How Malaysian Companies Can Start Sustainability Reporting

Sustainability reporting is the practice of disclosing how your organisation affects and is affected by environmental, social, and governance (ESG) factors. In Malaysia, this is no longer a voluntary exercise confined to large listed companies. Regulatory expectations are expanding, international customers and investors increasingly require ESG data from their suppliers, and the frameworks available for reporting have matured significantly. Environmental topics such as Scheduled Waste Management can also contribute to sustainability reporting by helping organisations track waste generation, demonstrate regulatory compliance, and report on their environmental performance. This guide explains what sustainability reporting requires, which frameworks apply to Malaysian businesses, and how to build a credible reporting process from the ground up.

What Is Sustainability Reporting and Why Does It Matter in Malaysia?

Sustainability reporting involves disclosing quantitative and qualitative information about your organisation’s performance across three areas: environmental (energy use, emissions, water, waste), social (employee welfare, community impact, diversity, supply chain labour standards), and governance (anti-corruption practices, board composition, ethics and compliance). Together these are commonly referred to as ESG.

In Malaysia, the Securities Commission Malaysia and Bursa Malaysia have driven mandatory disclosure requirements for listed companies. Bursa Malaysia’s Main Market and ACE Market listing requirements include mandatory sustainability statements or reports. The Bursa Malaysia Sustainability Reporting Guide provides detailed guidance on material sustainability matters and their disclosure. For non-listed companies, reporting remains voluntary, but commercial pressure from multinational buyers, GLCs qualifying their supply chains, and international investors requesting supplier ESG data means that many Malaysian SMEs are being asked to report regardless of listing status.

On 24 September 2024, Malaysia’s Ministry of Finance and the Securities Commission Malaysia jointly launched the National Sustainability Reporting Framework (NSRF), which formally adopts IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures) from the ISSB (International Sustainability Standards Board) as the baseline for Malaysian companies. Both IFRS standards were published by the ISSB on 26 June 2023. The NSRF adoption timeline for Main Market listed issuers requires IFRS S2 reporting for financial years ending on or after 31 December 2025, IFRS S1 reporting for financial years ending on or after 31 December 2026, and full adoption of both standards without transition reliefs for financial years ending on or after 31 December 2027. These requirements will flow down supply chains as listed companies reference NSRF-aligned disclosures in supplier qualification and procurement processes.

Which Sustainability Reporting Frameworks Apply to Malaysian Companies?

The four frameworks most relevant to Malaysian businesses are the Global Reporting Initiative (GRI), the ISSB standards, the Task Force on Climate-Related Financial Disclosures (TCFD), and the UN Sustainable Development Goals (SDGs).

The Global Reporting Initiative (GRI) Standards are the most widely used framework globally and in Malaysia. GRI uses a modular structure: GRI 1 covers the foundation and reporting principles, GRI 2 covers general disclosures about the organisation, and topic-specific standards address environmental, social, and governance matters. Reporting in accordance with GRI requires completing a materiality assessment to identify which ESG topics are most significant to your organisation and stakeholders.

The ISSB standards (IFRS S1 and IFRS S2) are designed for capital markets and focus on sustainability-related financial risks and opportunities that are material to investors. IFRS S2 specifically addresses climate-related risks and follows the structure of the TCFD recommendations. For Malaysian companies with listed parent companies or those seeking to access international capital markets, ISSB alignment is increasingly relevant. TCFD itself is referenced as the climate disclosure framework by Bursa Malaysia.

The UN Sustainable Development Goals (SDGs) provide a useful way to connect your sustainability activities to the broader global agenda. Many Malaysian companies reference the SDGs in their sustainability reports to contextualise their contributions, but the SDGs are not a reporting framework in themselves and do not specify disclosure requirements.

What Data Do You Need to Collect for a Sustainability Report?

The data categories most commonly required across GRI, ISSB, and Bursa Malaysia disclosure requirements include environmental data (energy consumption by source, greenhouse gas emissions in Scope 1 and Scope 2 as a minimum, water withdrawal and discharge, waste generated and disposal methods), social data (total headcount and turnover, gender and diversity breakdown, training hours per employee, work-related injuries and fatalities, community investment or social spending), and governance data (anti-corruption policies and cases, board composition, whistleblowing arrangements, and supply chain due diligence).

For most Malaysian SMEs starting out, the immediate challenge is data collection rather than framework selection. Energy and water data are typically available from utility bills. Workforce data is usually held in HR systems but may not be structured in the format a report requires. Emissions data requires either direct measurement or the application of emission factors to activity data; Scope 1 emissions come from fuel combustion and company vehicles, and Scope 2 emissions come from purchased electricity. Many companies use ISO 14064-1:2018 as the methodology for quantifying and reporting greenhouse gas emissions because it provides a structured, auditable process that is internationally recognised.

Organisations that have already implemented or are pursuing ISO 14001 environmental management certification will find that their existing environmental data collection processes cover a significant portion of what sustainability reporting requires, particularly for energy, waste, and water performance.

How Should Malaysian Businesses Structure a First Sustainability Report?

A first sustainability report does not need to cover every possible ESG topic or adopt the most demanding framework from the outset. A pragmatic starting point is to identify the three to five ESG topics most material to your business, collect baseline data for those topics, set targets for the coming year, and publish a concise report that is honest about what you are measuring and what you are not yet measuring.

The structure most commonly used includes an introduction and company overview; a description of how material ESG topics were identified; performance data for the selected topics with prior year comparisons where available; an explanation of governance arrangements for ESG oversight; and forward-looking commitments and targets. Publishing the report on your company website and distributing it to key customers, investors, and supply chain partners ensures it reaches the stakeholders who will use it.

In our work with Malaysian companies on management system implementation, the organisations that produce the most credible sustainability reports are those that already have documented processes for operational data collection under a certified management system. ISO 9001, ISO 14001, and ISO 45001 each generate operational data, documented processes, audit trails, and management review records that directly feed into the environmental, social, and governance disclosures a sustainability report requires. Pursuing certification alongside sustainability reporting is often more efficient than managing them separately.

For Malaysian companies that also need to address governance and anti-corruption disclosures in their sustainability reporting, ISO 37001 anti-bribery management system certification provides documented evidence of governance controls that can be referenced directly in the governance section of a sustainability report.

What Are the Most Common Mistakes in Malaysian Sustainability Reports?

The most common mistake in early sustainability reports from Malaysian companies is confusing activity reporting with performance reporting. Listing CSR activities completed during the year (tree-planting events, donation amounts, employee engagement events) without connecting them to measurable ESG outcomes does not satisfy the requirements of GRI or Bursa Malaysia and does not give investors and buyers the data they need to assess your ESG position.

A related mistake is treating the sustainability report as a marketing document rather than a disclosure document. Sustainability reports that present only positive developments without acknowledging material risks, areas where performance fell short of targets, or ESG topics that are relevant but not yet measured, undermine credibility with sophisticated readers and may fall short of the accuracy and balance requirements in GRI 1 and the Bursa Malaysia Sustainability Reporting Guide.

A third common issue is inconsistency in emission reporting methodologies. Scope 1 and Scope 2 greenhouse gas data must be calculated using consistent, documented emission factors. Year-on-year comparisons are only meaningful if the same methodology is applied across periods. ISO 14064-1:2018 provides a structured approach to greenhouse gas quantification that produces auditable, comparable data.

Organisations looking to establish quality management as the foundation for their data collection and process documentation may find that ISO 9001 certification creates the documented process controls and audit discipline that sustainability reporting requires across all departments.

Sustainability reporting in Malaysia is transitioning from a voluntary good-practice activity to a practical business requirement driven by listed company obligations, supply chain expectations, and international buyer demands. Starting with a focused materiality assessment, building data collection processes linked to your existing management systems, and publishing a concise and honest first report is a more credible approach than waiting until the process feels perfect.

To explore Connext’s ESG and sustainability reporting support services, visit our ESG consulting and sustainability reporting, or contact us to discuss how your management systems can support your reporting process.

Frequently Asked Questions

Is sustainability reporting mandatory for all Malaysian companies?

Not yet for all. Bursa Malaysia requires listed companies on the Main Market and ACE Market to publish sustainability statements or reports as part of their annual reporting obligations. For non-listed businesses, reporting is currently voluntary, though supply chain requirements from GLCs and multinational buyers are making it effectively necessary for many SMEs.

What is the difference between a sustainability report and an ESG report?

The terms are often used interchangeably. Sustainability reports typically follow the GRI structure and address environmental, social, and governance performance holistically. ESG reports use the same three categories but may be structured differently for investor audiences. Both aim to disclose non-financial performance data to stakeholders.

Does ISO 14001 certification satisfy sustainability reporting requirements?

Not directly. ISO 14001 certifies that your environmental management system meets the standard’s requirements; it does not produce a sustainability report. However, the data and documentation your ISO 14001 system generates, such as energy monitoring records, waste tracking logs, and environmental objective reviews, provides much of the environmental data a sustainability report requires.

How often should a Malaysian company publish a sustainability report?

Annual reporting is the standard. Bursa Malaysia requires annual sustainability disclosures alongside the annual report. For non-listed companies, annual reporting aligns with financial reporting cycles and allows year-on-year performance comparisons that make the report more useful to stakeholders.

What is materiality assessment in the context of sustainability reporting?

A materiality assessment identifies which ESG topics are significant enough to include in your sustainability report, based on their impact on your business and their importance to your stakeholders. GRI 1 and the Bursa Malaysia Sustainability Reporting Guide both require this assessment to be documented and to drive the selection of topics covered in your report.