“This is expected to reduce the complexity and costs associated with sustainability reporting, allowing businesses to focus on what they do best: Driving innovation, creating jobs and contributing to economic growth.”
Malaysia’s Finance Minister II, Datuk Seri Amir Hamzah Azizan, announced on September 24 that the National Sustainability Reporting Framework (NSRF) will be implemented in phases for listed companies and large non-listed companies.
The phased approach aims to provide sufficient preparation time. Support and training will be offered, especially to small and medium enterprises (SMEs), to reduce the complexity and costs associated with sustainability reporting.
The first phase will begin in 2025 with large Main Market companies (market capitalisation of RM2 billion and above) adopting the International Sustainability Standards Board (ISSB) Standards. This will then be extended to other Main Market companies in 2026, and followed by ACE Market companies and large non-listed companies in 2027.
Amir Hamzah emphasised the growing significance of sustainability in attracting investors. He observed that Malaysia’s reforms have revitalised global investor interest, as evidenced by substantial investments from companies such as Microsoft Corp and Google LLC.
The government estimates that RM1.3 trillion will be necessary to support the transition to cleaner energy sources, including renewable energy, energy efficiency, and green mobility. Additionally, the government highlighted the urgent need for investments that address sustainability challenges and adapt to evolving environmental conditions.
With the launch of the NSRF, Malaysia joins over 20 jurisdictions globally, representing 55% of global gross domestic product (GDP), that are adopting IFRS S1 and S2 standards.
Datuk Mohammad Faiz Azmi, chairman of the Securities Commission (SC), emphasised the importance of the NSRF for Malaysia’s role in the global supply chain. He stated that adopting these requirements is crucial for fully benefiting as early adopters, given Malaysia’s position as a major trading country and open economy.
Malaysia’s decision to adopt the ISSB standards into its NSRF represents a significant step forward in positioning the country as a major investing hub for global investors.
By encouraging more sustainability-related financial disclosures, Malaysia is signalling its commitment to transparency, accountability, and sustainable practices, which are increasingly valued by international investors.
Sustainability-related disclosures can help businesses identify and manage potential risks associated with climate change, social impacts, and governance issues. By adopting ISSB standards, Malaysian companies can improve their risk management practices and enhance their resilience.
As global investors increasingly seek opportunities to invest in sustainable and resilient economies, Malaysia’s adoption of ISSB standards positions the country as a preferred destination for sustainable investment.
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