Introduction
In response to increasing global and domestic demand for transparency in sustainability practices, Bursa Malaysia has introduced enhanced sustainability reporting requirements for all companies listed on the Main Market and ACE Market with the objective of aligning the sustainability reporting framework with the National Sustainability Reporting Framework (“NSRF”) launched by the Ministry of Finance on 24 September 2024. These amendments, issued on 23 December 2024, signal a major shift toward integrating ESG considerations into corporate disclosures and in aligning Malaysian standards with international best practices, particularly the IFRS Sustainability Disclosure Standards.
Key Changes to Sustainability Reporting Requirements
1. Sustainability statement is required to be incorporated in the annual report
All listed issuers are required to prepare their Sustainability Statements in accordance with the IFRS Sustainability Disclosure Standards, specifically:
- • IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information; and
- • IFRS S2: Climate-related Disclosures.
The IFRS Sustainability Disclosure Standards were introduced by the International Sustainability Standards Board (ISSB) aimed at creating a global baseline for sustainability-related financial disclosures that are comparable, consistent and decision-useful for investors.
The incorporation of this international standards of reporting ensures that companies listed on Bursa Malaysia adhere to a global reporting framework, particularly concerning climate-related risks and opportunities, governance, strategy, risk management, and performance metrics.
2. Scope and Contents of the Sustainability Statement
The Sustainability Statement must be prepared in accordance with IFRS S1 and IFRS S2
IFRS S1 – provides the basic requirements for sustainability disclosures which include:
- • disclosure on material sustainability-related risks and opportunities that is useful to users of general purpose financial reports in making decisions relating to providing resources to the entity such as those information that could reasonably be expected to affect the entity’s cashflows, its access to finance or cost of capital over the short, medium or long term
- • industry specific disclosures with reference to the industry-based SASB standards when identifying such sustainability-related risks and opportunities
IFRS S2 is designed to be applied together with IFRS S1. However IFRS S2 have been developed to capture climate-specific requirements which include:
- • strategy disclosures that distinguish between physical and transitional risks
- • disclosure of plans to respond to climate-related risks and opportunities including any climate-related targets set and targets that are required to be met by any law or regulation
- • include scenario analysis detailing how various climate-related events may potentially impact the business in the future
- • climate-related metrics and target disclosure should include those (i) cross-industry metrics that are relevant to all companies; (ii) industry-based metrics relevant to companies within the industry; and (iii) company specific metrics by the board
In addition to the above, companies are required to report on:
- • quantitative metrics and performance targets for at least the past 3 financial years (on a rolling basis);
- • a statement of assurance, indicating whether the Sustainability Statement has been internally reviewed or independently assured;
- • a summary of performance data in a prescribed format.
3. Implementation Timeline and Transitional Reliefs
To accommodate varying levels of ESG maturity among listed companies, a phased implementation and transitional reliefs have been introduced.
- • Main Market Companies
- • ACE Market Companies
All ACE Market companies must comply from its issuance of annual report for financial year ending on or after 31 Dec 2027, with transitional reliefs granted for the first three (3) years.
- • Transitional Reliefs for Main Market Companies
For the initial two (2) full financial years from the Effective Dates, companies may:
- • focus only on climate-related risks and opportunities in accordance with the IFRS S2;
- • reporting on (a) above may be limited to those in relation to the company’s principal business segments; and
- • defer Scope 3 greenhouse gas emissions disclosure, unless otherwise required by regulators.
4. Implications for Listed Companies
The enhanced requirements represent a significant step forward for ESG transparency in Malaysia. Listed companies, moving forward, will be required to consider:
- • the strengthening of ESG governance structures;
- • building internal capacity for sustainability reporting;
- • engage internal auditors or external assurers early in the reporting cycle;
- • revisit and align existing ESG strategies with IFRS S1 and S2 frameworks.
5. Conclusion
Bursa Malaysia’s mandatory ESG reporting regime brings Malaysian listed companies, specifically those listed on the Main Market and ACE Market, in line with international standards, particularly in anticipation of growing investor scrutiny and demand for climate risk disclosures. Companies that act early and embed ESG into their core strategies will not only comply with regulations but also build long-term resilience, attract sustainability-linked investments, and bolster stakeholder trust.
About the authors
Laurel Lim Mei Ying
Senior Associate
ESG Practice Group
Halim Hong & Quek
laurel.lim@hhq.com.my
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