Malaysia’s National Sustainability Reporting Framework is entering its second phase. Group 2—Main Market listed issuers outside the first, largest-company cohort—begins using ISSB-aligned sustainability disclosure requirements for annual reporting periods starting on or after January 1, 2026.
The NSRF uses IFRS S1 and IFRS S2 as its baseline and combines phased adoption, transition relief, capability building, and a developing assurance framework.
The three NSRF reporting groups
Malaysia’s adoption timetable is based on listing market and size:
- Group 1: Main Market listed issuers with market capitalisation of RM2 billion or more, from annual reporting periods beginning on or after January 1, 2025.
- Group 2: Other Main Market listed issuers, from periods beginning on or after January 1, 2026.
- Group 3: ACE Market listed corporations and non-listed companies with annual revenue of RM2 billion or more, from periods beginning on or after January 1, 2027.
Companies should check the NSRF and applicable Bursa Malaysia or statutory reporting requirements for the precise scope test, reporting location, and current relief. A parent’s group report does not automatically settle every subsidiary’s obligations.
What changes for Group 2
The implementation is not simply an added emissions table. IFRS S1 requires material information about sustainability-related risks and opportunities that could affect an entity’s prospects. IFRS S2 applies that approach to climate.
The disclosure architecture covers governance, strategy, risk management, and metrics and targets. Reporting needs to be connected to the financial statements, use the same reporting entity, and present decision-useful information for primary users of general-purpose financial reports.
Start with a requirement-by-requirement gap assessment against the ISSB global baseline. Tag each gap by owner, system, evidence, review control, transition relief, and due date.
Use transition relief deliberately
The NSRF provides climate-first and other transition relief to make adoption manageable. Group 1 and Group 2 have a two-year climate-first transition period, while Group 3 has three years.
Relief changes the first-year disclosure scope; it does not eliminate the need for a roadmap. Record which relief is used, why it applies, who approved it, what the company will disclose instead, and when the omitted capability will be ready.
The company should also review current NSRF materials for relief related to timing, comparatives, Scope 3, and use of particular methodologies. Do not copy a relief conclusion from another company without checking cohort, year, and circumstances.
Build the GHG inventory as a controlled process
Create a register of all entities, facilities, meters, vehicles, refrigerants, purchased energy, and material value-chain categories. Reconcile it to the financial group and investigate gaps.
For each calculation, preserve the source record, unit conversion, method, estimate, factor source and version, preparer, reviewer, and explanation of changes. Our GHG inventory management plan provides a practical control structure.
Scope 3 should begin with category screening and method selection. Use spend, activity, and supplier-specific data according to data quality and decision needs, with a documented plan to improve material categories.
Prepare governance and assurance together
The board should understand the reporting scope, material risks and opportunities, major estimates, reliefs used, and unresolved control issues before approving public disclosure. Align the sustainability timetable with finance, risk, internal audit, and board calendars.
Malaysia’s assurance pathway is developing, with Scope 1 and Scope 2 assurance an important early focus. Companies should confirm the current assurance timetable and applicable standards before commissioning an engagement. An early ISSA 5000 readiness assessment can identify evidence and control weaknesses without implying that a voluntary review satisfies a future mandate.
A 2026 delivery sequence
In the first phase, confirm applicability, reporting boundaries, reliefs, and governance. Next, complete the disclosure gap assessment and inventory source register. Then run a dry calculation and narrative close, resolve material gaps, and produce a report cross-reference with supporting evidence.
The final review should test consistency among sustainability disclosures, annual-report risk language, financial assumptions, targets, and public claims. Contradictions across those channels are a reporting risk even when every individual document has been reviewed.
Information in this article was verified on August 9, 2026. Malaysia’s implementation and assurance requirements may evolve. This overview is general information, not legal advice.
Sources
See how Carbon Impact automates compliance with standards like this.