ESG Data in Southeast Asia: Why It Starts in Your ERP

ESG reporting in Southeast Asia often starts with a single email. A major customer, or an overseas parent company, asks for the CO₂ emissions of every product code shipped to them last year, due in 30 days. Finance has the electricity bills. Production has the output figures. Procurement has the supplier list. But no one has a number that answers the question.

For many companies, this is how ESG arrives: not as a grand strategy, but as a specific data request that current systems cannot answer. This article explains ESG reporting in Southeast Asia from the basics, the pressures now coming from regulators, markets and customers, and why the answer starts with data.

What is ESG?

ESG stands for three groups of criteria used to assess a company beyond its financial results:

• E (Environmental): greenhouse gas emissions, energy, water, waste, packaging.
• S (Social): workplace safety, working conditions, responsibility to communities and the supply chain.
• G (Governance): transparency, internal control, compliance.

ESG differs from philanthropy or CSR in two ways. First, it must be measurable and verifiable: companies have to prove their claims with data, and that data must trace back to source documents.

Second, and this is the biggest shift of recent years, ESG is increasingly expressed in financial terms. IFRS S1, issued by the ISSB, requires companies to disclose sustainability-related risks and opportunities that could reasonably be expected to affect their cash flows, access to finance or cost of capital over the short, medium or long term.

The IFRS Foundation makes the link explicit: sustainability-related financial disclosures are provided with the financial statements, companies must explain how sustainability-related risks and opportunities are reflected in those statements, and use consistent assumptions. Its example: a net zero commitment could, over time, result in liabilities being reported in the financial statements. It also notes that, increasingly, the same people within a company prepare both the financial statements and the sustainability disclosures.

In practice, this already shows up as real numbers:

• Carbon costs on exports covered by CBAM, or carbon taxes and emission quotas at home
• Loan terms and pricing, as banks and investors start to factor in climate risk
• Orders, as customers favour suppliers with clear emissions data

This is why ESG is no longer only the sustainability team’s concern. It is the CFO’s too. An emissions figure that does not reconcile with production and financial data will not hold up when auditors, banks or customers ask questions.

From an annual report to product-level data

Many companies used to handle ESG by hiring consultants to compile a report once a year. That is no longer enough, because the questions have become far more detailed. To see why, it helps to know the three emission “scopes”:

• Direct (Scope 1): emissions from the company’s own operations, such as fuel burned in boilers or company trucks.
• Purchased energy (Scope 2): emissions from the electricity a company buys.
• Value chain (Scope 3): emissions from suppliers’ raw materials to transport and the use of products after sale.

When a large company has to report Scope 3, it has to ask each of its suppliers. Companies in its supply chain will receive those questions, even if they are not required to report themselves.

Why ESG reporting in Southeast Asia is no longer optional

Many still see ESG as a European issue. In practice, pressure across the region now comes from four directions.

1. National disclosure rules are arriving, one market at a time

• Singapore: Scope 1 and 2 GHG emissions reporting is mandatory for all listed companies from FY2025, and Scope 3 for STI constituents from FY2026.
• Malaysia: under the National Sustainability Reporting Framework (NSRF), large Bursa Main Market issuers began IFRS S1 and S2 reporting in 2025. Other Main Market issuers follow in 2026, and ACE Market issuers and large non-listed companies in 2027.
• Indonesia: the national Sustainability Disclosure Standards PSPK 1 and PSPK 2, based on IFRS S1 and S2, take effect on 1 January 2027.
• Vietnam: under Decision 42/2026/QĐ-TTg, 2,441 facilities are required to conduct greenhouse gas inventories, with reports due by 31 March 2027.

2. Carbon is becoming a direct cost

Singapore’s carbon tax rose to S$45 per tonne from 1 January 2026, with a view to reaching S$50–80 by 2030. In Vietnam, emission quotas are being allocated in three phases from 2025 to 2030, starting with thermal power, steel and cement, and a pilot carbon exchange runs until the end of 2028, ahead of nationwide operation from 2029.

3. Exports to the EU

The EU’s Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase in January 2026, bringing real financial costs for EU importers of covered goods. Those costs flow back through the supply chain, and exporters without verified emissions data are typically assessed on default values, which usually means higher costs.

4. Supply chain requests

When large companies must report Scope 3, they ask their suppliers. In Malaysia, the Securities Commission has said it is looking at how SMEs can provide data for listed companies’ Scope 3 disclosures.

Whatever the market, the first question is the same: where is your data?

The real bottleneck: scattered data

To calculate the emissions of a product, a company has to connect several types of data:

• Electricity and fuel consumption by plant and production line
• Output by product code
• Bill of materials (BOM) for each product
• Suppliers for each material
• Transport: routes, modes, volumes
• Packaging: material types and weights

In many companies, this data sits in spreadsheets, accounting software and separate warehouse systems, each defined differently by each department. The result is emissions figures based on estimates, out of line with financial figures and hard to defend under scrutiny. A standalone ESG tool rarely fixes this: if the input data is fragmented, the ESG tool simply consolidates the fragmentation.

How ERP helps

ERP (Enterprise Resource Planning) is the system where finance, procurement, inventory, production and sales share one data foundation. Most of the data needed for ESG already flows through ERP: purchase orders, goods receipts, production orders, BOMs, invoices.

SAP, one of the world’s largest ERP vendors, has put sustainability at the centre of its product direction. Rather than building a separate ESG tool, SAP builds its sustainability solutions on the same data foundation as ERP:

• ESG inside SAP S/4HANA: workplace safety, environmental management and product compliance are functions within the ERP system.
• Sustainability bundled into cloud ERP packages: for example, SAP Supply Chain Premium on SAP Cloud ERP (Public Cloud) includes six solutions, from carbon footprint to packaging and workplace safety.
• AI agents dedicated to ESG are being developed to find emission hotspots, check packaging compliance and prepare data for regulatory reporting.

The idea behind this approach is simple: the most reliable ESG data is data generated by everyday business transactions. When ESG is built on ERP:

• One source of data: emissions and financial figures come from the same transactions, so they reconcile.
• Calculated from real transactions, not estimates: you know which batch of material came from which supplier and went into which product.
• Traceable: every figure has an audit trail back to source documents, ready for audits or customer requests.
• ESG in everyday decisions, not only in the annual report.

Take procurement as an example: the system flags a supplier whose emissions have risen sharply before an order is approved, and suggests alternatives with a comparison of cost and risk. The buyer decides on both price and carbon, instead of price alone.

Where is SAP heading?

The SAP Sustainability portfolio includes a few key solutions:

• Footprint Management: calculates corporate and product footprints from real operational data.
• Green Ledger: records carbon alongside financial figures on each accounting entry.
• Control Tower: consolidates and reports ESG data against international standards.

SAP describes a three-step journey:

1. Intelligence: trusted ESG data and visibility of risks before decisions are made.
2. Optimization: AI recommends actions and analyses trade-offs between cost, risk and emissions. People still decide.
3. Autonomy: the system executes certain decisions within defined limits, escalating exceptions to the people responsible.

SAP’s message is “Start now, but start right”: the ERP architecture chosen today determines whether a company can move on to the later steps.

One example published by SAP: HARTING, a German manufacturer, used AI to assign emission factors to 1,500 materials overnight, work it had previously planned to hire additional staff to do manually.

Where to start

1. Identify your obligations: national disclosure or GHG inventory rules, carbon taxes or quotas, exports covered by CBAM, or requests from customers and parent companies.
2. List the data each obligation requires.
3. Check where that data sits today, and whether departments define it the same way.
4. When upgrading or replacing ERP, build ESG data requirements into the design from the start rather than adding them later.

Talk to us about your ERP data foundation for ESG

Planning for ESG reporting in Vietnam, Malaysia, Singapore or Indonesia, or preparing an ERP upgrade? Contact TDI APJ, an SAP partner, to discuss how to organise your data from today.