Understanding Malaysia’s ESG and Sustainability Reporting Framework
Malaysia has established one of the more structured sustainability-reporting frameworks in Southeast Asia. The country’s National Sustainability Reporting Framework (NSRF) provides a common baseline based on the International Sustainability Standards Board’s IFRS S1 and IFRS S2.
The framework is being introduced through a phased approach covering listed companies and large non-listed companies. Bursa Malaysia has incorporated the sustainability-reporting requirements into its Main Market and ACE Market Listing Requirements.
As of October 2026, Malaysia is also refining its assurance framework. Mandatory reasonable assurance for Scope 1 and Scope 2 greenhouse-gas emissions for Group 1 entities has been deferred to 2028, with Group 2 and Group 3 following in 2029 and 2030 respectively.
Q1. What is ESG reporting in Malaysia?
ESG reporting in Malaysia refers to the disclosure of information relating to a company’s sustainability-related risks, opportunities, governance, strategy, environmental performance, social matters and relevant metrics.
Malaysia’s current framework increasingly focuses on sustainability-related financial information using the ISSB standards as its baseline.
Q2. Is ESG reporting mandatory in Malaysia?
Yes, for specified entities.
Malaysia does not impose one identical ESG-reporting requirement on every company. Instead, mandatory sustainability reporting is being introduced through the NSRF and Bursa Malaysia Listing Requirements, with different implementation dates for different groups of companies.
Q3. What is the National Sustainability Reporting Framework?
The National Sustainability Reporting Framework (NSRF) is Malaysia’s framework for sustainability-related financial disclosures.
It uses IFRS S1 and IFRS S2 issued by the International Sustainability Standards Board as the baseline sustainability disclosure standards for applicable Malaysian companies.
Q4. When was Malaysia’s NSRF introduced?
The NSRF was launched on 24 September 2024 by the Advisory Committee on Sustainability Reporting (ACSR).
It was developed through an inter-agency process involving Malaysia’s key capital-market, financial and accounting institutions.
Q5. Which organizations developed the NSRF?
The NSRF was developed by the Advisory Committee on Sustainability Reporting (ACSR).
The committee includes representatives from:
- Securities Commission Malaysia
- Audit Oversight Board
- Bank Negara Malaysia
- Companies Commission of Malaysia
- Bursa Malaysia
- Financial Reporting Foundation
Q6. Which ESG standards does Malaysia use?
Malaysia uses IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 – Climate-related Disclosures as the baseline standards under the NSRF.
Q7. What is IFRS S1?
IFRS S1 establishes general requirements for disclosure of sustainability-related financial information.
It focuses on sustainability-related risks and opportunities that could reasonably be expected to affect a company’s prospects, cash flows, access to finance or cost of capital.
Q8. What is IFRS S2?
IFRS S2 specifically addresses climate-related risks and opportunities.
It covers areas such as:
- Climate governance
- Climate strategy
- Climate risk management
- Climate metrics
- Climate targets
- Greenhouse-gas emissions
Q9. What is the role of Bursa Malaysia?
Bursa Malaysia is Malaysia’s stock exchange and plays a major role in implementing sustainability-reporting requirements for listed issuers.
In December 2024, Bursa Malaysia enhanced its Main Market and ACE Market Listing Requirements to align sustainability reporting with the NSRF and IFRS Sustainability Disclosure Standards.
Q10. Which companies are covered by Malaysia’s mandatory ESG reporting framework?
The NSRF implementation covers:
- Large Main Market-listed issuers
- Other Main Market-listed issuers
- ACE Market-listed issuers
- Large non-listed companies meeting the applicable revenue threshold
Large non-listed companies are defined within the framework based on annual revenue of RM2 billion or more.
Q11. What is Group 1 under the NSRF?
Group 1 consists principally of Main Market-listed issuers with market capitalisation of RM2 billion or more based on the applicable criteria.
These companies were the first major group to begin reporting under the new ISSB-aligned framework.
Q12. When did Group 1 companies begin reporting?
Group 1 companies began applying the sustainability disclosure requirements for annual reporting periods beginning on or after 1 January 2025.
The initial approach provides transition relief and emphasizes climate-related reporting.
Q13. What is Group 2?
Group 2 covers the remaining Main Market-listed issuers that are not within Group 1.
Their mandatory implementation began for annual reporting periods beginning on or after 1 January 2026.
Q14. What is Group 3?
Group 3 includes:
- ACE Market-listed issuers
- Large non-listed companies meeting the applicable RM2 billion annual-revenue threshold
Group 3 reporting begins for annual reporting periods starting on or after 1 January 2027.
Q15. Is ESG reporting mandatory for all Malaysian private companies?
No.
Private companies that fall outside the applicable NSRF categories are not automatically subject to the same mandatory reporting requirements.
However, they may voluntarily adopt the framework or face ESG information requests from customers, investors, banks and multinational supply chains.
Q16. Can smaller Malaysian companies voluntarily report ESG information?
Yes.
Companies outside the mandatory scope can voluntarily adopt sustainability-reporting practices.
This can be particularly useful for SMEs that supply larger listed companies and multinational corporations.
Q17. Why is climate reporting being introduced first?
Malaysia’s NSRF follows a climate-first approach.
The approach allows companies to build their reporting systems progressively before moving into more complex sustainability-related disclosures.
Q18. What is the climate-first approach?
Under the transition arrangements, companies initially concentrate on climate-related risks and opportunities.
This gives companies additional time to develop systems for broader sustainability disclosures and complex data requirements.
Q19. What is Scope 1 emissions?
Scope 1 represents direct greenhouse-gas emissions from sources owned or controlled by the company.
Examples include fuel combustion in company-owned facilities and vehicles.
Q20. What is Scope 2 emissions?
Scope 2 represents indirect greenhouse-gas emissions associated with purchased or acquired electricity, steam, heating or cooling.
Q21. What is Scope 3 emissions?
Scope 3 represents other indirect greenhouse-gas emissions throughout the company’s value chain.
Examples include:
- Purchased goods and services
- Business travel
- Employee commuting
- Transportation
- Waste
- Use of sold products
Q22. Is Scope 3 reporting mandatory in Malaysia?
Scope 3 reporting is being phased in under Malaysia’s framework, with transition reliefs allowing companies additional time to prepare.
Malaysia’s framework specifically recognizes the complexity of Scope 3 data collection.
Q23. Why is Scope 3 important for Malaysian companies?
Malaysia is a major trading nation and an important participant in global supply chains.
Large exporters and suppliers may therefore need emissions information from their suppliers to satisfy customers’ ESG requirements.
Q24. Are Malaysian SMEs affected by ESG reporting?
Even when an SME is not directly subject to mandatory NSRF reporting, it may be indirectly affected.
Large companies may request ESG information from suppliers to calculate their own Scope 3 emissions.
Q25. What is Bursa Malaysia’s Sustainability Statement?
A listed issuer is required to include a Sustainability Statement in its annual report in accordance with the applicable sustainability-reporting requirements.
Q26. What information should the Sustainability Statement contain?
Depending on the applicable phase and transition requirements, sustainability disclosures address matters such as:
- Governance
- Strategy
- Risk management
- Metrics
- Targets
- Climate-related risks
- Climate-related opportunities
- Greenhouse-gas emissions
Q27. What are the four major pillars of IFRS S2?
The climate-disclosure architecture is built around:
- Governance
- Strategy
- Risk management
- Metrics and targets
These pillars build on the architecture previously associated with the TCFD recommendations.
Q28. Is ESG reporting included in the annual report?
For applicable Bursa Malaysia-listed issuers, the sustainability statement is included within the annual reporting framework.
Bursa Malaysia’s enhanced requirements specifically require the sustainability statement to be prepared in accordance with the applicable IFRS Sustainability Disclosure Standards.
Q29. Must companies disclose historical ESG data?
Bursa Malaysia’s enhanced requirements require metrics and targets demonstrating performance and progress over the last three financial years on a rolling basis, together with a prescribed summary of the data.
Q30. Is ESG assurance mandatory in Malaysia?
Malaysia is moving toward mandatory assurance, but the timetable has been revised.
As of September 2026, mandatory reasonable assurance for Scope 1 and Scope 2 emissions for Group 1 entities has been deferred to annual reporting periods beginning on or after 1 January 2028. Group 2 and Group 3 will follow in 2029 and 2030, respectively.
Q31. What assurance level is being introduced?
The framework provides for reasonable assurance over specified sustainability information, particularly Scope 1 and Scope 2 greenhouse-gas emissions.
The phased timetable allows companies additional time to strengthen reporting systems and controls.
Q32. What assurance standard will be used?
The Securities Commission Malaysia states that ISSA 5000 – International Standard on Sustainability Assurance 5000 is the designated recognized assurance standard for independent assurance under the updated framework.
Q33. Why was mandatory assurance delayed?
The delay followed a review of the first cohort of Group 1 listed issuers.
The review found that further improvements were needed in the quality of sustainability disclosures. The additional time is intended to strengthen reporting processes, controls and data quality.
Q34. Does a company still need to state whether its sustainability report was assured?
Yes.
Bursa Malaysia requirements continue to require applicable listed issuers to state whether sustainability disclosures have been subject to internal review by internal auditors or independent assurance.
Q35. What is greenwashing?
Greenwashing occurs when an organization makes environmental or sustainability claims that are misleading, exaggerated or unsupported by reliable evidence.
Malaysia’s focus on consistent, comparable and reliable sustainability information is intended to reduce the risk of misleading disclosures.
Q36. What is materiality under ISSB-based reporting?
The ISSB approach focuses on sustainability-related risks and opportunities that could reasonably be expected to affect an entity’s prospects.
The focus is therefore strongly connected to financial decision-useful information for investors.
Q37. Does Malaysia use the EU-style double-materiality approach?
Malaysia’s NSRF is based on the ISSB standards and therefore does not replicate the EU’s broader double-materiality model.
The primary focus is sustainability-related financial information that is relevant to investors and other providers of capital.
Q38. What role does the board play in Malaysian ESG reporting?
The board has an important responsibility for overseeing:
- Sustainability strategy
- Climate risks
- ESG governance
- Data quality
- Reporting processes
- Internal controls
- Business resilience
The Securities Commission has issued a board guide to help directors navigate the transition to NSRF reporting.
Q39. What is PACE under Malaysia’s NSRF?
PACE is an initiative designed to support implementation of the NSRF.
It provides policy guidance, assumptions, calculators, education, training and other capacity-building resources for reporting entities.
Q40. How can Malaysian companies prepare for ESG reporting?
Companies should:
- Identify their applicable NSRF group.
- Understand IFRS S1 and IFRS S2.
- Establish ESG governance.
- Identify material sustainability risks and opportunities.
- Establish Scope 1 and Scope 2 emissions inventories.
- Begin preparing Scope 3 data.
- Establish ESG data controls.
- Integrate climate risk into enterprise risk management.
- Develop ESG KPIs and targets.
- Prepare for assurance requirements.
Q41. What role does the CFO play in ESG reporting?
The CFO can play a central role because ESG information increasingly intersects with financial reporting and corporate strategy.
Responsibilities may include:
- ESG budgeting
- Climate-risk assessment
- Carbon accounting
- Internal controls
- Data governance
- Disclosure review
- Assurance coordination
- Financial impact assessment
Q42. What role can accountants play in Malaysian ESG reporting?
Accountants can contribute to:
- ESG data collection
- Internal controls
- Sustainability reporting
- Carbon accounting
- Assurance
- Risk management
- Financial impact analysis
Q43. What role can CMAs play in ESG reporting?
Management accountants can connect sustainability information with business performance.
Their potential responsibilities include:
- ESG costing
- Carbon costing
- Sustainability KPIs
- Budgeting
- Scenario analysis
- Capital investment decisions
- Performance measurement
- Management dashboards
Q44. What role can auditors play?
Auditors and sustainability assurance professionals can contribute to:
- Data verification
- Internal control assessment
- Assurance engagements
- Reporting quality
- Evidence evaluation
- Risk assessment
The move toward mandatory reasonable assurance will increase demand for professionals with sustainability-assurance expertise.
Q45. Can Malaysian companies use GRI alongside ISSB?
Companies may use additional reporting frameworks where appropriate.
The NSRF has also developed resources addressing interoperability between GRI Standards and ISSB Standards, helping companies understand how different reporting requirements can work together.
Q46. How does Malaysia’s ESG framework compare with the EU?
There are important differences.
The EU uses a broad sustainability reporting framework under CSRD and ESRS, while Malaysia has adopted a more focused ISSB-based approach.
Malaysia emphasizes sustainability-related financial information and is implementing the framework progressively.
Q47. How does Malaysia’s framework compare with Singapore?
Both Malaysia and Singapore are moving toward ISSB-aligned sustainability reporting.
Malaysia’s NSRF provides a national framework based on IFRS S1 and S2, with phased implementation through Bursa Malaysia and requirements for large non-listed companies.
Q48. Can a foreign company operating in Malaysia be affected?
Potentially.
The exact applicability depends on the company’s legal structure, listing status, regulatory position and whether it falls within the relevant definition of an applicable entity.
Multinational companies may also face additional ESG reporting requirements from their global headquarters or customers.
Q49. What happens if a company does not comply?
Malaysia has adopted a phased and practical approach to non-compliance during the transition.
The authorities emphasize capacity building and corrective action, but serious or deliberate non-compliance—including fraudulent or materially misleading disclosures—can result in enforcement action.
Q50. What is the future of mandatory ESG reporting in Malaysia?
Malaysia is moving toward a more comprehensive, internationally aligned and assured sustainability-reporting system.
The key direction is clear:
NSRF → IFRS S1 & S2 → phased implementation → improved data quality → mandatory assurance.
The reporting requirements already apply progressively to Bursa Malaysia-listed issuers and large non-listed companies, while mandatory reasonable assurance is scheduled to phase in from 2028 after the latest one-year postponement.
Conclusion
Malaysia has taken a significant step toward institutionalizing ESG reporting through the National Sustainability Reporting Framework.
Unlike jurisdictions that have created broad sustainability-reporting laws covering large numbers of companies, Malaysia has chosen a phased ISSB-based approach. IFRS S1 and IFRS S2 form the foundation, while Bursa Malaysia has incorporated the requirements into its listing framework.
The implementation timeline is:
- 2025: Group 1 – large Main Market issuers
- 2026: Group 2 – remaining Main Market issuers
- 2027: Group 3 – ACE Market issuers and qualifying large non-listed companies
- 2028: Mandatory reasonable assurance for specified Scope 1 and Scope 2 disclosures for Group 1
- 2029: Assurance phase for Group 2
- 2030: Assurance phase for Group 3
The latest assurance timetable reflects Malaysia’s decision to give companies additional time to strengthen data quality, reporting controls and sustainability-reporting capabilities.
For CA, CMA, CPA, finance and accounting professionals, Malaysia’s ESG transition presents significant opportunities in sustainability reporting, carbon accounting, ESG controls, assurance, climate-risk management, budgeting and strategic decision-making.
For Malaysian companies—and Indian companies participating in Malaysian or ASEAN supply chains—ESG reporting should increasingly be viewed not merely as a compliance exercise, but as an important part of corporate reporting, risk management, access to capital and global competitiveness.
The Worldonomics Times will continue tracking ESG reporting developments across Malaysia, India, Singapore, the EU, the United States, Canada and other major economies.