In 2023, Chief Sustainability Officers (CSOs) across Asia operated in an increasingly complex and politically charged landscape. As boardrooms grappled with economic slowdowns and shifting commercial priorities, the once-clear momentum behind net-zero strategies was disrupted by geopolitical friction, rising scrutiny of ESG claims, and an evolving regulatory environment. Some corporates scaled back climate ambitions. BP and Shell softened their net-zero pathways, while Standard Chartered and HSBC withdrew from the Science Based Targets initiative (SBTi) citing concerns over fossil fuel financing restrictions. In stark contrast, over 367 multinational firms representing US$33 trillion in assets—including Dow, Japan Steel and JD.com—rallied in November to demand more ambitious global climate targets.
This divergence defined the year: while policymakers slowed down, stakeholder pressure accelerated. For CSOs, 2023 was less about technical compliance and more about organisational navigation—translating sustainability into strategic value amid competing forces. Below are the eight core challenges that shaped their mandate.
1. The ESG Backlash: A U.S. Trend with Asian Implications
In the U.S., ESG came under fierce political attack. Larry Fink, CEO of BlackRock, became a lightning rod for critics and publicly distanced himself from the acronym. Although this backlash hasn’t yet reached Asia in full force, it casts a shadow—particularly during budget cycles. If the most advanced markets retreat, how can CSOs in Asia defend ESG as a strategic imperative?
2. The Fragile Business Case for Net Zero
Many companies pledged net-zero targets without concrete decarbonisation plans, creating expectation gaps at the executive level. Securing board approval for science-based goals requires CFO and CEO buy-in, yet few senior executives enter discussions with a full grasp of the financial dynamics involved. Some view RECs and offsets as cheaper alternatives to actual emissions reductions. As noted by Singapore-based Paia Consulting, CSOs who can articulate the reputational and revenue risks of inaction are more likely to secure the capital necessary for operational transformation.
3. Sustainability Expertise Inflation
A viral meme in 2023 captured it best: “The fastest thing on Earth? Becoming an ESG expert.” CSOs frequently reported frustration with talent inflation—candidates claiming expertise after brief training courses. In Asia, rapid promotions sometimes placed underqualified individuals in senior roles, undermining credibility in boardroom discussions and weakening execution capacity at a critical time.
4. Geopolitics Entering the ESG Equation
This year, geopolitics permeated the ESG agenda. The wars in Ukraine and Gaza, coupled with escalating U.S.-China tensions, elevated geopolitical risk to a board-level concern. Some practitioners even advocated for a fourth “G” in ESG—Geopolitics. For Asian CSOs, this meant expanding their remit from environmental compliance to geopolitical risk navigation, especially in trade-sensitive sectors.
5. SBTi Scrutiny and Scope 2 Controversy
SBTi lost support from some Asian corporates, especially in sectors like real estate. Proposed changes that limited the use of RECs or overseas PPAs in Scope 2 calculations triggered pushback, particularly in regions with fossil-heavy grids and scarce renewables. Although SBTi later adjusted its guidance, many CSOs still saw the process as Western-biased, complicating their efforts to obtain target validation.
6. The Fear of Greenwashing (and Greenhushing)
For any CSO with integrity, being accused of greenwashing remains the ultimate reputational risk. In Asia, where CSOs are often embedded in corporate communications or public affairs teams, coordination failures can amplify this risk. In response, some brands opted to remain silent—”greenhushing” their sustainability progress to avoid scrutiny. While this may reduce short-term exposure, it undermines transparency and slows market leadership.
7. Scope 3 Emissions: The Next Frontier
Scope 3 remains a formidable challenge. While it often represents the bulk of a company’s emissions, it is also the least understood and least controllable. CSOs in oil, gas, and manufacturing expressed frustration with the lack of regulatory support and methodological clarity. Only 37% of companies with net-zero pledges fully cover Scope 3, according to Net Zero Tracker data. This omission risks eroding credibility.
8. The Regulatory Wave: CSRD, CSDDD and EUDR
For years, sustainability outpaced regulation. But in 2023, the tide turned. The EU’s Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Deforestation Regulation (EUDR) collectively redefined the compliance landscape. For CSOs managing forest-risk commodities or carbon-neutral marketing claims, the need to rethink certification, traceability, and auditability intensified. Terms like “carbon-neutral” now require verifiable data and credible plans—forcing firms to drop vague pledges or risk penalties.
Conclusion: Toward Strategic Resilience
The role of the CSO has never been more visible—nor more scrutinised. In 2023, it became clear that sustainability leaders are not just advocates, but integrators, translators, and risk navigators. As the regulatory bar rises and investor scrutiny deepens, the ability to align commercial strategy with planetary boundaries is no longer optional. It’s a board-level imperative.
For CSOs in Asia, 2024 demands more than ambition—it calls for strategic resilience. Those who can quantify trade-offs, anticipate stakeholder sentiment, and build robust internal governance will not only endure the ESG backlash, but lead the next wave of sustainable value creation.
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