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Asia Times
Covering geo-political news and current affairs across Asia
At a moment when the world was searching for steady hands and shared direction, two of the most influential democracies in modern history chose retreat over renewal.
The first came with the United Kingdom’s decision to exit the European Union—an act justified as reclaiming sovereignty yet widely seen as a strategic miscalculation. Rather than working from within to shape the evolving rules of global cooperation, Britain relinquished its seat at the table, trading influence for isolation.
The second came with Donald Trump’s return to the White House, heralded by his supporters as “Liberation Day.” Instead of re-engaging the world with renewed purpose, the United States turned inward—reviving tariffs under the banner of industrial protection.
This month, sweeping new duties were imposed on all imports, a protectionist move framed as safeguarding American jobs. Yet true strength does not lie in economic barricades, especially when those barriers isolate a nation from the evolving standards shaping tomorrow’s trade and legitimacy.
The cost is not just economic—higher prices and disrupted alliances—but moral: a diminished voice in shaping the shared future.
These were not just political choices. They were acts of abdication—the surrender of a once-shared responsibility to help steer the planet through overlapping crises of climate, inequality and legitimacy.
And yet, as often happens in history, the vacuum they left behind is being filled—not with noise, but with standards. In the quiet corridors of Brussels, a new form of global leadership is taking shape. The European Union, for all its imperfections, has begun doing something remarkable: turning sustainability into structure.
Through initiatives like the Corporate Sustainability Reporting Directive (CSRD), the Green Taxonomy and the Carbon Border Adjustment Mechanism, Europe is institutionalizing what others still treat as aspirational. It is not simply defending sustainability—it is encoding it.
In a time when greenwashing is rampant and ESG scores are increasingly distrusted, the EU is doing something radical: demanding proof.
Under CSRD, over 50,000 companies—including non-European ones operating in the region—must provide audited disclosures on everything from emissions and human rights to governance and supply chains.
This isn’t charity. It’s conditional legitimacy. If you want access to one of the world’s largest markets, you must show that you are part of a just, sustainable future.
What sets Europe apart is not its scale but its willingness to lead through values. While others weaponize trade, Europe is using it to build trust. While some raise walls, it erects frameworks. And perhaps most importantly, it is turning access into accountability.
But Europe is not moving alone. Japan has taken bold but understated steps in advancing sustainability. In 2025, its Sustainability Standards Board (SSBJ) issued the country’s first IFRS-aligned sustainability disclosure standards, covering general and climate-related disclosures. These apply to companies listed on the Tokyo Stock Exchange’s Prime Market—ensuring transparency on emissions, governance, and climate risks.
Japan has also committed to a 73% reduction in greenhouse gas emissions by fiscal year 2040 compared to 2013 levels, one of the most ambitious decarbonization targets among G7 nations. Its approach may be quiet, but it is methodical, rigorous, and structurally transformative.
China is also reshaping its sustainability framework—on its own terms. In late 2024, it released the Basic Standards for Corporate Sustainability Disclosure, setting the groundwork for a national ESG reporting system aligned with global expectations.
This move complements its SDG-aligned green taxonomy and strengthens its ability to steer sustainable finance and trade policies. At a geopolitical level, the Global Development Initiative reflects China’s effort to embed environmental and social metrics into its infrastructure diplomacy.
While its pathway differs from Europe’s, the trajectory is unmistakable: sustainability is no longer peripheral—it is becoming structural. This isn’t just a Western story. And it isn’t just about compliance. It’s about coherence.
For countries in the Global South, the implications are real and immediate. Exporting is no longer just about price. It’s about proof. From cocoa farmers in Ghana to garment makers in Bangladesh, producers are being asked to demonstrate that their goods carry not only value but values.
This is not a form of neocolonialism. It is a mirror. And the question it reflects back is this: can we design a global economy where access is earned through contribution, not coercion? Where legitimacy flows not from branding but from behavior?
We believe the answer is yes. But only if the systems being built are truly inclusive. The Global South must not only adapt to these standards—they must shape them. Sustainability cannot become another form of gatekeeping. It must become a shared foundation, one that honors planetary boundaries while protecting developmental dignity.
And yet, this emerging architecture is fragile. Recent delays in implementing CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD) have raised valid concerns. It is not the timelines that worry observers. It is what they symbolize. Because in moments of hesitation, values can erode. Standards can blur. And belief can wither.
Europe has planted its flag at a new peak: sustainability as the foundation of global legitimacy. If it slows down, the world might wait. But if it turns back, the world may stop believing. And belief, once lost, is far harder to rebuild than rules.
This is not about who speaks loudest. It is about who holds steady when it’s most tempting to soften. Leadership now lies in stamina, in consistency, in staying the course when complexity hits.
The world is moving beyond glossy ESG brochures. It is entering the age of consequence. The age when systems must deliver, not just perform. In that world, Europe’s role is vital—but not sufficient. Japan’s steady hand, China’s recalibration and the Global South’s rightful demands must all converge.
The future cannot be dictated by the loudest, richest or fastest. It must be built by the most credible. And credibility now has a new name: sustainability.
In a world that builds walls out of fear, Europe began to build filters out of trust. But even filters need guardians. If Europe falters now, it is not just regulation that collapses – it is direction. And in this fractured moment, direction is everything.
Setyo Budiantoro is Nexus Strategist at The Prakarsa, MIT Sloan IDEAS Fellow 2024 and member of the Advisory Committee of Fair Finance Asia
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