As we navigate 2026, Malaysian businesses are no longer debating if they should adopt Environmental, Social, and Governance (ESG) practices, but rather how to afford them. Between the new National Sustainability Reporting Framework (NSRF) and the implementation of the domestic carbon tax, the pressure to comply has never been higher.
However, transitioning to a sustainable business model doesn’t have to be a solo financial burden. The Malaysian government has rolled out a comprehensive suite of “carrots” such as grants, tax incentives, and low-interest loans, to ensure our local industries remain globally competitive.
At Bernard Business Consulting, we believe sustainability is a source of value, not just a cost. Here is your ultimate guidance to the financial aids available to fuel your ESG journey.
Table of Contents
Top ESG Incentives in 2026
The following funds and tax incentives are available to Malaysian businesses to facilitate their sustainability transition:
1. ESG Training Grants
For companies paying the HRD Corp levy, the cost of upskilling staff in ESG and sustainability is fully claimable.
- The Benefit: Use your existing levy to fund ESG-related training programs, such as Carbon Accounting, Sustainability Reporting, and Double Materiality Assessment.
- Source: Human Resource Development Corporation (HRD Corp)
- Official Website: https://hrdcorp.gov.my/hrdcorp-claimable-courses
2. Domestic Investment Accelerator Fund (DIAF) – ESG Adoption
This is a strategic matching grant designed for Malaysian-owned SMEs and Mid-Tier Companies (MTCs) to transition their manufacturing or service operations toward ESG compliance, covering ESG certification fees, carbon footprint accounting, and the purchase of ESG-related data management systems.
- The Benefit: A 50% matching grant (reimbursable) with a maximum limit of RM500,000 per company.
- Source: Malaysian Investment Development Authority (MIDA)
- Official Website: https://www.mida.gov.my/forms-and-guidelines/grants/
3. Business Accelerator Program (BAP 3.0)
SME Corp provides financial assistance to SMEs to improve their operational capabilities, which now includes ESG-related certifications.
- The Benefit: Matching grants to help SMEs upgrade machinery, obtain ESG certifications, and improve production efficiency.
- Source: SME Corporation Malaysia (SME Corp)
- Official Website: https://smecorp.microleapasia.com/
4. PKSlestari Financing Scheme
Part of the broader PKSlestari initiative, this is a dedicated financing facility for MSMEs to adopt ESG practices. You must complete the MSME ESG Assessment on their platform first to qualify for this financing.
- The Benefit: Financing up to RM1 million with a competitive profit rate of 3.5% p.a. and potential rebates of up to 30% based on sustainability performance.
- Source: SME Corporation Malaysia (SME Corp)
- Official Website: https://smecorp.gov.my/index.php/my/programmes1/2015-12-21-09-53-14/pkslestari
5. Low Carbon Transition Facility (LCTF)
A Bank Negara Malaysia initiative designed to help Small and Medium Enterprises (SMEs) fund the costs of transitioning to low-carbon operations.
- The Benefit: Financing up to RM10 million per SME with competitive rates (capped at 5% p.a.). It is often collateral-free because it is backed by SJPP or CGC guarantees.
- Source: Bank Negara Malaysia (available through participating commercial banks)
- Official Website: https://www.bnm.gov.my/funds4sme
6. Green Technology Financing Scheme (GTFS 5.0)
GTFS 5.0 supports producers and users of green technology by making bank financing more accessible.
- The Benefit: A 2% per annum interest subsidy and a 60% to 80% government guarantee on the financing amount.
- Source: Managed by MGTC and guaranteed by SJPP.
- Official Website: https://www.gtfs.my
7. ESG Expenditure Tax Deduction
Introduced to alleviate the immediate compliance costs of reporting, this allows companies to deduct specific ESG-related expenses from their taxable income. Qualifying expenses include the preparation of ESG reports, ESG consultations, carbon accounting audits, and subscriptions to ESG data software.
- The Benefit: A tax deduction of up to RM50,000 per Year of Assessment (YA) until 2027.
- Source: Inland Revenue Board of Malaysia (LHDN)
- Official Website: https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/2928613/PUA%20193%20(2025).pdf
8. Green Investment Tax Allowance (GITA) – Assets
This incentive targets capital expenditure on verified green technology assets, such as solar energy systems, energy-efficient equipment, and waste management technology, for their own internal use. The asset must be listed in the MyHijau Directory.
- The Benefit: A 100% tax allowance on qualifying capital expenditure. This can be offset against 70% of your statutory income.
- Source: Malaysian Green Technology and Climate Change Corporation (MGTC)
- Official Website: https://www.mgtc.gov.my/services/green-investment-tax-allowance-gita/
9. Green Investment Tax Allowance (GITA) – Projects
This is for businesses undertaking major green projects as a Qualifying Activity (e.g., building a renewable energy plant or an integrated waste management facility).
- The Benefit: A 100% tax allowance on qualifying capital expenditure for 5 years. In 2026, this follows a Tiered Approach (Tier 1 for Green Hydrogen gets higher incentives than Tier 3 for standard Renewable Energy).
- Source: MIDA
- Official Website: https://www.mida.gov.my/industries/services/green-technology/
10. Green Income Tax Exemption (GITE) – Services
This incentive is for companies that provide green consultancy or technical services to other businesses.
- The Benefit: A 70% income tax exemption on statutory income derived from green services for 3 years (e.g., ESG audit, green building certification services, and energy efficiency consultancy).
- Source: MIDA
- Official Website: https://www.mida.gov.my/industries/services/green-technology/
11. Green Income Tax Exemption (GITE) – Solar Leasing
This incentive is specifically for companies that own solar systems and lease them to other users.
- The Benefit: A 70% income tax exemption for up to 10 years, depending on the solar capacity (MW) installed.
- Source: MIDA
- Official Website: https://www.mida.gov.my/industries/services/green-technology/
Summary of Grants, Tax Benefits and Funding Opportunities for Your ESG Roadmap
Name | Type | Max Benefit |
1. HRD Corp Grant | Training levy | 100% claimable |
2. DIAF-ESG Adoption Grant | Matching grant | Up to RM500,000 per company |
3. BAP 3.0 | Matching grant | Up to RM400,000 |
4. PKSlestari | Financing | UP to RM1 million |
5. LCTF (BNM) | Financing | Up to RM10 million |
6. GTFS 5.0 | Subsidised loan | 2% interest subsidy |
7. ESG Expenditure Tax Deduction | Tax deduction | RM50,000 per year |
8. GITA Assets | Tax allowance | 100% of CAPEX |
9. GITA Projects | Tax allowance | 100% of CAPEX (Tiered) |
10. GITE Services | Tax exemption | 70% of statutory income |
11. GITE Solar Leasing | Tax exemption | 70% of statutory income for up to 10 years |
How Bernard Business Consulting Can Help
Navigating the documentation for a MIDA grant or a BNM green loan can be as complex as the ESG reporting itself. Most applications fail not because the project is bad, but because the company data provided doesn’t meet the rigorous standards of the funders.
Bernard Business Consulting offers a bridge between your sustainability goals and the financial aids meant to support them. Our comprehensive suite of services include:
- Incentive and Grant Advisory: Identifying which specific financial aids your business qualifies for and managing the application process end-to-end.
- ESG Reporting & Disclosure: Helping you build a NSRF-compliant report that satisfies both regulators and banks.
- Carbon Accounting: Practical measurement of your Scope 1, 2, and 3 emissions to access green financing applications.
- HRD Corp Training Alignment: Providing HRD Corp-claimable ESG courses to upskill your team without additional out-of-pocket costs.
- ESG Strategy & Implementation: Actionable roadmaps to improve your ESG ratings and lower operational risks.
Contact our consultants to discuss how your business can access these financial aids to meet your ESG obligations efficiently.
Bernard Business Academy
NSRF Implementation Training Series
Implement NSRF and IFRS S1 & S2 with Malaysia’s comprehensive training programme, providing practical guidance on sustainability disclosures, climate-related financial reporting, and enterprise risk management. Customised and delivered by our in-house consultants and trainers based on real-world ESG implementation experience.