The Circular Economy Transition for Asia Pacific: Asia Pacific businesses should prepare now for new circular economy reporting standards

Europe’s Corporate Sustainability Reporting Directive (CSRD) is coming, and it will be mandatory for a significant number of European and non-European companies. CSRD is the first to include the circular economy as a reporting category, with the aim to set new standards for how companies report on social and environmental impacts.

As Europe’s major supplier of manufactured goods and commodities¹, Asia Pacific business leaders should determine if they are required to report under the new CSRD. If so, preparations for this new requirement need to start now. Failure to take action will increase the risk of penalties for individual companies such as financial sanctions, exclusion from investor portfolios, or reputation damage and could also have implications to a territory's ability to trade with the European Union (EU) if there is widespread non-compliance. Exact sanctions will be implemented by each territory when the CSRD is transposed into national law. 

Here we explore which companies are impacted, what businesses will need to do, and why the broader global circular economy transition is increasingly critically important for Asia Pacific.

EU Circular Economy Regulations

_{Source: PwC}

The global circular economy transition and what it means for Asia Pacific

From a regulatory perspective, circularity looks unstoppable. More than 50 national roadmaps and strategies have been launched globally, and a further 520 circular economy-related policies (such as plastic taxes, bans and extended producer responsibility schemes) now exist.  

The European Union currently has the most comprehensive circular economy action plan⁴ in the world, targeting the whole lifecycle of products from design, sustainable production and consumption, to reducing waste through circular feedback loops (reuse, remanufacturing and refurbishing). 

Circular economy regulations around the world*

Explore the interactive map

_{*Note this map includes national circular economy policies, product policies that support circular practices, extended producer responsibility policies, waste management and recycling policies that encourage circular practices, and fiscal policies that incentivise circular practices.}

_{Source: circulareconomy.earth⁵}

The circularity landscape is also shifting across Asia Pacific. In 2021, ASEAN⁶ announced its own circular economy framework, with actions including to identify key sectors for the transition, harmonise circular products and services, and promote financing of the circular economy. An implementation plan for the period 2023-2030 with a number of initiatives is now being finalised. 

On a national level, Japan, China, Vietnam and Indonesia all have national circular economy policies/strategies, while other countries in the region have sector or product specific resource efficiency circular policies, and are developing comprehensive regulations for the circular economy. Within the private sector, several large international brands are already considering circularity, including through changes to packaging and product materials, launching ‘product as a service’ lines and exploring new revenue streams from by-products and waste.

As regulator and consumer pressure grows, more investment decisions will be influenced by circularity assessments. Businesses will look deeper into their supply chain and preferred suppliers will be those implementing a circular economy approach. Even Asia Pacific-based companies currently unaffected by the CSRD - but which supply to EU/international buyers - will need to future-proof their business, such is the reach of the global focus on circularity.