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HONG KONG - Asian regulators should tell companies how to reform their boards to better address environmental, social and governance (ESG) challenges, according to recommendations published on Thursday by a regional corporate governance group.

The recommendations include adjusting corporate governance codes of best practices to include how company boards should be composed, selected and trained in order to handle ESG issues, particularly climate change, and emphasising in these codes boards' responsibility for reporting ESG data, the Asian Corporate Governance Association (ACGA) said.

"That listed companies need support on ESG reporting seems incontestable," the report noted.

Climate change and other green issues are high on the agenda of most Asian governments, and financial regulators, such as in Hong Kong and Singapore, have also begun changing rules to force companies to better to disclose their environmental impact, and ultimately to reduce it.

"There has been a marked improvement in ESG standards in Asia over the past two years, but corporate governance mechanisms remain fragmented and connections between CG and ESG policies are unclear, limiting meaningful ESG and sustainability efforts," Jamie Allen, the ACGA secretary general.

The ACGA noted that both corporate governance and companies' ESG standards had improved in Asia since their last report in 2018.

The report also ranked markets by their corporate governance standards, and placed Australia first, unchanged from 2018, followed by Hong Kong and Singapore in joint second, saying 2019's political unrest had not affected the financial regulator's ability to do its job, either at the policy or enforcement level.

Japan rose two places to fifth, thanks to improvements in climate change reporting.