ASEAN Law Forum 2025 : Strengthens ESG dispute resolution for sustainable governance

In recent significant event, the ASEAN Law Forum 2025 has pinpointed environmental, social, and governance (ESG) principles are no longer peripheral concerns in global development; they have emerged as central benchmarks for evaluating not only sustainable economic growth but also the pursuit of social justice and corporate accountability. Increasingly, governments, investors, and civil society view ESG commitments as indicators of long-term resilience and legitimacy. In Southeast Asia, these issues are particularly urgent as the region faces the dual pressures of rapid industrialisation and urbanisation alongside the escalating impacts of climate change, environmental degradation, and deep-rooted socio-economic inequalities.

The challenges ranging from balancing energy security with renewable energy transitions to ensuring fair labour standards and inclusive community development. Against this backdrop, ASEAN is taking meaningful steps to strengthen its dispute resolution mechanisms, recognising that accessible, fair, and efficient systems are indispensable tools for translating ESG commitments into enforceable outcomes and advancing the broader agenda of sustainable and accountable governance across the region.

The emergence of ESG disputes in ASEAN

The number of ESG-related disputes across ASEAN has grown steadily in recent years. Environmental conflicts include disputes over land use, deforestation, mining operations, and renewable energy projects. Social disputes often involve labour rights violations, migrant worker protection, or the displacement of local communities due to development projects. Governance-related disputes, meanwhile, highlight issues of corporate transparency, anti-corruption measures, and investor accountability.

These disputes are complex, frequently cross-border, and involve multiple stakeholders with competing interests. Inadequate resolution mechanisms can undermine not only justice but also investor confidence, regulatory integrity, and social harmony.

In Malaysia, companies are required to comply with various legal frameworks governing ESG practices. For the environmental aspect, the key legislation is the Environmental Quality Act 1974. The social dimension is primarily regulated under the Employment Act 1955, Employees Provident Fund Act 1991, Employees’ Social Security Act 1969 (SOCSO), Employment Insurance System Act 2017, Occupational Safety and Health Act 1994, National Wages Consultative Council Act 2011, Anti-Trafficking in Persons and Anti-Smuggling of Migrants Act 2007, and the Employees’ Minimum Standards of Housing, Accommodations and Amenities Act 1990. As for governance, the main statutes include the Companies Act 2016 and the Malaysian Anti-Corruption Commission Act 2009.

Arbitration and mediation are increasingly viewed as the most effective means of resolving ESG disputes in ASEAN. Arbitration offers neutrality, expertise, and enforceability which are the key advantages when dealing with international investors and cross-border conflicts. Mediation, on the other hand, allows for participatory and collaborative solutions, particularly important in cases involving local communities and indigenous groups.

ESG dispute resolution and sustainable governance

Several ASEAN countries have already modernised their arbitration laws. For instance, Singapore has positioned itself as a leading hub for international arbitration, with institutions like the Singapore International Arbitration Centre (SIAC) attracting global ESG-related cases. Meanwhile, Malaysia has updated its Arbitration Act and strengthened the Asian International Arbitration Centre (AIAC). Other nations including Thailand, Vietnam, and the Philippines are also improving their institutional frameworks, though the pace of reform varies.

Strengthening ESG-focused dispute resolution in ASEAN carries three major benefits. First, it reinforces climate ambitions by ensuring that commitments under the Paris Agreement such as environmental regulations, renewable energy development, and carbon market participation are legally enforceable and that related conflicts are resolved fairly. Second, it advances social protection by offering accessible and inclusive mechanisms to address labour disputes, workers’ rights issues, and community grievances, with mediation and arbitration providing viable alternatives to overburdened courts and enabling affected groups to pursue justice effectively. Third, it promotes accountability by embedding ESG principles into dispute resolution, thereby enhancing corporate responsibility and investor transparency; companies that fail to meet ESG standards will be subject to structured mechanisms of redress, reducing the risk of impunity and strengthening sustainable governance across the region.

Building investor and public confidence

Strong ESG dispute resolution mechanisms are also vital for ASEAN’s economic competitiveness. International investors increasingly prioritise sustainability and social responsibility in their decision-making. A robust system for resolving ESG disputes provides them with the confidence that potential risks will be managed efficiently and fairly.

At the same time, local communities and civil society organisations are demanding stronger protections. Strengthening dispute resolution is not only about investment security but also social justice.

Conclusion

ASEAN’s move to strengthen ESG dispute resolution represents a significant step towards embedding justice, accountability, and sustainability in its governance framework. Effective mechanisms will not only attract responsible investment but also provide fair remedies for communities and stakeholders affected by environmental harm, social injustice, and governance failures.

By aligning dispute resolution with ESG principles, ASEAN is laying the groundwork for a governance model that balances economic growth with climate responsibility and social equity. This shift signals the region’s determination to move beyond aspirational policy statements toward practical and enforceable solutions.

As ASEAN deepens its integration and positions itself in the global economy, effective ESG dispute resolution will remain central to its vision of sustainable governance — one that protects both people and the planet while ensuring long-term resilience for the region.