Around 130 of our largest listed companies have now filed a sustainability statement built on a global accounting standard rather than a house format of their own.
Talk to the people who prepared them and you hear the same thing.
It took longer than anyone budgeted for, and the hard part was not the writing. It was finding the numbers.
When ESG first entered ordinary business conversation here, it was something for the big listed companies and the fund managers.
Everyone else filed it under corporate social responsibility (CSR). Community giving, a tree-planting day, two pages of good causes near the back of the annual report.
None of that was wasted, and I do not think we should be sniffy about it now. It was answering a question nobody is asking anymore.
From voluntary effort to stated expectation
Bursa Malaysia’s 2015 requirement for a sustainability statement did more than it usually gets credit for.
It moved the subject out of the communications department and into the part of the business that gets audited.
Companies now have to explain who governs sustainability matters, how material issues were identified and how climate risk touches the business.
Quality is still all over the place. The direction is not.
The finance side moved in parallel, and in some ways moved faster.
The Securities Commission’s Sustainable and Responsible Investment (SRI) Sukuk Framework in 2014 and its SRI Roadmap in 2019 put our Islamic finance strengths to work, one of the few places where Malaysia was early rather than catching up.
Bank Negara’s Climate Change and Principle-based Taxonomy followed in 2021 and gave banks a common language for what they were lending to.
ESG stops being an abstraction the moment it affects the cost of money.
Policy caught up too. The National Energy Transition Roadmap and the New Industrial Master Plan 2030 put decarbonisation inside the economic agenda instead of next to it, and the Thirteenth Malaysia Plan carries that on.
A different standard of corporate responsibility
The National Sustainability Reporting Framework, launched in September 2024, is the clearest measure of how far expectations have shifted.
It takes IFRS S1 and S2 as issued, with no local softening, and phases them in: the largest Main Market issuers from financial year 2025, the rest of the Main Market from 2026, the ACE Market and large non-listed companies from 2027.
Assurance comes after that, starting with Scope 1 and 2.
The part that catches companies out
is not the standards. It is financial materiality.
A company that built its assessment around a broad stakeholder survey, which is what most did under Global Reporting Initiative, has to redo that work through an investor’s eyes, and the answer often comes back different.
Carbon figures have to come off meter readings and fuel invoices rather than estimates assembled in the fortnight before printing.
This changes who owns the subject.
Sustainability used to sit with a small CSR team and a good writer.
It now needs finance to close the data, operations to produce it, procurement to chase it down the chain, and internal audit to test whether any of it holds.
The companies making real progress have stopped treating the report as the thing they are producing.
A mid-sized exporter recently saw European orders worth millions drop without explanation.
Management assumed it was price or quality – until a buyer confirmed they had shifted to a vendor meeting strict ESG requirements.
The founder’s reaction was blunt: “I thought we were losing on cost, not carbon data. We didn’t realise it was a condition to stay in the supply chain.”
The price signal arrives
Disclosure was always the easier half.
Budget 2026 committed us to a carbon tax on iron, steel and energy. The National Carbon Market Policy went through Cabinet in April, and the Climate Change Bill will bring the monitoring and verification system any credible carbon price has to stand on.
The tax has been held back while the government weighs timing against energy costs and an unsettled region. I understand the caution. I would not read it as a reprieve, and I would not advise any board to.
And the pressure is not only ours to schedule.
The European Union’s Carbon Border Adjustment Mechanism entered its definitive phase in January, so exporters of covered goods now face a cost at the border rather than a reporting form.
The Deforestation Regulation sits behind it, with traceability running into palm oil, rubber and timber, and eventually down to the smallholders.
Companies that spent two years building emissions data systems are finding the investment pays for itself. The ones that treated it as paperwork are learning what a weak baseline costs when somebody else sets the price.
Invest in SMEs’ capabilities
Our progress cannot be judged by the annual reports of our biggest issuers.
Small and medium enterprises (SMEs) are most of our businesses and most of our employment, and they sit inside the supply chains of the exporters now facing everything above.
When a large customer commits to cutting emissions, most of the reduction has to happen among its suppliers.
This is where the strain shows.
A supplier may get six questionnaires asking for the same information in six formats, none of which talk to each other, or be asked for emissions data without ever having built a baseline.
The obstacle is rarely unwillingness. I have yet to meet an SME owner who objects to the idea. What they do not have is time, capability and money.
We have produced some genuinely useful tools.
The Simplified ESG Disclosure Guide, SME Corp’s guide for micro and SMEs, the i-ESG framework, grants too few companies claim.
But guides do not finish the job. Large buyers must invest capability into their suppliers rather than forwarding the requirement down the chain with a deadline attached.
What I hope for
I would like implementation to matter more than presentation, which sounds obvious until you read a few dozen reports in a row.
Data quality has to come first. Too many are still running on spreadsheets, estimates and numbers held privately inside one department.
Better reporting starts with clear ownership, fixed boundaries, documented methods and controls an outsider could follow.
Boards have to treat this as business. Climate risk turns up in insurance premiums, energy contracts and plant downtime, labour practice affects market access, and governance failures destroy value faster than anything else on that list.
The next challenge is building real capability. Malaysia does not simply need more sustainability reports; it needs people who understand both business operations and sustainability.
Directors, finance teams, procurement professionals and SMEs all require practical skills to turn reporting frameworks into better commercial decisions.
Knowing IFRS S2 is one thing. Knowing how a plantation keeps its records, or what a family-owned supplier can absorb in a quarter, is another. The second is harder to teach.
The transition also has to be inclusive
or it loses credibility. A first-time SME should not be held to the standard of a multinational. It should be able to set an honest baseline and improve on it each year.
I will admit to some discomfort. There is a real risk that we build a reporting industry rather than a low-carbon economy, and that the companies best at disclosure become the ones we mistake for the companies doing best.
I do not know how to guard against that except by asking harder questions about outcomes than we ask about outputs.
Malaysia has assembled the architecture. Rules, standards, taxonomies,
roadmaps, guidance for smaller firms. What we do with it is the part that gets judged.
The next decade will not judge Malaysia by the number of sustainability reports we publish. It will judge us by whether those frameworks changed how our businesses invest, compete and grow sustainably.
