Malaysia’s National Sustainability Reporting Framework is a significant step towards enhancing corporate transparency and accountability in environmental, social, and governance (ESG) matters. Here’s an overview of the framework, including its applicability, implementation timeline, and specific requirements:
Applicability
The framework primarily targets:
- Public Listed Companies (PLCs): All companies listed on Bursa Malaysia are required to adhere to the framework.
- Large Enterprises: While initially focusing on PLCs, the framework may eventually extend to large private enterprises to encourage broader adoption of sustainability practices.
Implementation Timeline
The framework is being phased in to allow companies adequate time to adapt:
- Phase 1 (2024): Large-cap PLCs are required to begin full compliance with the disclosure requirements. These companies are expected to have the resources and capacity to lead the transition.
- Phase 2 (2025): Mid-cap PLCs are brought into the fold, allowing them additional time to prepare and adapt their reporting processes.
- Phase 3 (2026): Small-cap PLCs are required to comply, with the Securities Commission providing extra support and resources to assist these firms.
Specific Requirements
Malaysia’s National Sustainability Reporting Framework incorporates elements from the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards, specifically IFRS S1 and S2. These standards are designed to provide a comprehensive framework for sustainability reporting. Specific requirements include:
- Materiality Assessment: Organizations are required to conduct a materiality assessment to identify and prioritize ESG issues relevant to their operations and stakeholders.
- Disclosure of ESG Metrics: Companies must disclose specific ESG metrics, including carbon emissions, energy consumption, water usage, waste management, and social impact initiatives.
- Governance and Oversight: There should be clear governance structures in place to oversee sustainability initiatives, including board-level responsibility.
- Assurance of Reports: Reports should be subject to third-party assurance to enhance credibility and reliability.
- Stakeholder Engagement: Companies are encouraged to engage with stakeholders to ensure that their sustainability efforts align with stakeholder expectations and needs.
Goals and Benefits
The overarching goals of the framework include:
- Enhancing Transparency: Providing investors and stakeholders with clear, comparable, and reliable information on corporate sustainability practices.
- Driving Sustainable Development: Encouraging companies to integrate sustainability into their business strategies and operations, thereby contributing to Malaysia’s sustainable development goals.
- Improving Competitiveness: Helping Malaysian companies remain competitive in global markets where sustainability is increasingly a key differentiator.
Challenges and Support
While the framework presents opportunities, companies may face challenges such as resource constraints and the need for capacity building. To address these, the Malaysian government and Bursa Malaysia are providing guidance and support, including training programs and resources to facilitate compliance.
In summary, Malaysia’s National Sustainability Reporting Framework is a comprehensive initiative designed to promote sustainable business practices and enhance corporate accountability. Its phased implementation allows companies to progressively adapt, ensuring a smooth transition towards more sustainable operations.
Contact experts at Carbon Impact today to see how our solutions can help your business prepare for compliance with Malaysia’s National Sustainability Reporting Framework.