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Climate Series 2: Malaysia is moving to introduce mandatory climate-related disclosures and carbon pricing
Mandatory climate-related disclosures – how to make them work for you?
The introduction of Malaysia’s National Sustainable Reporting Framework (NSRF)1 in September 2024 means that reporting on sustainability and climate-related disclosures will increasingly become mandatory for a greater number of companies.
Along with incoming policies relating to RUUPIN2 and NPCC 2.0.3 the change demonstrates an increased commitment from the Malaysian government to the climate transition and to hold the private sector4 accountable for transparency and their contribution to the transition.
What is changing?
Where previously disclosure requirements based on TCFD-aligned climate disclosures were limited to Bursa Malaysia Main Market listed companies, the NSRF expands the requirements for sustainability reporting to non-listed companies and expands the depth and breadth of reporting1. The expansion is taking a phased approach, starting with Main Market listed companies with yearly revenues of over RM2 billion for who reporting requirements are coming into effect in 2025, and expanding to ACE Market and non-listed companies with yearly revenues of over RM2 billion in 2027.
The NSRF requires disclosure against the IFRS S1 and S2 standards in the first instance, with reliefs applied. Full adoption of S1 and S2, along with scope 3 GHG emission disclosures is expected to follow two to three years after initial requirements for limited IFRS S1 and S2 disclosures come into effect.
Getting ahead of the curve
Whether you are one of the companies affected by the mandatory disclosures or not, getting up to speed about disclosure requirements under IFRS S1 and S2 early is a good idea:
- Malaysian businesses are part of global supply chains and growing support and demand for the adoption of the IFRS S1 and S2 mean than businesses in Malaysia will face increased scrutiny from global customers regarding their climate transparency measures.
- Establishing disclosure mechanisms and gaining an overview of expectations ahead of requirements coming into effect for your business, allows you to build internal capacities, avoiding a rushed approach and delivering quality disclosures that can give you a competitive advantage over your peers, e.g., in accessing funding, winning customers and attracting talent.
- IFRS standards are focused on becoming aware of climate-related risks and opportunities, incorporating them into internal processes and decision-making, and consider adaptation mechanisms. Engagement with these topics can allow you to adapt early to arising risks and build resilience (e.g., by planning new real estate assets with consideration for expected severity and frequency of heatwaves or flooding), or to harness efficiencies (e.g., by switching to renewable energy sources that are often more cost effective than their higher-emitting fossil counterparts).
1Securities Commission Malaysia, Proposed National Sustainability Reporting Framework
2The Edge Malaysia, Climate Change Bill slated for first Parliament sitting of 2026, says Johari Ghani
3AsiaLaw, Decoding Malaysia’s Climate Agenda: Key Takeaways from the NPCC2.0 and Climate Change Bill
4The Edge Malaysia, More Malaysian firms now required to do sustainability reporting
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