SC sets up inter-agency committee to support ISSB standards implementation

KUALA LUMPUR: The Securities Commission Malaysia (SC) has set up a national-level Advisory Committee on Sustainability Reporting (ACSR).

In a statement today, the SC said the ACSR, with endorsement from the Ministry of Finance, is established to support the implementation of the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards (ISSB Standards) in Malaysia.

The ISSB Standards are expected to be issued by the International Sustainability Standards Board (ISSB) at the end of June this year.

SC chairman Datuk Seri Dr Awang Adek Hussin said the setting up of ACSR is timely as businesses and investors face real sustainability risks.

He cited risks such as financial losses, from disruption to operations and supply chain due to extreme weather conditions, and also opportunities like decarbonise and the transition to clean energy.

"Reliable and comparable sustainability-related information across markets is therefore crucial to support the design of strategies, action plans and capital allocation decisions,” he said.

The ACSR will look into the enablers that would support the implementation of the ISSB Standards in Malaysia, this includes the approach and timeline for implementation, taking into careful consideration market readiness to meet the reporting requirements, said the statement.

In order to address the reliability of the information and mitigate concerns about greenwashing, the ACSR will also discuss matters related to the assurance of sustainability statements.

"We need to mitigate the risks of imposing unnecessary reporting burden and adding to the cost of doing business.

"Therefore, consultation and engagement with the relevant stakeholders will be important in shaping the future direction of sustainability reporting in Malaysia,” Awang Adek said.

Currently, listed issuers on Bursa Malaysia have had a head start on sustainability reporting with such disclosures required since 2015.

Bursa Malaysia enhanced its sustainability reporting requirements at the end of last year to better align with global reporting expectations, including recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).

The enhanced requirements are built on the TCFD core pillars adopted by the ISSB in developing the ISSB Standards.

These are governance, strategy, risk management, as well as key metrics and targets.

This similarity between Bursa Malaysia’s sustainability reporting requirements and the ISSB Standards provides good grounds for listed issuers on the exchange to move towards more advanced reporting requirements.

The ACSR, chaired by the SC, comprises representatives from Bank Negara Malaysia, Bursa Malaysia, the Companies Commission of Malaysia, the Audit Oversight Board and the Financial Reporting Foundation. - Bernama