Among the leaders in attendance were United States President Donald Trump and Chinese premier Li Qiang, the country’s head of government, who met their counterparts from across the region and officiated trade pacts on goods ranging from semiconductors to critical minerals.
While the region has attracted increasing economic interest from global superpowers, however, it has yet to rise to positions of leadership in multilateral institutions that set the rules of the game for the financial and sustainability sectors.
Ahead of the summit, Sharath Martin, senior policy and insights consultant for Asia Pacific at the Association of Chartered Certified Accountants (ACCA) told the Eco-Business Podcast that Asean needs to consider how it can consolidate and amplify its voice at a global level, on subjects from financial and trade policy to valuing nature and biodiversity.
“If you ask me what needs to change, I think we have been on the receiving end of policies from the Global North [for too long]. We need to recognise that this cannot be a way forward,” he said.
Sharath, who is also a trustee for non-profit WWF-Malaysia, added that the region needs to learn how to “flex” as a bloc, potentially by forming working groups that could support individual representatives at global institutions such as the World Bank or International Monetary Fund (IMF).
Tune in as we discuss:
Sharath Martin, senior policy and insights consultant for Asia Pacific at the Association of Chartered Certified Accountants (ACCA). Image: ACCA
- The reasons behind Asean’s lack of leadership at global financial and sustainability standard setters
- The region’s strengths and challenges
- The need to price in nature and biodiversity
- Whether the consensus-driven Asean Way is still relevant
- How Asean’s mindset needs to shift
The transcript has been edited for brevity and clarity.
Could you give some background about the work you do at ACCA and what role you play when it comes to sustainability reporting standards?
To give a bit of context, ACCA is a global professional accountancy body with more than 250,000 members globally. Students are a much higher number; we call them future members.
Very importantly, more than half of our members are not from our home market of the United Kingdom, which means that when we work on thought leadership and research, we’re listening to voices through surveys, roundtables, and even one-to-one interviews that are largely coming from outside advanced economies.
That gives us, I think, a unique vantage point. Because this is us listening to current and emerging issues, not just from accountants, but also other professionals in the business landscape.
The role that I am with in ACCA, the policy and insights function, produces more than 20 reports, not all of them on sustainability or sustainability reporting. We cover everything from talent to technology because our members need to know about this.
On sustainability reporting, I wouldn’t say that has been a recent focus. We started to turn the dial on this in the last four to five years – it just feels like there’s a whole lot of attention to this now because standard-setting bodies like the International Sustainability Standards Board only came into being and issued its first two global standards around June 2023, which isn’t too far back.
ACCA started on this journey of sustainability and sustainability reporting several years before that, so it is a space in which we have done a whole lot of research, from guiding professional accountants on the processes as well as taking a more strategic perspective, especially with chief financial officers (CFOs).
I think the very good CFOs are already doing [sustainability], with a lens that it is not just about finance, but about everything else that provides value to the organisation, whether that’s in the supply chain, where raw materials are coming from, or how labour is being used in the supply chain. They’re looking at nature extraction…
I can keep going on, but the very good CFOs today are already doing that. I think what we need to see is more finance leaders, as well as those who are in professional services firms, start to understand this subject.
Let me just say that sustainability reporting isn’t about reporting per se. Rather, it is about understanding where you derive value from and how you’re then impacting others. From that, you start making the right decisions.
Unfortunately, though it may be unfair to some, when the word reporting is used, a lot of people get into a very transactional mindset that it’s just about the compliance.
When you slip into that space, I think you miss the bigger picture of understanding the risks you’re going to face, the opportunities that are on the table.
“
Sustainability reporting isn’t about reporting per se. Rather, it is about understanding where you derive value from and how you’re then impacting others. From that, you start making the right decisions.
You wrote an opinion piece about how Southeast Asia is not well represented in some global institutions. Would you be able to run us through some of the statistics?
This wasn’t just a sudden insight. I think as we researched collectively over the years, it dawned on me that the Asean voice was missing in the global landscape of policymaking. That got me starting to dig into the numbers.
So if you look at the World Bank, out of 24 to 25 executive directors – I must emphasise that these are executive directors – only one was from Asean.
If I go to IMF, there are very similar numbers in terms of the composition: 24 or 25 executive directors, but again, only one from Asean.
Now, people can question about how much impact the World Bank and IMF make, but I think it is symptomatic of something wider than that. Because if I then look even at the International Federation of Accountants, the representation from Asean is low. Coming to sustainability, the International Sustainability Standards Board – similar.
I think the question that we need to start asking ourselves is why does it matter? And what do we stand to gain by having a voice in this space?
What are the historical reasons for this, and what we might need to change going forward?
That is something that I grapple with, because it’s not as though there’s literature out there around these reasons. I can first give you the honest answer, which is that we don’t really know.
But I can give you also my sense of where I think this has come from, from a historical context.
Firstly, we must recall that in the Asean context, most countries only gained independence several decades after World War II. Now, 60 to 70 years might sound like it’s a long time, but it is not.
When you take into context that we had a much longer period of being colonised – though it makes some people uncomfortable when we speak about this because people think that we keep going on about this subject – there are a few points that I would like to emphasise.
One is that in that period, there were a lot of natural resources extracted out of our economies. So when we started as independent nations, we started with a very low balance, because there was nothing much left.
Two, I think we cannot ignore – and there are others who have talked about this much more eloquently than I have – the psyche that comes from that long period of being colonised. When you step out, finding your own feet takes a bit of time.
I could suggest that sometimes our mindsets are framed by what we have around us. So again, we started with weak economies… These have grown, but we haven’t learned to lend our voice [to the global stage].
Our economies have gone through several changes, from the Asian financial crisis to the tariff tensions now. Also, when we have such weak currencies, it gives a sense that we are coming from very weak standpoint.
The last thing is that we have a certain mindset that so long as our backyard is not clean [as there are economic, social or governance issues Asean has yet to resolve], we are not going to go out there and suggest to the world that this is what we should be doing.
That has to change, because actually, no one has their backyard clean, not even in the Global North. These are some of the hangups that we need to start letting go of, otherwise we will never progress.
What do you think Asean can bring to the table that it isn’t bringing now, given its lack of representation?
Firstly, we must recognise that we are a population of about 670 million and growing. We currently are already a major part of the global value chain. In fact, some numbers suggest that one in four jobs in Asean is directly or indirectly tied to our role as part of the global value chain.
Our populations are largely young, but we must also recognize that we have an aging population growing alongside this.
We are amazing in terms of our tech adoption. It surprises me when I speak to others from different parts of the world, especially from those who are in advanced economies, that the tech adoption in Asean is ahead.
We are already the third largest labour force in the world behind China and India. We have also grown, as part of that global value chain, our manufacturing [sectors] on the basis of cost. We like to think we’ve got the talent, but I can tell from having conversations that it was largely about the economics.
The point is once we start on a low-cost economic model, it’s very hard to uplift. Even if you look at China, which has done it, neighbouring markets then start to take on these jobs, again on the basis of cost. We have slipped into this space of competing on costs, and this is not a unique phenomenon to Malaysia or other countries in the region.
If you ask me what needs to change, I think we have been on the receiving end of policies from the Global North [for too long]. We need to recognise that this cannot be a way forward.
“
We must recognise that what can be a weakness can also be a strength.
You’ve hinted at what we need to do going forward, but one of the things that I’ve come across about what potentially is holding Asean back is the fact that we operate on a consensus basis. Do you think this has been something that makes our regional voice ineffective?
I’ve had conversations about this with others, who ask if Asean should follow the EU model. I don’t think we should. Why don’t we come up with our own way forward?
I think we must recognize that what can be a weakness can also be a strength. Asean was birthed because we needed peace in the region. When I talk about peace, a lot of the younger generation don’t get it, but if you go back in time, we were claiming territories against each other in Asean.
The leaders in the 1960s then said, ‘Look, we need to put a pause to this. Otherwise there’s no economic growth.’
Today, I think peace is still relevant. I sometimes say peace should be a policy. It should not be something that you leave to chance.
But going back to your point about having differing decisions, let’s also recognise that we have got economies which are growing at different speeds. We’ve got different sophistication and maturities.
A problem which I think needs to be called out is how land language becomes an artificial barrier. The economies that tend to speak English a bit more are at a relative advantage. I don’t think in today’s day and age that should be the case, but it is, because if you go to a policymaking table, you need to be able to communicate. No doubt you have translators. But I think sometimes that by understanding language and nuance, you’re able to get much further.
I may have strayed from main question that you’ve asked, but we should not shy away from the fact that this Asean Way, this consensus building, is what holds us back. I think we should find the mechanisms and the arrangements to make it successful.
When it comes to the World Bank and IMF, there are people who say – similar to the point you’re making – that maybe it’s not that World Bank and IMF have not invited us, maybe it’s Asean’s reluctance and the fact that we can’t speak in one voice because we have10 other countries to think about.
But maybe there are different ways to do this. For example, let’s say we have a Singaporean or Indonesian representative at IMF. The Asean arrangement should be, and it needs to be formalized, that behind every person who sits on these boards, there needs to be a working group level one below in which all the voices are considered.
I think today, especially if you look at how the (United Nations climate) COP arrangements work, there is an ability to recognise that we come from different points and therefore what we are pushing for is not just one position, but a multitude of positions.
If we talk about trade liberalisation and the growth of economies, Lao PDR’s position may not be the same as Singapore’s. Asean needs to speak on behalf of all, not just argue for one.
What are the practical steps that Asean should be taking? You mentioned language – given ACCA’s global presence, what kind of feedback have you received from members?
Honestly, we have not done research specifically on this issue, so I have to be conscious of saying some of these things because it’s largely around conversations that I’ve had.
But I think it is quite plain to see – in fact, yesterday, we were having conversations with academics from Vietnam, and it was a little bit of a struggle for them to speak in English. Does that mean though, that they are not amazingly intelligent and know the space, not just of accounting, but of technology, in which Vietnam is doing amazingly?
The talent in Asean is simply amazing. Indonesian and Vietnam stand out to me, but those are also places where English is not widely spoken.
If we could see beyond the veneer of language, if we can get to the thoughts and the articulations, I think we would start to have a very different perspective.
So while I think language is a barrier, it could be addressed through something as simple as live translations at conferences. In this day and age of technology, I don’t know why that hasn’t happened (more often). We need to change that – and I think technology can play that role.
Southeast Asia’s leaders stand with United States President Donald Trump at the Asean Leaders’ Summit in Kuala Lumpur, Malaysia. Image: X account of the White House/ Wikimedia Commons
The other thing you mentioned was having a working group to support Asean members on global institutions. We’ve seen working groups at an Asean level for things like human rights, for example. Where else do you think this needs to happen most critically?
All across the board. Let’s begin with cross border trade – how do we simplify things like customs duties?
I’m also a trustee with WWF-Malaysia, so nature is close to my heart. But Asean, or shall I even go as far as to say Asia, provides much to the world for which we are not paid. And that’s nature.
If you look at something as simple as biodiversity credits, never mind carbon credits, I think we have significantly mispriced that. I think there’s a notion of justice that we must call out.
ACCA’s mantra is about accounting for a better world. But some of us speak about the notion that it has to also be accounting for a more just world. You can’t have one without the other.
For example, in Brazil, they are looking to launch the Tropical Forest Forever Facility, which pays for forests to remain standing because they’re carbon sequesters. I think there is merit to that, because when we buy other things from more advanced economies, we have to pay [for those goods] but tropical countries are effectively the lungs of the world, which is not priced in anywhere.
This mispricing is causing a lot of destruction. In fact, although I speak about amplifying Asean’s policymaking voice, Asean should also be smart and learn how to amplify that voice through working with Africa and Latin America. The smarter thing to do is actually to work with economies and regions of similar size.
The point that I want to leave the audience with is to imagine ourselves in 2050. Our young population will not be so young then, but they would have certain demands of where they think our economy should be by 2050, and our policymakers need to understand that and address that.
We need to start doing things differently in Asean. I like to use a word borrowed from maybe your generation or the generation after, which is ‘flex’. Asean needs to learn how to flex.
What would you hope to see from Asean this year, given Malaysia’s year as the Asean chair?
I think we need our Asean leaders to call out that Asean has the potential to influence global policymaking, but we need to figure out how we are going work behind the scenes to make these things happen.
Secondly, we need to learn how to advocate and coordinate internally, because you can’t just have someone from say, Malaysia representing us in IMF while the other countries feel left out. We need to work out how we underpin that representation more equitably.
But I think, very importantly, why does Malaysia want to champion these things?
One, we are going to be disproportionately affected by any climate and nature risk, yet access to finance is also disproportionately poor.
Two, we’ve also got the third largest workforce, but we are not paying them well enough. If they’re part of the global value chain, it requires two to tango.
It is about recognising that we’ve got this enormous talent who are hungry to lift themselves up, so the policymaking has to follow suit. It cannot be continuously on a backpedal when most of Asean wants to go on the front foot.
