Bursa Malaysia’s Updates on Sustainability Reporting Framework for Listed Companies
At Elite Asia’s “Navigating Excellence: A Blueprint for Leaders” seminar, held on 26 September 2024 in Kuala Lumpur, Dr Arvin Kaur, Senior Manager of Corporate Governance & Sustainability at Bursa Malaysia, presented the latest developments in Malaysia’s sustainability reporting framework.
As sustainability gains worldwide momentum, businesses must increasingly align with Environmental, Social, and Governance (ESG) practices. In Malaysia, ESG now plays a critical role in corporate strategy, driven by both regulatory demands and stakeholder expectations. Since 2015, Malaysian Public Listed Companies (PLCs) have been required to submit mandatory ESG reports.
Dr Arvin’s presentation explored how companies can stay competitive by embracing enhanced ESG disclosure standards. She provides insight into Bursa Malaysia’s updated Sustainability Reporting Guide and its role in promoting transparency across the market.
The Latest Development in Sustainability Reporting in Malaysia
Dr Arvin introduced Bursa Malaysia’s latest Sustainability Reporting Guide, which emphasises mandatory ESG disclosures for Public Listed Companies (PLCs). These disclosures must align with global standards, including the Global Reporting Initiative (GRI), the Task Force on Climate-related Financial Disclosures (TCFD), and the European Sustainability Reporting Standards (ESRS). The updated framework ensures that companies provide clear, comparable ESG information, enhancing investor confidence in Malaysian businesses.
The revised Sustainability Reporting Guide, updated in line with the Twelfth Malaysia Plan (2021-2025), integrates ESG into the national development agenda. The plan promotes economic resilience, security, and sustainability, signalling a shift in both corporate and governmental priorities.
As Dr Arvin emphasised during her presentation at Elite Asia’s ESG seminar, ESG is not merely a regulatory exercise but a means of reinforcing long-term business resilience. Companies ignoring this trend may find themselves at odds with investors and regulators who increasingly view ESG risks as financial risks.
The new reporting framework requires Malaysian PLCs to conduct thorough materiality assessments, engaging both internal and external stakeholders to identify the most relevant ESG issues. This step improves transparency, aligns sustainability goals with business operations, and fosters greater comparability between companies, benefiting the entire market.
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Malaysia’s Evolving ESG Framework
Since 2015, Bursa Malaysia has required PLCs to include a Sustainability Statement in their annual reports. This marked a formal step toward integrating ESG into corporate governance. The regulation has been further strengthened by the 2021 revision of the Malaysian Code on Corporate Governance (MCCG), which mandates that boards and senior management take responsibility for managing ESG risks and opportunities.
Malaysia’s ESG framework ensures that companies align their sustainability practices with global best practices. The framework focuses on:
- Environmental: Carbon emissions, energy efficiency, and waste management.
- Social: Labour practices, diversity and inclusion, and community engagement.
- Governance: Board diversity, risk management, and executive compensation.
The latest developments in Malaysia’s ESG framework reflect the growing expectations of stakeholders and the global shift towards sustainable business practices.
These updates, aligned with the Sustainability Reporting Guide and international frameworks like the Global Reporting Initiative (GRI), are part of Malaysia’s broader effort to elevate sustainability reporting standards. The framework positions companies to align their disclosures with global best practices, enhancing both transparency and accountability. Dr Arvin’s presentation stressed that while ESG reporting has been mandatory for PLCs, the goal is not merely compliance. Companies must view ESG as a critical component of their strategy, shaping long-term competitiveness and corporate value.
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A Business Guide to ESG Regulations in Malaysia – What Companies Need to Know
Understanding JC3 in Climate Resilience
In 2019, Malaysia took a significant step towards embedding climate resilience into its financial system with the establishment of the Joint Committee on Climate Change (JC3). This collaboration between the Securities Commission Malaysia and Bank Negara Malaysia aims to integrate climate-related risks into the financial sector, offering direct implications for PLCs. Dr Arvin noted that companies must increasingly demonstrate their ability to withstand climate risks, an area that has become central to corporate governance. Climate change is no longer just an environmental issue—it poses profound economic challenges that can undermine business stability.
The framework for climate-related disclosures, supported by the Task Force on Climate-related Financial Disclosures (TCFD), pushes Malaysian businesses to provide detailed insights into how climate risks affect their operations. This includes identifying opportunities for innovation, such as in renewable energy adoption and energy efficiency, which are integral parts of the ESG strategy.
The National Sustainability Reporting Framework (NSRF)
In May 2023, Malaysia introduced the National Sustainability Reporting Framework (NSRF) through the establishment of the Advisory Committee on Sustainability Reporting (ACSR). The goal of the NSRF is to elevate ESG reporting across all sectors by gradually adopting the International Sustainability Standards Board (ISSB) standards. The phased adoption begins with large listed issuers in 2025, allowing time for smaller companies to adjust. This ensures that Malaysia’s corporate sector aligns with global norms while addressing national priorities.
The ACSR’s Policy, Assumptions, Calculators, and Education (PACE) initiative is designed to provide companies with the necessary resources to meet compliance requirements. As Dr Arvin explained, the framework aims not only to enforce standards but to guide companies towards making sustainability a core part of their operations. By improving the quality and comparability of sustainability disclosures, Malaysia ensures that its businesses remain competitive in a rapidly evolving global economy.
The Bursa Malaysia ESG Reporting Platform
One of the cornerstones of the ESG journey for PLCs is Bursa Malaysia’s ESG Reporting Platform, accessible through the Bursa LINK system. This platform provides a structured environment for submitting sustainability disclosures while ensuring strict data integrity. PLCs are required to input accurate information on board composition, fiscal year-end, and performance metrics. Once submitted, the data cannot be altered, ensuring that companies maintain a rigorous approach to reporting.
The ESG Reporting Platform generates a Performance Data Table, which must be incorporated into the company’s Sustainability Statement. This approach to data integrity is a key feature of Malaysia’s ESG framework, addressing growing demands for transparency from investors and regulators. Any inaccuracies in reporting would not only damage a company’s reputation but also undermine the credibility of its ESG efforts.
Expanding Resources for ESG Reporting
Recognising that companies need continuous support, Bursa Malaysia has expanded its range of resources for PLCs. The Sustainability Reporting Guide and Toolkits (3rd Edition) offer step-by-step guidance on meeting disclosure requirements, while the Illustrative Sustainability Reporting Guide provides examples of best practices. These resources are available on the Bursa Sustain platform, an online hub where businesses can access explainer videos, toolkits, and further guidance.
These tools are essential in helping companies navigate Malaysia’s evolving ESG framework, especially for smaller businesses that may lack the internal capacity for extensive ESG reporting. By providing practical resources, Bursa Malaysia ensures that even the least experienced companies can confidently align their operations with both national and international standards.
A Phased Approach to Sustainability Leadership
Malaysia’s decision to adopt ISSB standards through a phased approach allows businesses the necessary time to adjust without overwhelming them. Large PLCs will lead the way in 2025, followed by smaller companies, ensuring that the market adapts gradually while raising the overall quality of ESG disclosures. The ACSR’s PACE initiative offers capacity-building programmes that focus on the strategic importance of ESG in business. This initiative will play a critical role in helping businesses transition smoothly with ESG practices.
As ESG becomes a defining feature of corporate governance worldwide, Malaysia’s phased adoption of ISSB standards positions the country’s companies at the forefront of sustainability leadership in the region. This move also aligns with broader ASEAN trends, where ESG risks are being increasingly recognised as material to financial stability.
A Better Future in Malaysia Shaped by ESG
The evolution of ESG reporting in Malaysia reflects the global recognition that sustainability is now a core business imperative. The enhanced Sustainability Reporting Guide by Bursa Malaysia, alongside the phased adoption of ISSB standards, ensures that the country’s listed companies are well-prepared to thrive in a world that prioritises transparency, responsibility, and long-term value creation.
For Malaysian PLCs, the stakes are high. While the enhanced sustainability reporting framework is a powerful tool for driving corporate ESG practices, navigating these standards can be intricate. Companies need to ensure their disclosures are not only compliant but also aligned with international benchmarks. Elite Asia offers comprehensive ESG report services to support public-listed companies in Malaysia in preparing their sustainability report. From conducting materiality assessments to guiding companies through the complex reporting process, Elite Asia provides the expertise needed to align with the Malaysia ESG Framework and the latest regulatory standards. We want companies to stay competitive in an increasingly sustainability-driven world.
