5 Costly Mistakes Companies Make in ESG Reporting (And How to Avoid Them)

As Group 2 public listed companies (PLCs) in Malaysia prepare for their first IFRS S1/S2-compliant sustainability reports covering FY2026, one thing is clear: the companies that struggle most are not the ones that lacked resources — they are the ones that made avoidable mistakes.

At Brandford Consulting, we have worked with companies across various stages of their ESG reporting journey. We see the same errors come up time and again. Here are five of the most costly mistakes — and what you can do to avoid them.

Mistake 1: Leaving It Too Late

This is by far the most common — and most damaging — mistake. Many companies assume that because the reporting deadline is 2027, they have plenty of time. They do not.

Sustainability reporting under IFRS S1 and S2 requires three years of historical quantitative data. This means for your FY2026 report, you need data going back to FY2024 — data that many companies are not currently collecting in a structured way. Add to that the time required for gap assessments, materiality assessments, governance restructuring, board training, data collection, drafting, review, and assurance, and it becomes clear that preparation should have started yesterday.

What to do instead: Begin your gap assessment now. Identify what data you need to collect and put systems in place immediately. Every month of delay narrows your window and increases your risk of a rushed, low-quality report.

Mistake 2: Treating ESG as a Tick-Box Exercise

Bursa Malaysia and institutional investors can spot a compliance-only sustainability report. When disclosures are vague, generic, or disconnected from the company's actual business risks and strategy, it damages credibility — with investors, analysts, and regulators.

IFRS S1 specifically requires companies to explain how sustainability risks and opportunities affect their business model, strategy, and financial position. This is not a template you can fill in generically. It requires genuine analysis and board-level engagement.

What to do instead: Treat your sustainability report as a strategic document, not just a regulatory requirement. Involve your CEO, CFO, and board in the process. The best sustainability reports tell a coherent story about how the business manages its risks and creates long-term value.

Mistake 3: Getting Materiality Wrong

Some companies report on everything — producing bulky reports that bury the most important information under mountains of irrelevant data. Others report on too little, omitting matters that are genuinely significant to their business. Both approaches create problems.

Bursa Malaysia requires companies to conduct a proper materiality assessment and report quantitatively on their identified material sustainability matters. A poorly conducted materiality assessment — one that is not properly tied to stakeholder input and business impact — will produce a report that fails to reflect the company's true sustainability profile.

What to do instead: Invest time in a rigorous materiality assessment. Engage real stakeholders — investors, employees, customers, and regulators — not just internal teams. Validate the results with your board. And revisit the assessment periodically as your business and its operating environment evolve.

Mistake 4: Poor GHG Data Quality

Scope 1 and Scope 2 greenhouse gas (GHG) emissions are mandatory disclosures under IFRS S2 for all Group 2 PLCs. Yet many companies dramatically underestimate the complexity of calculating these figures accurately.

Common errors include using the wrong emission factors, double-counting emissions sources, failing to account for all energy sources across all business locations, and mixing up market-based versus location-based accounting for Scope 2. Errors in GHG calculations are increasingly scrutinised by investors and assurance providers — and they undermine confidence in your entire report.

What to do instead: Use internationally recognised standards — specifically the GHG Protocol Corporate Standard. Engage someone with expertise in GHG accounting to set up your measurement methodology. Collect at least one year of quality-assured data before FY2026 begins so you are not starting from scratch.

Mistake 5: Ignoring Assurance Requirements

Third-party assurance — where an independent party reviews and verifies your sustainability disclosures — significantly enhances the credibility of your report. Bursa Malaysia has phased assurance requirements that will apply to PLCs over time. Even where assurance is not yet mandatory for Group 2 companies, institutional investors increasingly expect it.

Companies that leave assurance as an afterthought often discover — too late — that their data collection processes are not audit-ready. Assurance providers need clear audit trails, documented methodologies, and reliable source data. Building these from scratch under time pressure is costly and stressful.

What to do instead: Design your data collection and reporting processes with assurance in mind from day one. Engage an assurance provider early — even just for a readiness assessment — so you understand what will be expected and can prepare accordingly.

Work with an Experienced Sustainability Advisor

Avoiding these five mistakes is not difficult if you have the right guidance from the start. The companies that produce credible, compliant, and strategically valuable sustainability reports are the ones that plan ahead, engage seriously with the process, and work with experienced advisors.

Brandford Consulting helps Group 2 PLCs navigate every stage of the IFRS S1/S2 compliance journey — from gap assessment and materiality through to GHG reporting, drafting, and CSI platform submission. Contact us today for a free consultation and find out how we can help your company get it right the first time.

Not sure if your company is ready for Bursa NSRF compliance? Take our free Self-Assessment and get your personalised gap analysis report in minutes.

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