Takeaways
- NSRF mandatory reporting will expand to large non-listed companies from 2026. Companies should start Scope 3 emissions tracking immediately
- The carbon tax 2026 at approximately RM15 per tCO2e will target energy and steel sectors due to EU CBAM. Companies must verify Scope 1 and 2 emissions right away.
- The social pillar currently lags behind environmental efforts. Companies should prioritise workforce training during e-invoicing transitions.
- GRI standards and IFRS S1/S2 work effectively together. Companies should utilise interoperability guides for seamless reporting.
- Malaysian SMEs should focus on certifications such as ISO, PCF, and LCA to meet export compliance requirements.
- A RM50,000 ESG reporting grant is available. Companies should claim it alongside MIDA matching funds.
This article draws from our exclusive webinar “Malaysia ESG Outlook 2026: Key Trends and Lessons from 2025”, featuring expert insights from Jia Xin Ng, ESG and Sustainability Consultant and Trainer. As Malaysia accelerates its ESG reporting 2026 push, companies must prepare for mandatory sustainability disclosures under the National Sustainability Reporting Framework (NSRF). This demands robust governance, precise data tracking, and clear stakeholder communication to meet rising regulatory demands.
Table of Contents
Mandatory NSRF Reporting: Extending to Large Non-Listed Companies
The NSRF Malaysia, aligned with global IFRS S1 and S2 standards, enforces mandatory ESG reporting 2026 beyond public-listed firms to large non-listed entities.
- Broader Scope and Verification Needs: Expect heightened scrutiny on ESG risks, opportunities, and data assurance. Companies must verify disclosures fully, especially Scope 3 emissions Malaysia across supply chains.
- Value Chain Impact: Track upstream and downstream emissions accurately to comply with Malaysia ESG reporting 2026 requirements.
Malaysia Carbon Tax 2026: Driven by EU CBAM and Decarbonisation Urgency
Malaysia introduces a carbon tax 2026 targeting energy and iron-steel industries, spurred by the EU’s Carbon Border Adjustment Mechanism (CBAM).
- Emission Reporting Priority: Verify Scope 1 and Scope 2 GHG emissions now to establish a baseline for reductions. Bloomberg estimates ~RM15 per tonne CO2e from 2026, though official details remain pending.
- Global Pressures: Simplified EU rules like CBAM Malaysia and EUDR underscore compliance as a baseline amid customer and regulatory demands.
5 Essential Steps for ESG Readiness in Malaysia 2026
Act now to build ESG corporate readiness Malaysia and avoid penalties:
Strengthen Governance Structures: Embed sustainability in strategy; appoint leaders to align ESG with financial reporting.
Improve GHG Data Systems: Collect verifiable data across value chains using digital tools for Scope 3 emissions tracking.
Boost Supplier Engagement: Educate partners on GHG accounting; sponsor training for reliable supply chain data.
Ensure Transparent Communication: Share honest progress to combat greenwashing and transparency drives trust.
Leverage Incentives: Tap government perks like EV tax breaks and green grants (detailed below).
Key Q&A: Top ESG Questions for Malaysia 2026
1. Why Prioritise the Social Pillar in Malaysia ESG?
The social aspect covers workforce practices and human rights. It currently lags behind environmental efforts. Companies should focus on staff training for transitions like e-invoicing and LHDN stamping and boost well-being.
2. Does GRI Still Matter with IFRS S1/S2 in Malaysia?
Yes, GRI standards complement IFRS S1 and S2 Malaysia via materiality metrics. Companies should use their interoperability guide for seamless data mapping.
3. What is the Securities Commission Focus on Non-Financial Assurance?
The Securities Commission emphasises ISSA 5000 for verifying data sources and traceability in ESG reporting Malaysia.
4. What are ESG Trends for Malaysian SMEs?
Non-reporting SMEs, especially exporters, pursue certifications like ISO, Product Carbon Footprint (ISO 14067), LCA (ISO 14040/14044), or EPD (ISO 14025) to meet buyer demands.
5. How to Tackle Scope 3 Supplier Emissions?
Companies should phase in supplier education. They should offer free GHG training for quality Scope 3 data Malaysia.
6. Must Companies Use Malaysian Centralised Sustainability Intelligence (CSI) Platform?
No. Companies can use third-party tools, but they must submit finals to the CSI platform.
7. What are 2026 ESG Government Incentives in Malaysia?
Available incentives include EV charging tax incentives, MGTC Green Accelerator (GA), RM50,000 claim for mandatory ESG reporting, and 50/50 MIDA grants for SMEs (up to RM500,000).
Watch the Webinar for Deeper Insights
These insights stem directly from our exclusive webinar on “Malaysia ESG Outlook 2026: Key Trends and Lessons from 2025”. Watch the full webinar now to gain actionable lessons from 2025 and expert strategies for 2026 compliance.
eBook
The C-Suite Guide to Malaysia’s National Sustainability Reporting Framework (NSRF)
Developed by BBC’s ESG and sustainability consultants, this practical roadmap guide helps leaders understand, plan and apply the NSRF effectively. It provides a clear roadmap to strengthen governance, enhance reporting and create business value.