— AZHAR MAHFOF/The Star
MALAYSIA is at an inflection point.
Multiple policy frameworks have been in place charting the path to high-income status; yet, gaps in labour rights, governance accountability and environmental safeguards risk undermining sustainable growth.
Malaysia’s first National Action Plan on Business and Human Rights (2025-2030) (NAPBHR), launched on Aug 12, 2025, offers a rights-based architecture for the government, businesses and communities to reduce these disparities.
Emphasising the United Nations Guiding Principles on Business and Human Rights (UNGPs) – the state duty to protect, corporate responsibility to respect, and access to remedy – the NAPBHR could be Malaysia’s bridge from government to boardrooms to communities, protecting workers, enhancing accountability, and strengthening supply chain resilience while reinforcing competitiveness and investor confidence within one agenda.
It supports the 13th Malaysia Plan (13MP) objectives for inclusive growth and sustainability.
Now, the focus is on how the NAPBHR will deliver them.
Why alignment matters
Its launch was an important milestone, aligned with international best practices.
The UNGPs – unanimously endorsed by the UN Human Rights Council, on which Malaysia serves – bolster the NAPBHR’s legitimacy.
While not legally binding, the UNGPs exert influence through markets and regulation.
The Taskforce on Nature-related Financial Disclosures, National Sustainability Reporting Framework (NSRF) and Bursa Malaysia’s Sustainability Reporting Guide, for example, align with global standards such as the Global Reporting Initiative and the ISSB/IFRS Sustainability Standards.
Non-compliance risks legal exposure under the Companies Act 2016 and potential trade barriers.
Investors now expect UNGP-aligned due diligence and transparent reporting.
Against this backdrop, the NAPBHR must show implementation teeth.
Business and human rights (BHR) considerations need to dovetail with national priorities.
Strong BHR practices are also positively correlated with competitiveness.
In 2025, Malaysia ranked 23rd of 69 economies in the IMD World Competitiveness Ranking – our best since 2020.
Enhancements in “government efficiency” and “business efficiency” were major contributors to this progress.
This comes after the NSRF required large, listed companies to comply with ISSB S1 and S2, bringing sustainability issues into the heart of financial disclosures.
Human rights are not just about compliance. Fair recruitment and safe working conditions boost employee engagement and retention, enabling businesses to gain a competitive edge.
Organisations that get this right become more resilient.
Similarly, societies benefit as workplace standards buttress national development and enhance the protection of rights.
The NAPBHR combines BHR and environmental, social and governance (ESG) principles to promote responsible business practices.
BHR emphasises human rights and remedies, while ESG focuses on compliance and managing risks.
Together, they help businesses address sustainability challenges, embed safeguards, and meet local and global responsibilities. At its core, the NAPBHR is about three priorities: governance, labour and environment.
Governance
The NAPBHR sets out legal and institutional reforms to strengthen governance.
For the government, this means modernising legislation.
This includes reviewing laws related to labour, social protection, climate, environment and digital safety, and integrating human rights into financial institutions via human rights and environmental due diligence (HREDD), enhancing anti-corruption measures, and promoting diversity, equity and inclusion policies.
Businesses should conduct regular HREDD assessments across their own operations and supply chain to ensure that there is no cause, contribution, or link to adverse impacts on human rights.
They can support under-resourced companies and small and medium enterprises in their supply chain with training and funding to ensure compliance with international human rights standards and good governance practices.
Boards must exercise oversight, while investors should incorporate human rights risks into decisions, encouraging HREDD before financing, and as part of monitoring procedures.
Strengthening grievance mechanisms and managing litigation risks are also vital. Clear, practical, and proportionate rules facilitate compliance and provide mutual benefits for policymakers, businesses, and society – aligning with the 13MP.
Robust enforcement measures and corporate liability mechanisms are crucial to ensure that the NAPBHR is not mere soft law but a catalyst for substantive change.
Labour
This priority addresses forced and child labour, social protection and freedom of association. It sets out stronger protections for all workers including migrants, scales capacity-building and awareness, aligns with the International Labour Organisation conventions, and promotes HREDD and human rights-based risk assessment practices.
Integrating HREDD may raise near-term costs, but the bigger risk is inaction, causing supply chain disruptions, reputational damage, and loss of market access.
Over time, stronger labour practices improve efficiencies and brand trust, ensure workforce stability, and reduce trade risk. A practical, phased plan over two to three years involves assessing current wage practices, building capacity, embedding HREDD into governance, and then scaling. The NAPBHR also promotes the implementation of the minimum wage and encourages progress towards living wages, echoing the 2024 Progressive Wage Policy for a gradual shift from minimum to living wages.
Environment
This priority sheds light on the link between environmental health and human rights, building on the National Energy Transition Roadmap and NSRF for a just transition. The NAPBHR proposes reforms for transparency in net-zero efforts, anti-greenwashing laws, climate change and environmental justice laws, and a standardised process for free, prior, and informed consent for indigenous communities.
Embedding human rights and social considerations into net-zero plans is crucial to ensure just transitions, reduce risks, and avoid costly disruptions – turning compliance into a competitive advantage amid stricter environmental and social scrutiny.
Effective implementation, guided by strong governance, creates cleaner environments and green jobs, supported by social safety nets, stakeholder engagement, upskilling, and partnerships in renewable energy and climate-resilient sectors – aligned with Malaysia’s climate commitments and a just transition towards a green economy.
Conclusion
The NAPBHR is Malaysia’s bridge between growth and rights.
Budget 2026 is one near-term lever among several to move us from principles to practice.
Strategic allocations could reduce compliance costs, helping businesses manage risks, improve sustainability and human rights practices, and strengthen Malaysia’s resilience.
They could also reassure investors of our commitment to a stable, rights-based, and competitive growth market – positioning us as a regional leader in responsible business.
Measures could include capacity building, offering tax incentives linked to human rights, workplace, and environmental standards, such as tax credits for companies adopting fair labour practices and deductions for businesses implementing strong environmental management systems.
With collective and coordinated action by government, business, and civil society – and pragmatic budget signals where appropriate – the NAPBHR can move from policy to practice, embedding “protect, respect, remedy” across the economy and demonstrating that rights and growth are, in fact, mutually reinforcing.
Malar Odayappan is sustainability and climate change director, just transition lead, PwC Malaysia and Ruth Garnet Maran is sustainability and climate change manager, PwC Malaysia. The views expressed are the writers’ own.
