Substainability and ESG Reporting

In an era where sustainability is becoming a cornerstone of business strategy, sustainability and ESG (Environmental, Social, and Governance) reporting have gained unprecedented importance. For listed companies in Malaysia, enhancing sustainability reporting practices is crucial to building transparency, trust, and long-term value.

Key Updates for 2024 In September 2024, Bursa Malaysia proposed significant amendments to the Main Market and ACE Market Listing Requirements to align with the National Sustainability Reporting Framework (NSRF). These amendments aim to harmonize with international standards, such as the International Sustainability Standards Board (ISSB) standards.

Global Standards Alignment Aligning with ISSB standards, particularly the IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, ensures that Malaysian companies meet global expectations. This alignment not only enhances credibility but also facilitates access to international capital markets.

Research Insights Research indicates that companies with robust sustainability practices are more likely to attract responsible investments and build stronger relationships with stakeholders. A study by the University of Oxford and Arabesque Partners found that high ESG performance is positively correlated with better operational performance and lower cost of capital.

Key Changes in Reporting Requirements

• Workforce Diversity: Mandatory disclosure of workforce diversity, including gender, ethnicity, and generation, aims to promote inclusivity and empower Bumiputera (indigenous Malaysians).

• Climate Risk Disclosures: Companies are required to outline their strategies for managing climate risks and opportunities, aligning with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

• Sustainability Assurance: Enhanced emphasis on obtaining independent assurance for sustainability reports to improve their credibility and reliability.

Implementation Strategies To meet the new sustainability reporting requirements, companies should:

• Integrate Reporting: Integrate sustainability information into their annual reports, providing a holistic view of their ESG performance.

• Regular Assessments: Conduct regular assessments of sustainability practices to identify areas for improvement and ensure compliance.

• Stakeholder Engagement: Engage with stakeholders to understand their expectations and incorporate their feedback into sustainability strategies.

• Assurance Services: Invest in sustainability assurance services to enhance the credibility of their reports.

Conclusion Enhanced ESG reporting is essential for building trust with investors and stakeholders. By aligning their practices with global standards, Malaysian companies can demonstrate their commitment to sustainability and position themselves as leaders in the market.