3 key takeaways:

• • • The connection is detectable but required massive data analysis — IJM analyzed more than 1 million CyberTipline reports and matched them with mobile device data, ultimately linking sextortion reports to forced scamming sites in Cambodia, Myanmar, and Laos.
    • Forced scamming compounds exploit trafficking victims to commit crimes — Human trafficking victims are lured by fake job ads, then confined in guarded compounds where they’re coerced into running various online scams.
    • Coordinated multi-stakeholder action is urgently needed — Electronic service providers must improve account creation safeguards and detection methods, while law enforcement needs to better coordinate cross-border investigations.

New research by links hundreds of financially-motivated child sextortion reports to scam compounds in Cambodia, Myanmar, and Laos. Indeed, the research shows that significant effort was required to detect these linkages as IJM analyzed more than 1 million CyberTipline reports in the “Online Enticement” category from the National Center for Missing and Exploited Children (NCMEC).

“Our research provides the first clear evidence of this likely link, but to understand the true scale of the problem, there needs to be further urgent investigation into this troubling nexus by law enforcement, tech companies, and global governments,” says Eric Heintz, Senior Criminal Analyst at IJM.

Because forced scamming compounds now blend labor trafficking, high-volume online fraud, and financially-motivated child sextortion, it becomes critical that electronic service providers (ESPs) must harden account creation and improve detection of signals indicative of online fraud and sextortion. In addition, law enforcement must better coordinate their efforts at cross-border investigations and distinguish trafficked workers from criminal organizers.

Links between compound scamming and child sextortion

To illustrate the details of how these two fast-moving crime waves are converging online, forced scamming occurs when victims are trafficked into guarded compounds across Cambodia, Myanmar, and Laos, after responding to fake job-ads. These trafficked victims then are coerced into defrauding targets online as part of forced scams. These schemes employ deceit or trickery to defraud the online targets, often using scripted approaches, fake personas, or impersonation to elicit money or sensitive information.

You can read the IJM report here

The types of scams include romance, investment, crypto, fake loans, and impersonation scams, all of which are carried out from inside guarded compounds. Many times, trafficking victims endure confinement and abuse as part of being forced to perpetrate these scams on others.

These human trafficking victims are also trained on psychological manipulation tactics to lure in potential victims, including children in some instances, although it is not evident that children are being intentionally targeted.

Within some of the scam operations, if trafficking victims fail to elicit the desired outcome, such as an investment in a cryptocurrency fraud scheme, they are forced to pivot to sexualized chat and a request for images or a video call. The forced labor victims then use the collected sexual images to blackmail the scam target for money under threat of exposure. Since 2022, reports of such financially-motivated sextortion have surged globally and have disproportionately affected boys and young men, with devastating psychological harm including documented suicides.

Forced scamming is not just a fraud trend; rather, it is a human rights crisis that collides with child protection, cybercrime, and organized criminal groups across Southeast Asia and beyond.

Researchers from IJM combined large-scale ESP platform reports with mobile ad-tech telemetry to trace overlap between child sextortion and forced scamming. They analyzed nearly 1.2 million reports from NCMEC that covered 3.17 million IP addresses and paired them with more than 300 million advertiser ID rows, which included mobile devices used in these locations, the device’s latitude and longitude, and the IP address and date and timestamp (UTC) of an internet connection by the device. These were collected from 44 confirmed scam sites in Cambodia, Myanmar, and Laos, resulting in 493 reports tied to devices at 40 sites in these countries.

The strongest links centered in hotspots in Cambodia and Myanmar, and some IP addresses traced back to internet service providers in Thailand. This reflected cross-border routing and service reliance and occurred when activity originated in neighboring countries or special economic zones.

Required actions to protect children

Coordinated action by platforms and law enforcement is essential to expose, disrupt, and prosecute the intertwined machinery of forced scamming and financially-motivated child sextortion. ESPs, such as social media networks, messaging apps, email providers, cloud services, and dating platforms, submit CyberTipline Reports to NCMEC when they detect suspected child sexual exploitation. While this is helpful, more efforts are required, which include:

• • • Cross-referencing account creation and activity with known scam hotspots and scripted patterns
    • Including precise timestamps, IP addresses, and geolocation context in CyberTipline submissions
    • Flagging and disrupting account creation that originates from suspicious infrastructure, beyond simple VPN indicators

At the same time, further law enforcement action is needed to improve disruption and prosecution of these networks, including:

• • • Examining sextortion cases for signs of forced scamming, which may include scripts, crypto addresses, or investment lures
    • Studying evidence for indicators of sextortion as a tactic, such as the use of sexually explicit scripts or imagery
    • Considering that some suspects are themselves trafficked victims who have been coerced into scam operations
    • Using advertiser ID data and timestamp matching to pinpoint devices and compounds
    • Devising ways to coordinate cross-border law enforcement actions in hotspot countries, known scam regions, and local jurisdictions.

Forced scamming is not just a fraud trend; rather, it is a human rights crisis that collides with child protection, cybercrime, and organized criminal groups across Southeast Asia and beyond.

The nexus between forced scamming and financially-motivated sextortion of children is detectable — as demonstrated by IJM’s new research. Now is the time for action among ESP platforms, law enforcement, and NGOs to align data and coordinate cross-border responses to better identify devices, compounds, and networks in real time.

You can learn more about how organizations can reduce and mitigate child exploitation in the TR Institute’s human rights crime resource center

Key points:

• • • Varied AI adoption across courts in APAC — Courts across the Asia Pacific region are at different stages of AI exploration and implementation.

    • Priority on cautious, responsible implementation — Leading jurisdictions, such as South Korea, have developed comprehensive guidance that emphasizes human responsibility and accountability.

    • Key governance recommendations for courts around the world — Successful AI integration in courts requires critical elements around transparency, training, and assessment.

As with courts in the United States, court systems across the Asia Pacific region (APAC) are facing mounting caseloads as more individuals seek self-representation without professional legal advisers, leading to increased attention on access to justice.

Not surprisingly, AI has emerged as a tool with the potential to increase the efficiency and effectiveness of the region’s judicial processes. A recent webinar hosted by the and the Thomson Reuters Institute, as part of their joint , featured the varied approaches on the use of AI in courts across APAC.

, a director in the Asia & Emerging Markets group of ��������, has an expertise on the current state of AI use in courts across the region, and he describes a spectrum of stages in adoption that included jurisdictions like Singapore, on one end, that are proactively piloting AI tools, such as generative AI (GenAI) assistants to help self-represented litigants and to summarize case materials for judges.

China’s courts, on the other hand, use a nationwide smart court system with extensive AI and big data integration, Heaphy says, adding that judges use AI tools for legal research, drafting, and error checking, but humans remain responsible for decisions. And other Asia Pacific jurisdictions like Hong Kong, Japan, and India are also actively exploring AI with a focus on governance frameworks and pilot projects that could extend to their court systems.

Different stages of court systems’ journeys

Many countries in the APAC region are at different stages of their AI journey, and South Korea and Australia, for example, have taken a cautious approach to AI adoption by issuing guidance to ensure responsible use and the mitigation of risks.

In South Korea, the Judicial Policy Advisory Committee, an advisory body that deliberates on judicial reform measures proposed by the Chief Justice, issued recommendations in August 2024 on AI use in judicial proceedings with a priority on underscoring principles of protecting fundamental rights and ensuring accountability and transparency, according to the , a judge on the Intellectual Property High Court of Korea. In parallel, the Association of Korean Judges for AI Studies, a research group of judges founded in 2023, published its Guidelines for the Use of AI in the Judiciary in February 2025, which further elaborates the safe use of AI by judges and litigants.

Many countries in the APAC region are at different stages of their AI journey, and South Korea and Australia, for example, have taken a cautious approach to AI adoption by issuing guidance to ensure responsible use and the mitigation of risks.

In Australia, the Supreme Court of New South Wales issued a practice note to the profession restricting the use of GenAI in drafting evidence without rigorous verification, according to , Deputy Chief Magistrate of Victoria, Australia.

While adoption of AI in courts is being driven by the goal of improving access to justice and addressing growing caseloads, each country has its own unique priorities and projects. For example, South Korea’s judiciary currently is focused on advancing AI tools for case management. “These include initial case analysis functions that can automatically extract key information from complaints or indictments, generate procedural checklists, predict timelines, and identify governing law,” said Judge Kwon, adding that there also is an AI tool for law clerks to conduct content analysis. This tool chronologically itemizes events from the arguments of both parties in a structured, tabular or visual format, and highlights repetitive content to help judges focus on what is truly in dispute.

Conversely, Australia’s guideline-driven approach has been external looking, said Deputy Chief Magistrate Bourke, noting that Australia’s AI use is geared more “towards external parties as compared to internally within the court. There are no current settings, as far as the court’s use of AI.”

Key recommendations for courts around the globe

As courts around the world explore the integration of AI into their judicial processes, several critical initiatives that have emerged to shape responsible and effective adoption, including:

Prioritizing transparency and accountability — Comprehensive frameworks must be established that prioritize transparency and accountability. Policymakers should develop detailed guidelines that address data privacy, bias mitigation, and clear boundaries for AI applications.

Promoting continuous learning —��Continuous training programs should be established to help judicial officers and court staff understand AI capabilities and limitations while maintaining their critical oversight role in all AI-assisted workflows.

Conducting ongoing impact assessment — Focused investigation into AI’s judicial impact remains crucial, and special attention should be paid to significant challenges around accuracy, bias, and access to justice that require continued study and analysis.

Users of AI in courts need clear AI governance, opportunities for ongoing education, and an continuous evaluation of the use and performance of AI tools in order to ensure that AI best serves courts and the public.

You can find out more about the use of AI in courts here

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General Counsel Trends Driving Japan’s Legal Market in 2025

Nevertheless, there is a region where significant change is underfoot that could provide valuable lessons for law firms around the world, whether they are large global entities or boutique midsize firms — Japan.

The Thomson Reuters Institute’s latest report, , offers a rare and timely look into a legal market that is not only growing rapidly but also is evolving in ways that could foreshadow broader global trends. Based on in-depth interviews with general counsel and senior legal decision-makers at major Japanese corporations, the report reveals a market that is both uniquely Japanese and strikingly global in its trajectory.

A market on the move

Like in many legal markets around the world, Japan’s legal industry is undergoing a transformation. Once known for its conservative approach to legal services and a cultural preference for informal dispute resolution, the country is now seeing a surge in legal demand — particularly for international work. In fact, Japanese companies with more than $1 billion in annual revenue now allocate nearly half of their legal budgets to matters outside Japan.

This internationalization is not just a trend — it’s a structural shift. The number of Japanese companies with overseas legal needs has grown to 90% from 74% over the past decade. And with that growth comes opportunity, both for domestic firms to expand their capabilities and for international firms to gain a stronger foothold in a market that has traditionally been difficult to penetrate.

Yet, this growth is not without its challenges, as the report shows. Japan’s legal sector is grappling with a familiar but acute issue — a shortage of qualified legal professionals. As demand rises, firms are struggling to scale; and this has opened the door for international firms, particularly those with strong M&A and regulatory practices, to step in and support those Japanese clients with global ambitions.

The report also highlights how general counsel in Japan are increasingly prioritizing outside law firms with broad service offerings and global reach. While trust and relationships remain important, the ability to deliver across jurisdictions is becoming a key differentiator for many Japan-based law firms.

GenAI: A further catalyst for change

Perhaps the most intriguing aspect of Japan’s legal evolution is its potential role as a proving ground for the use of generative AI (GenAI) in legal services. With its deep-rooted culture of technological innovation and a pressing need to boost capacity, Japan is uniquely positioned to lead in the adoption of AI-driven legal solutions and tools.

Japanese law firms are already embracing technologies like e-discovery and automation, and many see GenAI as a way to not only alleviate staffing pressures but also to leapfrog into a new era of legal service delivery. Whether this will help domestic firms reclaim market share from international competitors — or further accelerate the latter’s rise — remains to be seen.

What makes Japan’s legal market so compelling is not just its growth, but its potential to serve as a bellwether for the global industry. The interplay of internationalization, capacity constraints, and technological disruption is not unique to Japan — but the way these forces are converging there is.

As the report shows, for law firms around the world, understanding what’s happening in Japan isn’t just interesting — it’s instructive. The strategies that succeed (or fail) in this high-pressure, high-opportunity environment could offer a preview of what’s to come elsewhere.

You can explore

these insights in more detail by downloading a full copy of the Thomson Reuters Institute’s “General Counsel Trends Driving Japan’s Legal Market in 2025” or here

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2025 Report on the State of the New Zealand Legal Market

To examine this further, the Thomson Reuters Institute has just published the , detailing much of what is happening in the legal ecosystem of that region.

A welcome return to stability

The past five years have been marked by significant financial fluctuations for New Zealand law firms. From 2020 to 2021, firms saw significant annual growth in profits, driven by a boom in transactional demand. However, this period of outperformance ended sharply, leading to two consecutive years of reduced profits from 2022 to 2023.

The recent historical context shows that in 2020 and 2021, New Zealand saw average quarterly demand growth of 7.1% year-over-year. However, demand fell nearly as quickly as it rose, averaging a 0.8% contraction per quarter in the following two years. These fluctuations were largely influenced by transactional practices, which peaked at 23.6% growth in Q2 2021 and reached a low point of a 7.5% contraction in Q4 2022. Unlike other regions, New Zealand did not see corresponding growth in counter-cyclical practices from 2022 through 2023 to make up for the transactional pull-back.

In 2024, law firms faced the challenge of reversing these declines and returning to peak performance levels. Fortunately, the momentum began to shift as key transactional practice areas finally saw improved results. Yet despite a weak first quarter, performance improved dramatically over the second and third quarters, resulting in an improved profit position by the end of 2024.

The return to normality

Although fortunes for the broader New Zealand economy and law firms began to turn in 2024, the recovery was inconsistent. The legal market initially faced a broad downturn in Q1, but transactional practices spurred a recovery in the following quarters. Despite cooling in Q4 due to a decline in counter-cyclical demand, the full fiscal year demand performance in 2024 was essentially flat compared to 2023. Further, law firms were able to increase their worked rates substantially; however, this was simply because they were using higher prices to make up for weaker demand. This pricing power push, coupled with more normal demand, resulted in moderate revenue growth for 2024.

With expense growth under tighter control, law firms in the region enjoyed an average 3.4% increase in profits in 2024 compared to the previous year. This comes as a relief that has largely reversed the effects of the past two challenging years, during which firms faced a harsher demand and expenses environment that led to a combined 2.6% decline in overall profits from 2021 to 2023.

During this difficult period, margin compression became a larger concern. Profit margins fell to 43.0% in 2023 from 48.5% in 2021, primarily due to the simultaneous slowdown in revenue growth and the uptick in indirect expense growth. Despite these challenges, profit margins among New Zealand law firms have consistently been high compared to other regions. Even with 2023’s 43.0% margin, the average profit margin for the region’s firms surpassed the averages seen among law firms in the United States, Australia, and the United Kingdom.

The road ahead into 2025

In 2024, New Zealand law firms navigated a landscape of recovery and growth, with stabilized demand and expenses leading to profit growth that marked a shift from previous challenges. However, the reliance on transactional demand poses a risk of volatility in an already unstable international situation, underscoring the need for strategic diversification.

More worrisome, elevated compensation levels for associates continue to pressure financial structures, requiring careful management for sustainability. By leveraging lessons learned and focusing on strategic growth and efficiency, the New Zealand legal market can thrive amid uncertainty. And though vigilance and flexibility, law firms there can capitalize on opportunities and weather future challenges.

You can download

a full copy of the Thomson Reuters Institute’s here

Through my interview process, I realized that little was being said about the values of the firm and the culture it was creating and exhibiting both internally to its lawyers and staff and externally to clients and the overall market. If we were going to have success in moving our strategy forward, we first had to start with our culture and values, conducting a major evaluation of what both meant to us as a firm.

Just as importantly, we needed to determine what our purpose should be as a firm in helping shape New Zealand’s future. To that end, we began to talk about culture and strategy as appropriate bedfellows, but probably not in a way that many partners at the firm had thought about previously.

Beginning the process

I decided that I would use an upcoming annual partner conference – on the calendar for just six months after I started at the firm – to hold a major exercise around our values, starting with an externally facilitated workshop.

In this workshop, we asked the partners what they considered to be the firm’s values and priorities. We then broke into groups and rotated around a large conference room with flip charts and whiteboards in the corners, talking about the potential for values centered around a few key concepts. And at the end of that first day, I honestly felt that we were probably halfway there.

I was very proud how the partners took to it because I think it could have gone terribly badly. I was concerned that the partners would approach the exercise with skepticism, especially because I had so little history with the firm. However, even though they had never done an exercise like this, most put that natural lawyer cynicism aside and really engaged in the exercise.

But that was just the first step. Right away we knew that this exercise would not succeed if our staff did not feel that these were their values as well. So, we then ran 17 workshops across our Auckland and Wellington offices with me, our HR director, and facilitators present at all of them. We discussed what the partnership had come up with and asked staff for their honest feedback. Do we have the right number of values? Have we got the right kind of core concepts? Have we got the right language?

You can imagine what that kind of exercise in language might be like when you’re involving lawyers and other business professionals. However, there was a lot of good humor, energy, and a deep sense of engagement. Not surprisingly, they did fantastic work.

Each core value resonates much further beyond its initial meaning. For example, the first value – Respect Individuality, Work as One – is about teamwork, of course, but also the idea that individuals can turn up as themselves and that we’re stronger as a diverse group. That level of respect for individuality flows right into the second value.

We wanted to capture the way we look at our performance and service both internally and how we work with our clients. Many years earlier, a young partner had come up with the phrase listen, care, and deliver, and we thought that continued to fit almost perfectly. Then it was suggested that we add with excellence to the end of that phrase to show that we’re very deliberately raising the bar for our firm.

If we were going to have success in moving our strategy forward, we first had to start with our culture and values.

We latched onto this value so solidly that we use the acronym “LCDE” as shorthand to sort of embed that phrase into how we work, especially with clients. We created our LCDE Awards for staff who were recognized as going that extra mile.

Our third value was probably the most controversial – Bring on the Future! Admittedly, this is not what you’d typically expect from a law firm. However, as a firm we have always had a strong future-facing focus including in tech and innovation. We were a founding shareholder in an artificial intelligence start-up a few years ago, and I remember thinking, ‘Wow, that’s a really radical thing for a law firm to do.’ It’s not our core business, but the firm’s idea was that we want to demonstrate to the market that we are genuinely interested in this stuff, and that we think like a business because we are a business. To that end, we’re going to align with our clients and demonstrate that we’re part of the business community, not some professional services provider sitting on the sidelines.

After we affirmed these three values, we translated them into te reo Māori, the language of Māori, the indigenous people of New Zealand. Our country has a strong bicultural foundation as a nation, and there’s been a real Māori renaissance. We wanted to be a part of that because it’s reflective of the kind of modern liberal firm that we are. Through that process, working with an advisor from the local iwi (tribe) we envisioned our idea as a kind of journey, of traveling and momentum. That translated into the image of a canoe, or waka, with a three-paddle motif, with those representing individual paddles as well as the collective effort to get all of our team paddling in unison to really make the waka go faster – that was our first value of Respect Individuality, Work as One or waka eke noa.

Our second value (Listen, Care, Deliver with Excellence) is waka whakarei. The actual symbol for that is the very ornate panel at the back of the waka – something that took a lot of care and attention to produce.

Finally, the symbol for our third value, waka hourua, is a double-hulled canoe with an outrigger, which is the next generation of waka – Bring on the Future! The whole waka journey theme really works quite nicely, and while not a literal Māori translation, it does provide a foundation that conveys the idea that binds those three values together and speaks to us as a firm.

We talk openly about our culture, values, and our cultural alignment with new clients.

It’s also a depiction of a partnership, as opposed to a corporation, because the structure is – and the real power comes from – the collective effort of partners (and staff) each with a paddle, working in unison toward a common goal, to literally make the boat go faster, rather than having a corporate engine to power the boat, with a captain on the bridge.

It’s our New Zealand-centric and more modern motif for the age-old expression of getting the right people on the bus. For us, it’s having the right people – each with a paddle in the MinterEllisonRuddWatts waka.

The launch

Almost five years ago, we did a big launch for our core values in our offices in Auckland and Wellington. We didn’t let the staff know in advance where we’d landed as a final concept, but I remember distinctly seeing the pride on the faces of the staff who had been in the workshops and now saw their particular changes come through in the final idea.

Today, we talk openly about our culture, values, and our cultural alignment with new clients. For example, we will talk about our Community Investment Programme (pro bono and volunteering) efforts, and clients will talk about where they’re involved in the community – and then we’ll see whether we’ve got alignment there. However, it’s been even more interesting with existing clients. I remember about two or three years ago, we were re-pitching for an existing client’s work, and we thought we were going to get really squeezed on price.

But the client didn’t mention price. They knew us well and didn’t need to be convinced that we were the right firm in terms of legal expertise, service, or understanding their sector. Instead, we spent the whole time talking about our culture and values, about our empowerment, our diversity and inclusion policies, and our embracing of te ao Māori or the Māori world.

In my mind, that interaction really validated our efforts. And these three core values have continued to be an important part of telling that story to clients, to our current team, and to young recruits – the story of who we are and what we stand for as a firm.

You can access the interactive Spring 2024 issue of the Thomson Reuters Institute’s .

Of particular importance is the ongoing evolution of the erosion of the rule of law around the world. This fact alone creates risk exposure, especially in governance and assessment of legal risks, for companies’ chief legal officer (CLO) or general counsel (GCs), who act as the guardians of the company when it comes to legal, reputational, or ethical risks as well as other types of risk.

Erosion in the rule of law

Sean West, co-founder of and author of the newsletter, recently points out that the World Justice Project has framed the current status of the rule of law as “in recession” around the world, a .

For companies, the implication of this decay is that the assumptions in how the practice of law operates are no longer certain, according to West. “From an in-house point of view, we see CLOs getting pulled very much into the political planning and fray of their companies,” he says, adding that the disappearance of the norms in the roles that lawyers and the judiciary play are causing a seismic influence in the risk environment for companies. “This could leave companies to underestimate the risk that they face in certain places.”

For example, the companies that lawyers represent — whether they work as in-house counsel or external legal advisers — are subject to the effects of political climates, which can affect their share prices and business strategies to different extents. If lawyers only considers the legal aspects narrowly, they might miss out on identifying certain opportunities and hazards. Indeed, a company might win a legal battle but face unexpected political fallout as a result.

Further, legal professionals might judge a situation to be of low risk by not factoring in the wider political context, which is especially relevant given the numerous global elections happening this year. “The way that things have always been in a particular region or economy may not be the way that they are six months from now when a more populist or a new government comes in,” West explains.

Interrelated risks create integrated approaches

The lack of certainty in international affairs and how it could impact companies is one of many challenges for CLOs and GCs in the risk landscape. Add in the technological shifts and fragmentation of regulatory regimes, and the overall risk environment gets murky fast. “We can’t just talk about things like international affairs or artificial intelligence or environmental, social and governance issues as if their independent events,” West says. “They’re happening in a context that creates friction.”

Law firms — especially as technology elevates the standard for delivering value-added services to their clients — must consider the evolving needs of their customers to stay competitive. Indeed, being proactive on behalf of their clients is going to be worth a lot more than spending an extra dozen hours or so. Ongoing conflicts in the Middle East, for example, can disrupt companies’ supply chains, resulting in various legal complexities, from withdrawing operations from affected regions to revising agreements or justifying unmet commitments.

For law firms doing business with clients in these circumstances, the task of understanding the initial causes of these supply issues is crucial for identifying key strategic or competitive opportunities for the businesses. GCs are increasingly involved in these discussions, although they may not always have the collective expertise from their deputies and team members who may or may not be skilled in this specific type of analytical work, West adds.

Guidance for CLOs and GCs to address governance gaps

West advises that GCs and CLOs review their companies’ strategic plans and determine the Top 5 priorities that are critical for their companies’ success. Then, in collaboration with cross-functional peers, they should analyze how politics can disrupt or enable these priorities. They then are in a better position to make an assessment through the lenses of both risk and opportunity, simply by answering two questions:

• • • What is the company really trying to achieve today based on my knowledge as an manager of risk, whether it be legal, reputational, financial, or something else?
    • What are the different ways in which the politics of a region could manifest itself and disrupt the company by triggering the type of risk for which I am responsible?

West explains that it is then necessary for the group to build some scenarios around the potential events and identify what their companies’ proper responses would be. Working collectively as a group — when the group is not in the heat of a crisis — to build out plans for how each function would operate should the scenario develop enables effective decision-making around the best action when a crisis does hit.

Also equally important is the development of functional plans. For risk management leaders, it is important to understand what their companies’ mitigating actions would be in advance of any crisis. Going one step further, one best practice is embedding these discussions in their companies’ enterprise risk management governance and processes and to gather with peers a few times a year to review scenarios and plans, while keeping the values front and center to determine effective responses.

The decay in the rule of law is just one of many dynamic complexities in today’s risk environment in which companies are operating. It is critical for GCs and CLOs to gather with their peers regularly to assess and re-assess how the operating context is changing and then tweaking their risk mitigation response plans appropriately as a key part of ongoing governance to ensure their companies’ sustainability and success.

The new year ushers in a more refined version of the Association of Southeast Asian Nations’ (ASEAN)��, which is comparable in ambition to similar initiatives by Western peers. The latest taxonomy, which takes effect in the first quarter of 2024, will showcase the region’s growing emphasis on interoperability by advancing the taxonomy’s Plus Standard feature after gaining broad approval from stakeholders. The tiered feature aligns with the European Union’s Taxonomy and captures the coal phase-out criteria. As such, it aims to encourage decarbonization and raise ASEAN’s position in global sustainability efforts.

At the national level, the Monetary Authority of Singapore (MAS) has launched the Singapore-Asia Taxonomy for Sustainable Finance, which establishes detailed thresholds and criteria for defining green and transition activities that mitigate climate change across eight focus sectors.

To enhance interoperability with global taxonomies, MAS has commenced an exercise to map the Singapore-Asia Taxonomy to the International Platform for Sustainable Finance’s Common Ground Taxonomy, which currently covers the EU Taxonomy and People’s Bank of China’s Green Bond Endorsed Project Catalogue.

Formal blended finance is a major development

A major theme at COP28 in December 2023 was the need for increased public-private partnerships and innovative solutions to provide financing to poorer countries in the southern hemisphere. Against this backdrop, Allied Climate Partners (ACP), International Finance Corporation (IFC), MAS, and Temasek announced the intent to establish a green investments partnership to address climate finance gaps and increase the bankability of green and sustainable projects in Asia, with an initial focus on Southeast Asia.

Developing Asia requires $1.7 trillion annually in infrastructure investments until 2030 to maintain growth momentum while meeting climate goals. Many green infrastructure projects are only marginally bankable and often are unable to attract commercial financing on their own merits. These gaps are most acute in the project development and construction phases.

As such, ACP, IFC, MAS and Temasek signed a memorandum of understanding to bridge gaps in the region’s sustainable infrastructure financing needs through the deployment of blended finance, bringing in both concessional capital from the philanthropic and public sectors, as well as private capital towards such projects. MAS will convene its networks across Singapore’s international financial center, as well as Singapore’s strong infrastructure and sustainable finance and professional services ecosystem. Temasek will leverage its network of portfolio companies and partners, including Pentagreen Capital, a joint venture with HSBC, for origination and investment opportunities.

In addition, more small- and medium-sized firms (SMEs) are expected to adopt better ESG disclosures in 2024, as����for enhanced awareness and green certification of SMEs within ASEAN and beyond. For example, Malaysia’s��, launched by Capital Markets Malaysia (CMM), seeks to align the sector to global standards and address SMEs’ disclosure challenges. The guide offers clear, straightforward, and structured guidance on the ESG disclosures required of SMEs within their supply chains. CMM also intends to launch specialized sectoral disclosure guidance in early 2024.

Sustainability disclosures take shape in Hong Kong

The Green and Sustainable Finance Cross-Agency Steering Group, established by Hong Kong’s Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority in May 2020, welcomed the International Sustainability Standards Board’s (ISSB) publication of the International Financial Reporting Standards Sustainability Disclosure Standards. “These standards aim at becoming the global baseline for corporate disclosure of climate and sustainability-related information,” the SFC stated.

The Steering Group also welcomed the options built into the ISSB standards that allow jurisdictions to scale and phase-in the requirements. Authorities in Hong Kong will consider alignment of the local requirements with this global baseline in a proportionate approach, the SFC explained. “The ISSB standards aim to serve as a global framework for investor-focused corporate sustainability disclosures,” the SFC noted. “IOSCO’s [International Organization of Securities Commissions’] endorsement signals to its 130-member securities regulators to adopt, apply, or make reference to the standards in addressing sustainability-related risks and opportunities.”

The SFC plans to work with relevant government bureaus, other financial regulators, and the Stock Exchange of Hong Kong��(SEHK) to develop a comprehensive roadmap for the adoption of the ISSB standards in Hong Kong, the SFC stated.

As an initial move in this direction, the SEHK’s proposed disclosure requirements for listed companies referenced the ISSB’s exposure draft for climate-related disclosures and its further deliberations. The final SEHK requirements will take account of the consultation responses and the final ISSB standards.

Looking ahead to Q2 2024 and beyond, the recent advancements in ESG policies across Asia, particularly through the implementation of green taxonomies, blended finance, and enhanced disclosure rules, lay a strong foundation for the continued progress and escalation of sustainability-focused finance activities at both national and regional levels in 2024.

�������� Regulatory Intelligence’s Nathan Lynch in Perth and Rowena Valeria Carpio in Manila contributed to this article.

On one hand, the global stage will confront heightened challenges in securing and managing essential resources, a struggle deeply intertwined with geopolitical rivalries. On the other, there is an equally critical race for dominance in the field of AI, a key driver of future economic and strategic power. Both of these challenges demand effort and investment from companies with little guarantee of long-term payoff, especially as the situations shift on a seemingly weekly basis.

In the second of our three-part blog series, each covering two major challenges that the world will face in 2024, we delve into the ongoing challenges resulting from these competitions as well as some of the ways that businesses and organizations can best adapt.

Challenge #3: The fight for natural resources

It would be naïve to say that at any point in recent history nations have stopped competing for natural resources. The annals of the post-World War II era are replete with the strategic jostling for oil, minerals, and water, which has often dictated international relations and economic policies. However, this competition seems to be heating up as it heads into a new phase, especially as the international economy is starting to splinter back into .

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Part of this is simple supply and demand, of course. Countries that were once primarily based on resource extraction — such as China, India, and Brazil — have developed their own industries and are now becoming resource consumers, putting additional pressure on global resources. Combine this with a rush into the resources required by new green energy infrastructure, which includes a plethora of rare earth metals, and it becomes clear why the fight for .

Not surprisingly, one of the hotspots for this competition is a region with a scarred history of such conflicts: . The nation of ��in particular, one of the largest producers of precious metals, is facing serious challenges from social unrest, labor disputes, power shortages, and corruption. Meanwhile, the continent’s so-called stretching from West to Central Africa, is home to some of the world’s most sought-after minerals that are essential for electric vehicles, batteries, and electronics. As the name implies, political instability is a hallmark of the region, with within just the last couple years, often involving the intercedence of multiple foreign nations.

As the region’s former colonial power, France’s influence in the region has been in as a wave of popular vitrail against the old imperial power has grown. At the same time, Russian influence in the region is also somewhat uncertain. After years of growing prominence in the region as a peacekeeping and economic partner, Russia’s war in Ukraine may be a major turning point as African operations began competing for equipment and bodies with the Eastern European front.

China may be another story as it is also a major actor in Africa’s natural resource landscape, with a large and diverse presence in trade, investment, aid, and diplomacy. The nation opened its first oversea military base in the African nation of Djibouti in 2017 and has military agreements in . Add in the numerous American and western interests in the region, themselves no , and the potential for conflict to erupt somewhere over Africa’s resources in 2024 seems more like a certainty.

Indeed, instability will continue to be a constant companion to the opportunity for growth that Africa holds, yet as the world splinters into political and economic blocs, conditions could align where Africa is once again carved into fiefdoms of foreign nations. This kind of separation could pull apart not just geography, but the intertwining economic connections businesses, organizations, and peoples are currently struggling to build.

And Africa is not alone as a source of tension, as South America is currently experiencing an escalating crisis over the territory of Guyana. In December, Venezuela held a which focused on a potential annexation of a large swath of neighboring Guyana. The disputed region is , especially valuable for a struggling Venezuela oil industry. Guyana, in the world, is seen as the territory’s rightful owner by the and the potential for the crisis to pull in multiple powers exists. The eruption of a war in South America will bring broader levels of instability, especially in the global oil market but could also highlight how a region that has been relatively peaceful in the 21^st century can quickly spiral out of control.

In a very different corner of the world, Indonesia, the world’s fourth most populous country and a major exporter of coal, copper, and rare earth metals, is gearing up for , which could have significant implications for its natural resource sector. The current president has been pursuing a national industrial agenda that aims to ��of the country’s natural resources, especially in those minerals that are vital for green energy production. Such efforts hold the potential to turn the nation from not just a source of valuable natural resources but allow it to inherit the status of a global factory nation, especially as China shifts away from its manufacturing dominance.

All this competition over global natural resources will have significant implications for actors across the spectrum. As the global supply chain becomes more complex and fragmented, the challenges of ensuring its resilience, efficiency, and transparency will also grow, requiring more coordination and cooperation among stakeholders. Acquiring resources will likely only become harder for most industries and require greater attention from leadership as this situation intensifies.

Challenge #4: Artificial Intelligence

AI, as a technology, is unlikely to see such a payoff in 2024 that alone would categorize it as a dominant factor of the year. However, the long-term potential of the technology will force countries and organizations to begin competing for control and access now, because by the time the technology’s potential is realized these footings may be out of reach.

One of the key battlegrounds will be the production and supply of AI chips, which are specialized semiconductors that enable faster and more efficient processing of large amounts of data, an essential material for AI applications. The global AI chip market is expected to grow rapidly in the coming years; however, the market is also highly concentrated and dependent on a few players, mainly those in the United States and Taiwan that have the advanced technology and manufacturing capabilities to produce these chips. China, despite its massive investment and consumption of AI, still lags behind in this area and especially from the US, which has imposed on some of its AI chip makers, citing national security and human rights concerns. This has prompted China to accelerate its efforts to develop its own AI chip industry, through state support, domestic consolidation, and overseas acquisition.

Great attention will be paid to new developments that will begin to show the full potential of technology. and government intervention across the globe will also continue to be a dynamic force, shifting the courses that and take. For example, the has proposed a comprehensive framework for regulating AI applications, which aims to foster trust and innovation in AI, while addressing the ethical and social challenges posed by the technology. On the other hand, the US has adopted a more hands-off approach, relying on existing laws and to oversee AI. China, meanwhile, , investing heavily in its infrastructure, talent, and innovation ecosystem, as well as applying AI to various domains such as health, education, business, and security. China’s AI ambitions, however, have also raised concerns about its governance model, data practices, and geopolitical influence, especially as it seeks to export its AI solutions and standards to other countries.

Data and expertise are two other critical resources for AI development and deployment, and they will also be subject to fierce competition and contention in 2024. Data is the fuel for AI, and the quality, quantity, and diversity of this fuel are crucial for enabling the latest generation of AI models. The type of good data needed is also a scarce and valuable asset, however, and it is often proprietary, sensitive, fragmented, and subject to different rules and standards across jurisdictions. China has already proposed a for generative AI models with other countries likely to follow. Therefore, data collection and sharing will be a contentious issue in 2024, as stakeholders will have to balance the trade-offs between privacy and innovation, security and openness, and sovereignty and cooperation.

Not surprisingly, the demand for AI experts — such as researchers, engineers, and practitioners — will also continue to grow in 2024, as more sectors and domains adopt and integrate AI into their operations and services. However, the supply of AI experts will remain limited and uneven as the sudden rush of utilization outpaces the rate at which new experts can enter the profession.

Generative AI, the white-hot component of the AI tech stack, itself is unlikely to start paying off in 2024 as the world-changer it is said to be. And while the degree of investment into the technology is likely to be a defining feature of the year, Gen AI’s true potential will also be one of the largest question marks for the remainder of the decade.

For corporate leaders, these two challenges of competition over natural resources and AI, means that information and investing in proper due diligence will be keys to success. Leaders need to better understand their organizations’ supply chains, local regulations, and the goals of local and national governments. Without a doubt, getting a full view of the playing field is increasingly important, and those who fail to accurately assess the conditions will be those who fall behind in an increasingly complex world.

Our colleagues at Reuters are covering these and other crucial stories every day, and you can keep up with the best international reporting from around the world at .

To that end, in a new three-part blog series, each covering two of these major challenges, we will offer business professionals and governments the insight to better navigate what 2024 may have in store.

Challenge 1: Democracy under attack

Democracy, the system of government that allows people to choose their leaders and hold them accountable, . While this has been a years-long development, 2024 will be a particularly straining year, as more than 50 countries and regional bodies are experiencing major elections in the upcoming year, with four in particular that could have significant global impacts.

One of the most watched and consequential elections will be the presidential race in the United States, where incumbent Joe Biden will seek a second term against a (highly likely) challenge from former president Donald Trump, who has refused to concede his defeat in 2020. It will be a decisive moment for the future of American democracy, which has been eroded by partisan polarization, misinformation, voter suppression, and attacks on the integrity of the electoral system.

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Another key election will be in India, the world’s largest democracy, where Prime Minister Narendra Modi will seek a third term in office. Modi, who leads the Hindu nationalist Bharatiya Janata Party, has been accused of undermining India’s secular and pluralistic traditions, cracking down on dissent, and enacting controversial laws that discriminate against Muslims and other minorities. An effort by the government to — in a democracy already struggling with diversity — has only generated further concerns. Modi’s popularity, however, remains high among his supporters, who credit him with delivering economic growth, fighting corruption, and standing up to China and Pakistan. The 2024 Indian election will determine whether Modi can consolidate his power and agenda, or whether the opposition parties can mount an effective challenge and offer an alternative vision for the country.

The impact of these elections on geopolitics, global business, and society will be enormous, potentially shaping the policies and priorities of some of the world’s largest and most influential economies.

Other elections will also have important ramifications for the region and the world, as they will reflect the state of democracy and governance in their respective countries, as well as their relations with other powers. For instance, Taiwan will continue to be a flashpoint for US-China relations, as the island which China sees as its sovereign territory prepares for a democratic election in mid-January. Outgoing president Tsai Ing-wen’s Democratic Progressive Party seeks to defend her pro-independence stance and resist pressure from Beijing and the opposition party, the Kuomintang, in an election where is expected.

The election in Indonesia, the world’s largest Muslim-majority country and a rising economic power, will be a test of its democratic resilience and its role in Southeast Asia. The outgoing President Joko Widodo, who has served as the nation’s president since 2014, will be stepping aside as he reaches his term limit. His legacy of his Defense Minister Prabowo Subianto, whose vice-presidential running mate is Gibran Rakabuming Raka, the eldest son of President Widodo. Indonesia, for all of its growing power is a very young and thus relatively untested democracy, and it will have an important decision to make for Joko Widodo’s successor in an election already on all sides.

The impact of these elections on geopolitics, global business, and society will be enormous, potentially shaping the policies and priorities of some of the world’s largest and most influential economies. Alliances, trade agreements, and joint ventures are all dependent on the outcomes of these elections and what they say collectively about a prominent style of government.

Given the significance of these elections, it is crucial for business leaders to monitor and understand the political dynamics in these countries, as well as how they will affect the regional and global landscape. A proactive and informed approach to engaging with these democracies will not only help businesses mitigate the risks and uncertainties, but also allow them to seize the opportunities that these events offer.

Challenge 2: A fracturing global economy

Four years after the outbreak of the global pandemic, the international economy remains fragile and uncertain. The pandemic exposed and exacerbated the structural weaknesses and vulnerabilities of an interconnected global economy, one which is beginning to splinter into rival blocs. While potentially in only its early stages, the off shoring, re-shoring, and all-around realignment of global trade between these blocs is going to have a major impact on the world. Supply chains will be reshaped, relationships between companies will have to adapt, and new competitions will undoubtably emerge.

A core challenge facing the global economy going into 2024 continues to be, of course, inflation. In 2024, the inflation rate likely will fluctuate across countries and regions, depending on their economic conditions, policy responses, and external shocks. According to the , the global inflation rate is projected to be 5.8% in 2024, with core inflation not expected to return to target levels of around 2% until 2025. However, this global average masks significant differences among countries and regions. For instance, advanced economies are expected to see inflation of less than 3.0% in 2024, after averaging 4.6% in 2023. (Note: The 2023 figures are IMF projections for the full year given three quarters of data. Final growth figures for 2023 may deviate slightly from these projections.)

In light of this, the United States across the globe, but that is counterbalanced by and an especially sickly .

The inflation dynamic in 2024 will have important implications for the global economy, as it will affect exchange rates, interest rates, asset prices, income distribution, and the debt sustainability of many countries and regions.

Emerging market and developing economies, however, are expected to see 7.8% inflation on-top of the 8.5% inflation they saw in 2023, a significant struggle for nations that were already harder hit by the pandemic. Indeed, some countries such as Argentina, Turkey, and Egypt experiencing inflation at double- and even triple-digit rates.

The inflation dynamic in 2024 will have important implications for the global economy, as it will affect exchange rates, interest rates, asset prices, income distribution, and the debt sustainability of many countries and regions. It will also pose challenges and opportunities for businesses and professionals, which will have to adapt to the changing price levels and expectations while managing the associated risks and uncertainties.

Add to this worrisome economic picture the , the world’s second-largest economy and the largest trading partner of many countries and regions. China has been the main engine of global growth for the past four decades; however, its growth model — which relies heavily on investment, exports, and debt — may have reached its limits. Now, the country is facing multiple headwinds, such as an aging population, high unemployment among younger workers, declining productivity, and environmental and real estate crises. China’s slowdown will have a cascading effecting into foreign policy and other key interest areas, the full extent of which will depend on the responses of its government to the challenge.

Meanwhile, the world’s largest economy, the United States, seems to be better off, with greater optimism among its business leaders, even if the general public remains somewhat pessimistic. With slowing inflation and a historically strong labor market helping to lift real income, the nation’s economic fundamentals appear steadier than at any time since before the pandemic. Still, the US must dodge still-latent and crises, or any other major recession trigger. Yet even then the country may still slip into an economic malaise simply because consumers have convinced themselves of its inevitability. If it remains resilient, however, a strong US economy could send positive ripples across the business and political world.

Conclusion

In 2024, democracy will be under stress, as authoritarian leanings will seek to make a mark in upcoming elections and populist movements challenge the established institutions. At the same time, the global economy is likely to face multiple challenges and uncertainties, as well as some opportunities for recovery and resilience.

While these are major challenges — and only two of the six largest factors we’ll be covering in this series — we have to acknowledge that unforeseen occurrences can rapidly shift the state of the world, and are in fact, becoming alarmingly common. An assassin’s bullet, a heart attack, a natural climate disaster, a war, or even another pandemic, can impact the world in ways that cannot be predicted.

As such, organization leaders need to maintain the flexibility they were forced to develop during the pandemic as part of a plan of strategic preparation to face whatever 2024 has in store.

You can read the second part of this series, focusing on the global competition for natural resources and artificial intelligence, here.

Our colleagues at Reuters are covering these and other crucial stories every day, and you can keep up with the best international reporting from around the world at .

ESG has become a highly polarizing, politicized term — seized upon by politicians who paint such policies as a threat to the voters and companies they represent — and the resulting backlash has been most visible in the United States, where anti-woke rhetoric and policies from far-right Republican states have all but made the ESG label a bit too hot for many companies to handle, at least overtly.

While the political rhetoric has been less heated in Europe, there has been some backsliding on the policy front. The United Kingdom, for example, watered down many of its previous commitments to Net Zero, delayed energy efficiency requirements for residential properties, and failed to introduce a ban on fossil fuel vehicles. Many ESG advocates saw these actions as echoing the populist rhetoric of some anti-woke US politicians.

Separately, the European Commission has delayed the introduction of sector-specific reporting under its Corporate Sustainable Reporting Directive (CSRD) after its president said she intended to slash European Union reporting requirements by 25%.

In this frothy mix, the Thomson Reuters Institute has published ESG: Navigating past the noise, a new white paper — authored by the �������� Regulatory Intelligence group — that looks at the current state of play of ESG activity and initiatives across the globe.

Of course, the irony of the politicization of ESG issues is that it comes against the backdrop of catastrophic weather events across the world. The first half of 2023 witnessed massive wildfires, flooding, and temperatures rising to levels never seen before across many regions. More importantly, all of this comes ahead of COP28, the annual United Nations climate change conference, that began last week and lasts until December 12.

Progress continues despite politics

Of course, there is some good news in the ESG realm as well. Beyond the inflammatory headlines and reported demise of ESG, progress continues to be made by investors, companies, and governments on a number of fronts as the paper details.

For example, investors have shown a considerable appetite for sustainable projects, and one of the biggest drivers of that has been the recently US passage of Inflation Reduction Act (IRA), which is funneling billions of dollars into new clean energy and manufacturing investments.

Also, government regulations related to the environment and other social issues are moving ahead across the world. In the Asia-Pacific region, for example, some governmental financial authorities have put forward numerous new proposals, such as increased carbon disclosure, green taxonomies, and transition planning. In the European Union, despite some changes that will impact the CSRD, there has been no delay to when EU and non-EU based companies must begin complying with its reporting requirements, which still remains January 1, 2025, for most large EU corporations and January 1, 2028, for non-EU-based firms.

In the US, while the Securities and Exchange Commission drags its feet on a final climate disclosure rule for publicly traded firms, the state of California has charged ahead with its own disclosure requirements, affecting thousands of companies operating within the state.

Because of all this, as the paper makes clear, corporations’ need to meet growing regulatory obligations around environmental disclosure and other related social and governance issues means that siloed nature of ESG functions within many corporate structures is breaking down. This necessitates a greater urgency to integrate climate and social reporting processes that are more closely tied into traditional corporate functions such as operations, legal, and finance. This represents a transformation that those organizations with a longer-term view see as essential — the need to embed sustainability processes across their organizations, the paper describes.

While this paper outlines the latest regulatory developments and hurdles that companies face as they seek to navigate through the noise of divisive politics around ESG, it also shows that many companies are rising to the challenge by recognizing their fiduciary duties to shareholders, employees, and other stakeholders. And although the term ESG may have become toxic in some circles, the underlying problems that ESG initiatives seek to address still remain and those organizations that hold a view towards long-term viability and competitiveness understand the vital importance of the issues at hand, whatever the label.

You can download a copy of the new Thomson Reuters Institute white paper, “ESG: Navigating past the noise”, by filling out the form below: