86]).

Primarily, there are two types of legal action under private enforcement of corporate laws – direct action and derivative action. A direct action refers to a legal action initiated by shareholders against the company and its directors, if their actions have been oppressive or prejudicial to interests of the shareholders. A derivative action is also an action initiated by shareholders; however, it serves as a remedy for wrongs committed against the company. A derivative action is technically a legal action on behalf of the company against the directors for breach of their duties.

A fundamental point that needs to be considered, particularly from an enforcement perspective, is that directors owe duties to the company. Thus, only the company may be the proper person to initiate legal action against delinquent directors. Since the company is an artificial juristic person, shareholders may initiate a legal action on behalf of the company for breach of directors’ duties in certain circumstances, through a derivative action. In the jurisdictions under study, stakeholders do not have the standing to sue companies under the corporate and securities law framework. Thus, derivative action emerges as the most appropriate tool to proceed against delinquent directors for failure to consider sustainability matters.

In the UK, shareholders have initiated legal actions against directors for failure to adequately consider climate risk in two key cases – McGaughey and Davies v. USS (England and Wales Court of Appeal, 2023[87]) and ClientEarth v. Shell (Climate Change Litigation Database, 2023[88]). McGaughey and Davies sued directors of University Superannuation Scheme Limited, one of the largest superannuation funds in the UK. The plaintiffs argued that the directors’ breached their fiduciary duties by using flawed financial assumptions during the COVID-19 market downturn to justify pension cuts, failed to control costs, and neglected to divest from fossil fuels despite beneficiaries' preferences. The High Court acknowledged that beneficiaries could bring such claims but ruled against the plaintiffs, citing the Foss v. Harbottle principle, which limits individuals from suing on behalf of a company unless specific exceptions apply. The Court of Appeal later refused to entertain the case on appeal purely on procedural grounds.

In the case involving Shell Plc, the environmental organisation ClientEarth initially sought to engage with Shell Plc urging it to reduce its carbon footprint. Upon failure of the engagement process, ClientEarth bought shares in Shell Plc and initiated a derivative action. The organisation alleged that Shell’s directors had breached their duties under UK company law by failing to adequately manage climate-related risks. ClientEarth argued that Shell directors did not put in place adequate measures to effectively implement Shell’s commitment to become net-zero by the year 2050. The High Court dismissed the claim and leave to appeal was denied by the Court of Appeal. Thus, both of these shareholder-initiated actions have not been successful.

Three factors have been attributed to the unsuccessful derivative action for breach of directors’ duties to consider stakeholders’ interests or sustainability matters that are financially material to the company. First, the operation of the business judgment rule precludes courts from reviewing a decision and the adequacy of consideration given by the board of directors to an issue at hand. Certain jurisdictions have afforded a statutory recognition to the business judgment rule under their relevant company law, whereas other jurisdictions provide implicit recognition to the business judgment rule (OECD, 2023[48]). Courts have also, in practice, preferred a laxer, subjective standard of review of board decisions, more generally deferring it to the judgement of the board of directors. However, the operation of this rule and subjective standard of review does not entirely negate the possibility of a legal action. An egregious case where the board completely overlooked sustainability-related risks when it was eminent to consider it in the company's interest would not be covered within the safe harbour of the business judgment rule.

Second, derivative actions in most jurisdictions under study require that the plaintiff shareholder acts in good faith. This requirement may stem from the statute or a judicial pronouncement. There is a lack of clarity on the requirement’s real purpose, which has often deterred plaintiffs. For instance, in ClientEarth v. Shell, the plaintiff was a noted international environmental charity that initiated a case against Shell, a major fossil fuel company, for the failure of the board to adequately consider climate risks. The UK court ruled that ClientEarth had a policy agenda and thus, ‘ulterior motive’ to initiate this claim. Thus, ClientEarth did not meet the good faith requirement. The court also imposed costs on ClientEarth (Climate Change Litigation Database, 2023[88]). This has been seen as a setback for non-governmental organisations initiating strategic litigations to hold corporations accountable for climate change and sustainability-related issues.

Third, the nature of remedies aimed at assuaging a breach of directors’ duties to consider stakeholders’ interests is declaratory. This is because shareholders or stakeholders benefit only indirectly and to the extent of their equity ownership from any remedy. Since directors owe this duty to the company, remedies also flow to the company. This conundrum has led to activist shareholders seeking a declaratory relief. A declaratory relief in the form of a court declaration that the directors breached their duties may sound less onerous but has several important consequences, such as disqualification of directors or reputational harm to them. However, courts have been reluctant to grant such relief due to the lack of a direct coercive effect (England and Wales Court of Appeal, 2023[87]) (Climate Change Litigation Database, 2023[88]).

In addition to the abovementioned factors, various procedural and substantive barriers have precluded shareholders from seeking effective redressal. For instance, if the plaintiff fails to win the case, then it is also required to defray the legal costs of the defendants. These barriers may impose financial burden on a prospective plaintiff. Additionally, certain common law doctrines are still applied in some jurisdictions such as the UK which make it difficult for parties to truly harness the potential of statutory derivative actions in sustainability matters (McGaughey, 2025[89]).

Securities Law Enforcement

There are two potential avenues for arguing a breach of directors’ duties under securities law: (a) a securities class action route where investors initiate proceedings to recover losses caused by false and misleading sustainability disclosures, or (b) enforcement action resultant of an intervention of the securities market regulator (dealt under the Public Enforcement section below). If directors are held liable under securities regulations, shareholders may further initiate a derivative action for breach of directors’ duties under the applicable company law framework.

Securities Fraud Class Action

Securities fraud class action suits are legal proceedings initiated by groups of shareholders seeking compensation for violations of securities law including claims of fraudulent statements made in connection with the purchase or sale of a security (Saraceno, 2012[90]). These actions may also encompass claims related to false or misleading sustainability-related disclosures, which may also be tantamount to a breach of directors’ duties.

Multiple examples of securities class actions initiated in the US for misleading sustainability-related disclosures exist. A notable example is Ramirez v. ExxonMobil (2016) in which investors filed a securities class action in the United States alleging that Exxon and senior executives, including its then-CEO, misled shareholders about the impact of climate risk on the company. The plaintiffs claimed that Exxon’s use of a proxy cost of carbon created a misleading impression of how the company accounted for climate risk in its financial planning. While the court allowed certain overvaluation claims to proceed, it rejected class certification over carbon cost statements due to insufficient proof of stock price impact. In 2019, Exxon’s directors faced a separate claim for breaching fiduciary duties through misleading statements about stranded assets (Climate Change Litigation Database, 2019[91]).

In August 2024, shareholders of RELX PLC, a global publishing house, filed a securities class action in Massachusetts, accusing the company of overstating climate commitments. The plaintiff’s submissions highlighted the apparent contradictions between the company's stated policy objectives and its actual business practices in promoting fossil fuel activities (United States District Court, 2024[92]). This development is unprecedented and may shape the direction of private enforcement actions against companies for sustainability washing.

These cases are not limited to climate but cover a vast range of sustainability-related disclosures. Institutional investors filed a securities lawsuit against Boohoo Group PLC, a fashion retailer, in May 2024, seeking £100 million in damages (Butler, 2024[93]). These investors have alleged that they suffered £100 million in losses due to the non-disclosure of human rights violations in its supply chain, leading to a significant share price drop. This case is the first reported case in the UK where investors have filed a securities lawsuit involving sustainability-related disclosure violations (CCLI, 2024[94]). Thus, securities class action is emerging as an important tool for holding directors and the company accountable for breach of sustainability disclosures, but concrete cases remain so far inexistent.

3.1.3. Other Laws

Enforcement avenues under other laws are critical to corporate and securities law enforcement of sustainability related disclosures and claims. These avenues not only provide stakeholders with a remedy that redresses their grievances but also aids shareholders and regulators in further pursuing a case against delinquent directors. This interface is highlighted in the last section of this chapter (Section 3.3). This part will highlight private party-led enforcement for misleading and deceptive sustainability claims under advertising laws, consumer protection laws, and financial regulation.

Globally, an increasing number of legal actions have been initiated by private parties under laws other than company and securities laws for sustainability-related claims by companies. The KLM case is a leading example of advertising and consumer law based legal action in this regard (District Court of Amsterdam, 2024[95]). Plaintiffs argued that KLM, a Dutch airline, violated consumer law by misrepresenting to consumers in relation to the ‘Fly Responsibly’ campaign. The court found the campaign to be misleading, as it overstated the benefits of Sustainable Aviation Fuels (SAFs), carbon offsetting, and new technologies. The court also noted that KLM’s claims about addressing climate change conflicted with its broader business strategy, which focused on expanding air travel. This case was the first successful case of enforcement against ‘greenwashing’ and has had major ramifications across the industry. For instance, environmental NGOs sent letters in July 2024 to 71 European airlines, warning that – after the KLM ruling – making claims about SAFs, carbon offsetting, and net zero targets could likely be considered unlawful. It is pertinent to note that 21 European airlines have agreed to modify their practices regarding environmental claims following a dialogue with relevant consumer protection authorities (European Commission, 2025[96]). However, there have been instances when airlines have not been held liable for greenwashing. In August 2024, a US court dismissed a class action lawsuit against United Airlines. The plaintiffs had alleged that the airline had misrepresented its use of SAFs.

On 2 March 2022, three French environmental organisations – Greenpeace France, Les Amis de la Terre France, and Notre Affaire à Tous – filed a civil lawsuit before the Paris judicial tribunal against TotalEnergies SE and a subsidiary. The British NGO ClientEarth later joined the proceedings. The plaintiffs allege that TotalEnergies engaged in misleading commercial practices (defined in French consumer law as pratiques commerciales trompeuses), by promoting its public commitment to carbon neutrality by 2050 and its role in the energy transition, while simultaneously continuing fossil fuel investments and failing to disclose material climate-related risks. A landmark hearing took place in June 2025, and the tribunal’s ruling was issued on 23 October 2025. The tribunal ordered TotalEnergies to remove from its website communication materials related to carbon neutrality and energy transition within one month, and to publish the tribunal’s ruling in a visible manner for a period of 180 days. In the recent past, various banks and financial institutions have been held responsible for ‘greenwashing’ under advertising laws, consumer laws, and other laws (Batoudaki, 2024[97]). For instance, in December 2024, the UK’s Advertising Standards Authority (ASA) prohibited a Lloyds Bank advertisement after receiving a complaint from the campaign group Adfree Cities (ASA, 2024[98]). The ASA ruled the advertisement was misleading, as it exaggerated Lloyds' investment in clean energy while failing to disclose its ongoing support for polluting industries. The authority referred to the bank’s sustainability report that contradicted the message in the advertisement, showing substantial financing of high carbon-emitting activities. A similar action was taken against HSBC in 2022 for misleading climate advertisements (ASA, 2022[99]).

Further, in 2024, ClientEarth filed a complaint with France’s financial regulator, the Autorité des marchés financiers (AMF), against BlackRock – the world’s largest asset manager. The complaint targets 18 BlackRock investment funds marketed as "sustainable" in France, despite holding over $1 billion in fossil fuel investments, mostly in companies expanding fossil fuel activities. ClientEarth argues such investments are incompatible with Paris Agreement goals and would amount to greenwashing.

In 2023, the Canadian Competition Bureau initiated an investigation into Royal Bank of Canada (RBC) following a complaint from Ecojustice, an NGO (Ecojustice, 2022[100]). The complaint alleged that RBC made false and misleading statements about its environmental policies, particularly concerning its financing of fossil fuel projects. If found guilty, RBC could face fines up to CA$10 million.

Interestingly, some financial institutions also have been facing accusations that their sustainability commitments would be misleading considering the operations of their portfolio companies under other laws as well. In 2023, two NGOs – Comissão Pastoral da Terra and Notre Affaire à Tous – filed a complaint against BNP Paribas under the French Law on the duty of vigilance. BNP Paribas has been accused of offering financial services to companies like Marfrig – one of the world’s largest beef producers – without conducting sufficient due diligence. Marfrig’s suppliers have reportedly been involved in serious issues such as deforestation in the Amazon, illegal appropriation of indigenous lands, and the use of forced labour on cattle farms.

Asia has seen very limited use of private enforcement avenues for deceptive and misleading sustainability-related claims. However, these actions are mostly under laws other than company and securities laws. For instance, in March 2024, Climate Solutions filed a complaint against eight companies, including SK and POSCO affiliates, accusing them of misleadingly claiming that paying the Green Premium – a fee-based system to support renewable energy – reduced greenhouse gas emissions. The group argues this system does not actually cut emissions, making such advertising deceptive. The complaint was submitted to the Korea Fair Trade Commission and the Korea Environmental Industry and Technology Institute (Slaughter and May, 2024[101]). Further, in 2023, an Australian climate activist group filed a complaint against a power generator company for allegedly misleading sustainability-related disclosures in relation to listing its bonds on the Singapore Stock Exchange (Slaughter and May, 2024[101]).

3.2. Public Enforcement

Public enforcement, along with private enforcement, is crucial for maintaining the integrity of markets (Roe, 2008[102]). Public enforcement is vital for multiple reasons, particularly in the case of enforcement in relation to ‘sustainability washing’. First, regulators may have more access to information and resources to pursue companies for violations. Second, private parties may lack incentives to bring a legal action in certain cases. Third, regulators are responsible to maintain overall trust in the markets and exercise effective oversight of all market participants. Fourth, since the entire gamut of sustainability-related disclosures is at a nascent stage, regulators may be better positioned to pursue complex cases, ensure consistent application of disclosure standards, and act in the broader public interest. Public enforcement holds greater significance in jurisdictions where mandatory disclosure regimes provide for certain safe harbours from private enforcement, such as Australia, or where private enforcement is non-existent due to various socio-legal reasons, as is the case in many Asian jurisdictions.

Last, there has been an instance when a regulator had been at the centre of litigation by a leading NGO where the supervision and regulatory approval to an IPO had been met with court scrutiny. ClientEarth argued that the UK Financial Conduct Authority (FCA) accorded its approval to the prospectus of Ithaca Energy, one of UK’s largest oil and gas producers, despite Ithaca’s failure to adequately disclose or describe the materiality of climate-related risks (Climate Change Litigation Database, 2023[103]). Though this challenge was unsuccessful, this case highlights that regulators may need to step up the scrutiny of sustainability–related claims and disclosures (Kwan, 2023[104]).

3.2.1. Regulatory Supervision

Sustainability disclosure-based enforcement still needs room to develop, which may also require regulators and exchanges to engage more closely with company boards to nudge them towards adopting robust sustainability disclosure practices, rather than necessarily applying sanctions during an initial period. Regulators may also need to be mindful of the challenges faced by companies in data collection and validation in terms of certain key aspects of sustainability disclosures. Thus, facilitating an exchange between regulatory agencies and relevant company officials is key towards ensuring effective compliance.

Examples of usage of regulatory supervision tools in the context of sustainability-related claims or disclosure that is in the public domain are rare globally, and particularly among Asian jurisdictions. In July 2024, based on the complaint by ClientEarth, the French regulator, the AMF, reviewed more than 50 sustainable thematic funds totalling around €64 billion of assets under management that are marketed to retail investors in France. In response, the AMF issued reminders to reiterate the regulatory obligations for marketing thematic funds, emphasising the critical importance of ensuring that all provided information is accurate, clear, and not misleading (AMF, 2024[105]). Tools such as reminders or notices are instrumental in ensuring compliance. However, such tools need to be resorted to along with constant regulatory oversight to preclude any gross violations of securities law in the future. A summary of supervisory tools in the jurisdictions under study is provided below.

Table 3.1. Supervisory Tools

Jurisdiction	Overall enforcement strategy	Supervisory tools to encourage companies to comply
China	Adaptive	Engagement; Reviewing and monitoring disclosures; Corrective action; Warning.
France	Specific	Engagement; Reviewing and monitoring disclosures.
Hong Kong (China)	Adaptive	Engagement; Guidance to companies by regulator; Reviewing and monitoring disclosures; Capacity building.
India	Adaptive	Engagement; Reviewing and monitoring disclosures; Guidance to companies by the regulator and stock exchanges, including the establishment of the Industry Standards Forum; Data validation built into xBRL utility; Pre-enforcement intimations or notices (advisory letters) to companies; Annual sectoral compliance report as an annual independent compliance checkpoint.
Indonesia	Adaptive	Engagement; Guidance to companies by regulator; Reviewing and monitoring disclosures; Order for Specific Actions.
Japan	Adaptive	Engagement; Reviewing and monitoring disclosures.
Korea	Adaptive	Engagement; Reviewing and monitoring disclosures.
Singapore	Adaptive	Engagement; Reviewing and monitoring disclosures by stock exchange; Guidance to companies by regulator; Capacity building.
Viet Nam	Adaptive	Engagement; Remote supervision via the centralised information disclosure system; Incentivising best practices; Capacity building.
United Kingdom	Adaptive	Engagement; Reviewing and monitoring disclosures; Guidance to companies by relevant regulators; Thematic reviews; Warning notices; Publishing summaries of recently closed cases.

Key: Adaptive = This enforcement strategy refers to generic disclosure-related enforcement mechanisms being made applicable for breach of sustainability disclosures; Specific = This enforcement strategy refers to enforcement tools that are specifically provided for breach of sustainability disclosure requirements. Engagement = Regulators/stock exchanges would communicate with companies nudging them to ensure proper compliance with the applicable sustainability disclosure framework.

Securities market regulators have employed differing overall enforcement strategies to tackle greenwashing – specific and adaptive. Existence of a specific enforcement strategy generally presupposes a dedicated sustainability disclosure framework which is followed by certain exclusive provisions regarding its enforcement. For instance, in Australia, a law amending the Corporations Act was passed to incorporate the sustainability disclosure framework (The Parliament of the Commonwealth of Australia, 2024[106]). This law provided exclusive power to the Australian securities market regulator to initiate an enforcement action with regard to breach of certain sustainability disclosures, thereby barring private individuals from initiating an action for certain protected statements. These statements include those relating to Scope 3 emissions (including financed emissions), scenario analysis and transition plans within the meaning of the sustainability standards, for a fixed period of three years, and forward-looking statements about climate for one year (Corporations Act, 2001[107]). The draft climate disclosure framework (not in force) in the United States also contains a similar provision pertaining to disclosure related to Scope 3 emissions, allowing the US securities market regulator to initiate enforcement action instead of private parties for a certain period of time (Harper Ho, 2023[108]). France, which has transposed CSRD requirements, has provided specific monetary penalty and imprisonment for violation of sustainability disclosure requirements for auditors on certain grounds (Journal Officiel, 2023[109]).

In the United Kingdom, the FCA and the Financial Reporting Council’s (FRC) Corporate Reporting Review team (CRR) operate a joint supervisory strategy under the Listing Rules, Financial Services and Markets Act 2000, and powers in relation to breaches of the UK Market Abuse Regulation, as applicable.

An adaptive strategy mostly refers to a case where the general disclosure framework also includes sustainability-related disclosures. However, adaptive strategy also includes jurisdictions that may have specific sustainability disclosure-related provisions or frameworks, but where breaches are governed under broader disclosure-related enforcement mechanisms. These strategies are not sacrosanct, and regulators may deploy both adaptive and specific strategies based on their requirements.

The Asian jurisdictions under study have largely adopted an adaptive strategy to overall enforcement of sustainability disclosure frameworks. Japan has established enforcement mechanisms under the Financial Instruments and Exchange Act (FIEA) for breach of disclosure obligations by listed companies, which also serves as the key legislative instrument for enforcing breach of sustainability disclosures.

Viet Nam is currently taking steps to integrate ESG and Sustainability-Related Disclosure (SRD) requirements into circulars and decrees. Circular No. 96/2020/TT-BTC is currently the main legal document guiding disclosure on the securities market, which includes ESG related aspects in annual reports. Thus, the general securities law disclosure enforcement provisions also govern breach of sustainability disclosures.

In certain jurisdictions, while there is a specific sustainability disclosure framework in place, enforcement of the breach of this framework arises from the generic enforcement of securities disclosure requirements. For instance, in India, the Regulation 34(2)(f) of the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) forms the very edifice of its sustainability disclosure framework. Enforcement avenues are common for breach of disclosure requirements, including for sustainable disclosure requirements, as prescribed under the LODR.

In a similar manner, as per OJK Regulation No. 51/POJK.03/2017 read with OJK Circular No 16/SEOJK.04/2021, financial institutions and listed companies in Indonesia are required to submit annual sustainability reports. Breaches of disclosure requirements, including breaches of sustainability disclosure obligations, are enforced in accordance with the provisions of the Indonesian Capital Markets Law.

In Hong Kong (China), listed issuers are required to publish ESG reports in accordance with the ESG Reporting Code under the Hong Kong Listing Rules on an annual basis. As the sustainability disclosure framework forms part of the Hong Kong Listing Rules, any breach of these disclosure requirements would be enforced under the Listing Rules.

In China, the stock exchanges have put in place specific guidelines that govern sustainability disclosures for listed Chinese companies. Stock exchanges are empowered to supervise companies in this regard (People’s Republic of China, 2019[110]). A warning may be issued against any person who fails to comply with information disclosure obligations (any false or misleading statement or material omission), which would be required to take corrective action (People’s Republic of China, 2019[111]).

In Singapore, listed issuers are required to publish sustainability reports on an annual basis under the SGX’s Listing Rules and breach of these disclosure requirements would be enforced under SGX’s Listing Rules.

France, as an EU jurisdiction, has transposed the CSRD with Ordonnance n°2023-1142, amending notably Article L225-102-1 of the Commercial Code, which aligns with other international frameworks such as the TCFD.

Korea currently does not yet have an administrative or judicial enforcement framework in place for sustainability disclosures, as the authorities are currently discussing the development of a sustainability disclosure framework. However, since companies are voluntarily reporting sustainability information, any significant misrepresentation or misleading statements by companies will be designated as the unfaithful disclosure corporation in accordance with the disclosure regulations of the Korea Exchange.

There are considerable advantages to the adaptive strategy. First, regulators do not have to develop new tests or enhance capacity to monitor sustainability disclosures separately. Second, there is reasonable regulatory certainty in relation to breach and enforcement of disclosure provisions, minimising adjudicatory time and resources. However, in such an instance, providing regulatory guidance regarding the manner and scope of interpretation of the existing disclosure framework with reference to sustainability disclosures becomes vital. Regulators must also ensure that a lack of specific capacity and resource constraints does not impair the overall enforcement approach, thereby leading to under-enforcement.

Effective exercise of supervisory tools is essential to encourage companies to comply with sustainability disclosure frameworks. Since sustainability disclosures are relatively nascent, regulators must engage with companies to guide them to enhance their quality and ensure effective compliance. Regulators of all jurisdictions under study have laid emphasis on compliance with sustainability disclosures and have deployed engagement tools to aid corporations in meeting these requirements. These tools include the use of pre-enforcement intimation or notice to nudge companies to improve their sustainability disclosures and remedy any existing gaps.

Based on the monitoring and supervision of the relevant regulatory agency, the regulator would send requests to companies to comply with the relevant sustainability-related disclosure requirements. For instance, in India, in 2024-2025, in the broader ESG context, advisory letters were issued to two companies for non-compliance with the continuous listing requirements for green debt securities (based on a regulatory input provided by SEBI). Indonesia employs orders requiring specific actions (under OJK Regulation No. 23/POJK.04/2021) to request companies to comply with securities law requirements which may also be helpful in requiring companies with sustainability disclosure requirements. The Hong Kong Stock Exchange (HKEX) would follow up with issuers who have not published an ESG report, or whose ESG reports fail to include the information as required under the Hong Kong Listing Rules on a case-by-case basis. Such companies would provide the information through announcements or in subsequent reports.

In China, the relevant stock exchanges employ several informal tools such as disclosure quality ratings and comment letters with a view to encourage companies to properly comply with disclosure requirements (Yang, 2024[112]). Use of such measures has led to effective compliance with disclosure requirements (Cao, 2021[113]). Given that sustainability disclosures in China stem from stock exchange guidelines, these engagement measures may also be helpful in nudging companies towards adopting better sustainability disclosure practices.

In the UK, the FRC has been engaging with companies on a regular basis since 2021 to require companies’ full compliance with TCFD disclosures. Interestingly, FRC has published summaries of certain cases where it had engaged with the company, including 16 cases on climate-related disclosures under the TCFD (FRC, 2024[114]). This practice serves as future guidance for companies on complying with sustainability disclosure requirements, thereby encouraging companies to enhance such compliance and improve their disclosure practices in general.

Globally, regulators have put in place different mechanisms to guide companies in improving their sustainability disclosure practices. This aims to help regulators play a more collaborative role in the orderly development of the market. In this regard, jurisdictions such as Hong Kong (China), India, Indonesia, Singapore, and the United Kingdom have issued guidance documents (including in the format of frequently asked questions) to ease the compliance burden of companies, as they grapple with multiple challenges: Hong Kong (China) Implementation Guidance; India – FAQ Guidance; Singapore Guidance; Indonesia Guidance; GRI Indonesia Guidance; UK Guidance. This practice is crucial for ensuring ease of compliance for companies, as going forward, sustainability disclosure requirements will continue to evolve.

To further ensure that concerns of companies are considered, regulators may set up coordination forums between industry and other members of the securities market ecosystem. For instance, the Industry Standards Forum (ISF), supported by India’s securities market regulator, consists of members from India’s leading industry associations and stock exchanges (SEBI, 2023[115]). The ISF formulates practical industry standards for the effective implementation of complex regulatory requirements, such as India’s sustainability disclosure framework – BRSR Core. This co-regulatory approach leverages industry expertise to develop pragmatic solutions, which incorporates market feedback and creates clearer, consensus-driven guidelines for compliance.

Capacity building is another key supervisory measure that resonates with various regulators in the jurisdictions under study. Regulators have advocated for capacity building at the company level and at their level as well. Regulators and stock exchanges are regularly organising training programmes for company officers and directors of companies. Interestingly, Singapore has mandated director training on climate change and related aspects (SGX, 2022[116]). Hong Kong (China) Listing Rules require that annual directors training must cover ESG topics. Such capacity-building exercises may also be extended to officers of regulatory bodies and stock exchanges, along with greater co-operation among global regulatory agencies to strengthen enforcement against sustainability washing.

Incentivising best practices within a jurisdiction through public recognition initiatives, such as the Vietnam Listed Company Awards in Viet Nam, which awards a ‘Best Sustainability Report’ prize, may also be instrumental in encouraging companies to better comply with sustainability disclosure frameworks (SSC, 2025[117]). Constituting an index of companies based on sustainability performance may be another effective way of providing market-based incentives to enhance compliance. However, this would require more participation by other market participants such as institutional investors which may base investment products on these indexes.

3.2.2. Corporate and Securities Law Enforcement

The securities market regulator is primarily responsible for administering sustainability disclosure requirements (IOSCO, 2023[118]). This is particularly true as most of these requirements stem from securities law and apply to listed companies (OECD, 2023[1]). As per prescribed penalties for violation, the securities market regulator can recognise the matter, thereby leading to judicial or quasi-judicial enquiry.

In the context of public enforcement, regulators may initiate direct or indirect legal proceedings against company directors for breaches of their duties arising from a failure to consider sustainability risks. This ground could be triggered in case of a serious violation that adversely impacts a larger body of a company’s stakeholders, including the public at large. For instance, jurisdictions such as Australia, India, and Singapore empower regulators to initiate a judicial action against company directors for breach of directors' duties under their respective company laws. Since regulators are not required to meet various procedural requirements that private parties must comply with, the initial barrier to enforcement is mitigated. However, one has yet to see any major regulatory enforcement action in this regard.

It has been argued that public enforcement of securities law and listing rules is more effective in addressing climate risks (and, by extension, sustainability risks) in Asia (Lim and Varottil, 2022[119]). This is because most securities regulators have wide powers to deal with violations of securities law. An IOSCO survey of various global regulators indicates that enforcement actions against greenwashing have ranged from infringement notices and monetary fines to license revocations, business suspensions, public reprimands, and even potential civil or criminal liability – depending on the severity of the offense (IOSCO, 2023[118]). Regulators also expressed that introducing dedicated penalties or sanctions specifically targeting greenwashing would enhance their ability to address such cases more effectively (IOSCO, 2023[118]). Although authorities have started adjusting their supervisory and enforcement frameworks to combat greenwashing (or sustainability washing as defined earlier in this report), the true adequacy and effectiveness of these measures remain to be thoroughly tested, particularly in Asia.

Table 3.2. Enforcement Mechanisms

Jurisdiction	Remedy Mechanisms	Administrative Tools	Criminal Liability
China	Yes	Monetary penalties.	-
France	Yes	Monetary penalties; Stock market sanctions.	Individual and/ or Company.
Hong Kong (China)	Yes	Monetary penalties; Private reprimand; Public statement involving criticism; Suspension of trading in the listed issuer's securities; Disqualification of individuals; Disgorgement orders.	Individual and/or Company; Disgorgement order.
India	Yes	Monetary penalties; Freezing of promoter holdings; Trading suspension; Movement to “Z” category; and compulsory delisting; settlement mechanism.	Disgorgement order.
Indonesia	Yes	Written order.
Japan	Yes	Monetary penalties.	Individual and/ or Company.
Korea	Yes	Monetary penalties.	Individual and/ or Company.
Singapore	Yes	Monetary penalties; prohibition order; reprimand; warning.	Individual and/ or Company.
Viet Nam	Yes	Monetary penalties; Correction or removal of information; Public announcements of violations; Business suspension and Delisting.	Individual.
United Kingdom	Yes	Monetary penalties; Decision orders/ Final orders.	Company

As Table 3.2 shows, regulators have wide-ranging powers to enforce breach of disclosure requirements, including breach of sustainability disclosure requirements. These tools range from imposition of monetary penalties, making a private or public reprimand, decision orders to remedy the violation, suspension of trading, and delisting. These tools are resorted to after detailed investigation and if all supervisory and engagement tools are not effective. If these violations are serious – for instance, if disclosures were deliberately false and misleading – criminal sanctions such as fines, imprisonment, and disgorgement of ill-gotten gains or compensation to investors may also be imposed.

Across the globe, based on publicly available sources, regulatory actions under corporate and securities laws against non-financial entities for sustainability-related disclosures remain limited. For instance, in 2021, ClientEarth submitted a complaint to the UK FCA against Just Eat, claiming its annual report misled investors by portraying the business as “sustainable” without outlining a Paris-aligned strategy or emissions reduction commitments in its operating countries (ClientEarth, 2021[120]). This complaint is still pending.

In the Asian jurisdictions examined herein, no significant enforcement actions have been identified under applicable corporate and securities market regulation for breach of sustainability disclosures. However, there are emerging signs of regulatory action on sustainability-related disclosures, even though most of these cases relate to disclosures under prospectus for equity or debt listing. In India, in a case involving the IPO of a mining company, SEBI determined that the omission of information regarding the rejection of environmental clearance for the diversion of forest land for iron ore mining constituted a failure to disclose a material fact in the prospectus. As a result, a penalty of ₹5 000 000 was imposed on both the issuer and the merchant banks involved (Varrotill, 2019[121]). A leading opinion on legal liability on climate-risk in India highlights that the ‘trend therefore seeks to demand a higher degree of transparency in statutory disclosures to the market regulator’ (Divan, 2021[122]).

Singapore has also seen one case where Market Forces, an Australian NGO, filed a complaint against JERA, a Japanese energy company, that had listed its debt securities on SGX. Market Forces argued that JERA did not comply with listing disclosures and subsequent continuous disclosure requirements by not stating risks regarding its exposure to the Liquified Natural Gas business and litigation which could have had a material financial impact (Market Forces, 2023[123]). Thus, while no public regulatory action appears to have been taken, it reflects growing developments provide lessons from cases of regulatory action aimed at tackling ‘sustainability washing’.

3.2.3. Other Laws

Regulatory action against sustainability washing in the financial sector has gained more momentum than against non-financial entities. While the scope of this report does not include a discussion on false and misleading sustainability-related claims by financial entities, the experience may encourage enforcement of such claims made by non-financial entities. The United States Securities and Exchange Commission (SEC) initiated multiple enforcement actions against asset managers for disclosure and compliance failures related to ESG investments. For instance, in May 2022, it charged BNY Mellon Investment Adviser, Inc. for making material misstatements and omissions regarding ESG factors in the investment decisions of certain mutual funds under its management. BNY Mellon agreed to settle the charges by paying a USD 1.5 million penalty (SEC, 2022[124]). A similar settlement was agreed between SEC and WisdomTree Asset Management Inc. for mismanagement of three of its ESG funds (SEC, 2024[125]).

Australia has led the way regarding regulatory enforcement for making false and misleading sustainability-related claims. It is pertinent to note that all three actions initiated by the Australian securities market regulator (ASIC) are against financial entities.

In 2024, the Federal Court of Australia ruled in two significant cases that ASIC brought. In March, it found that Vanguard Investments Australia Ltd misled the public by falsely marketing a fund as “ethically conscious,” violating the ASIC Act. Vanguard has been required to pay AUD 12.9 million in penalties. This was ASIC’s first successful sustainability washing civil penalty action (ASIC, 2024[126]). In June, the Court found that LGSS Pty Ltd (Active Super) made misleading ESG-related claims, falsely stating it excluded specific industries and companies. Active Super has been required to pay a penalty of AUD 10.5 million (ASIC, 2025[127]). A third case was against Mercer Superannuation for alleged sustainability claims regarding its “Sustainable Plus” investment options: the Court has ruled against Mercer Superannuation, requiring it to pay a penalty of AUD 11.3 million (ASIC, 2024[128]). These cases have far-reaching ramifications – they provide the Australian securities market regulator with experience in dealing with false and misleading sustainability claims, translating into possible enforcement actions against companies in the future, as Australia embraces mandatory climate-related financial disclosures from 2025 onwards (Balding, 2024[129]).

Other sectoral regulators have also aided in tacking sustainability washing in Asian jurisdictions. In Singapore, the Advertising Standards Authority made the nation’s first ruling against an air-conditioning manufacturer for a misleading advertisement regarding energy saving through use of air-conditioners (McKenzie, 2023[130]). In 2023, the South Korean environmental regulator issued an administrative guidance regarding a claim by SK Enmove over its carbon-neutral lubricant ads, which were based on purchasing carbon credits from Verra. The ads were criticised as greenwashing, since credits do not eliminate emissions from petroleum products. Although a corrective order was initially considered in December 2022, it was downgraded to non-binding guidance as the advertisements and sales had already been halted (Slaughter and May, 2024[101]).

3.3. Interface Between Different Strategies

The cases discussed above – arising under advertising standards, consumer protection laws, financial regulation, and other relevant laws – serve as milestones for attributing liability under corporate and securities laws. Additionally, legal doctrines such as Caremark or stepping stone liability may provide viable pathways for holding directors accountable for failures related to sustainability oversight and disclosure. Most importantly, regulators could step in and rely on a private party led action under other laws to establish liability for misleading sustainability claims under corporate and securities law. While no enforcement action has yet been observed under corporate and securities laws in Asia that relied on enforcement on other laws, there are a couple of cases globally that suggest emphasising these interdependencies among different forms of ‘sustainability washing’. These enforcement actions are discussed below.

In 2021, the Australasian Centre for Corporate Responsibility (ACCR), an Australian NGO, took Santos, an Australian oil and gas major, to court for misleading claims in relation to Santos’ claims regarding (i) natural gas as ‘clean’ fuel, which may misrepresent the effects of natural gas on climate; and (ii) its commitment to be net-zero by 2040. ACCR has alleged that Santos plans to expand its natural gas operations, and its net-zero plan would depend on undisclosed assumptions about the effectiveness of carbon capture and storage processes. The suit alleges that these misrepresentations are in violation of Australian consumer protection and corporation laws (Climate Change Litigation Database, 2021[131]). While this case is still pending, it is a clear example of the interface between enforcement under other laws and corporate law for misleading and deceptive sustainability claims.

The case of ClientEarth v. Enea is part of a growing trend of legal actions holding directors accountable for losses in company value due to mismanagement and failure to communicate and consider climate risks properly. In 2018, ClientEarth, an environmental non-profit and shareholder, initiated an action against the directors of Enea, a fossil fuel company, arguing that investing in the Ostrołęka C coal plant in Poland violated its fiduciary duties by neglecting due diligence and risking shareholder value. ClientEarth won the case in 2019 (Climate Change Litigation Database, 2018[132]). In 2020, the company halted funding for the plant's construction. In 2021, Poland’s Supreme Audit Office identified poor risk management by Enea and recommended legal action against former board members. In December 2023, the company initiated legal proceedings against management and supervisory board members who supported the project, with shareholder approval granted in January 2024 (ClientEarth, 2024[133]). This case also highlights the interconnectedness of enforcement strategies in enhancing legal liability risks of directors who fail to consider sustainability-related matters in corporate decision-making.

Most importantly, a settlement in cases under these other laws could compel the board of directors to take immediate action. Shareholders sued the Commonwealth Bank of Australia (CBA) over its 2016 annual report, alleging it failed to disclose material climate-related business and investment risks. However, before the court ruled, the complaint was withdrawn as CBA in its 2017 annual report pledged to undertake climate change scenario analysis to estimate climate risks to CBA’s business operations (Climate Change Litigation Database, 2017[134]). In another instance, in 2025, EnergyAustralia, an Australian energy company, acknowledged the limitations of the use of carbon offsets by stating that using carbon offsets does not prevent or undo the harms caused by burning fossil fuels (Australia, 2025[135]). This acknowledgement came in the wake of a settlement in relation to a 2023 action by an NGO named Parents for Climate regarding Energy Australia's marketing of its Go Neutral carbon offset product amounted to misleading or deceptive conduct contrary to the Australian consumer law. Thus, a real threat of enforcement could also lead to behavioural change among companies.

Under certain sustainability disclosure frameworks such as in Australia, private enforcement is limited under corporate and securities law. This has been specifically resorted to ensure that companies do not engage in ‘greenhushing’ – the practice of under-disclosing or underreporting of sustainability related information to avoid liability risk. However, regulatory bodies can also initiate enforcement actions for failing to consider sustainability matters at the board level. There has been limited enforcement regarding violation of sustainability related disclosure requirements, even though the developments mentioned above highlight the interdependence among different domains of law to tackle ‘sustainability washing’. Based on global best practices, the next chapter details certain potential reforms that may be considered to improve sustainability-related disclosure and related board accountability in Asia.