Takeaways
- ESG governance should reflect the organisation’s size, risks, reporting needs and capabilities.
- Board members should understand ESG developments, business implications and NSRF resource needs.
- Senior management should turn Board direction into actions, budgets and reporting processes.
- Relevant business functions should support ESG implementation and data ownership.
- Companies should review their governance as sustainability expectations evolve.
Why ESG Governance Matters
As Malaysian companies prepare for the National Sustainability Reporting Framework, IFRS S1 and IFRS S2, ESG governance is becoming an increasingly important business priority.
Companies are expected to explain how sustainability-related risks and opportunities are overseen, managed and integrated into decision-making. This requires more than appointing an ESG representative or forming a committee. It requires a governance structure that enables informed oversight, clear accountability, sufficient resources and effective coordination across the organisation.
We discussed where Malaysian public listed companies should begin their ESG and NSRF readiness journey, how companies can prepare without a dedicated sustainability team and the key actions companies may consider for NSRF readiness.
The next question is how ESG responsibilities should be organised across the Board, management and business functions.
Table of Contents
What Is an ESG Governance Structure?
An ESG governance structure defines how an organisation oversees, manages and reports its environmental, social and governance responsibilities.
It may address:
- Board and committee oversight
- Management accountability
- Decision-making authority
- Functional responsibilities
- Reporting and escalation lines
- Policies and procedures
- Data ownership
- Performance monitoring
There is no single model that will suit every Malaysian company.
A large public listed company with several subsidiaries may require more formal governance arrangements, while a smaller organisation may strengthen its existing Board, management committee and functional teams.
The key consideration is whether the structure allows the company to understand relevant ESG developments, identify material risks and opportunities, allocate appropriate resources, monitor progress and produce reliable disclosures.
What Should the Board Understand and Oversee?
The Board plays a central role in setting the tone and direction for ESG governance.
To provide meaningful oversight, Board members should first develop a sufficient understanding of:
- What ESG means within the company’s business context
- How sustainability expectations are changing
- How the NSRF, IFRS S1 and IFRS S2 may affect the organisation
- Which sustainability and climate-related matters may influence strategy, risk and financial performance
- What internal capabilities, systems and resources may be required
ESG knowledge should not be limited to general awareness. The Board should be able to ask informed questions, evaluate management’s proposed approach and understand whether the organisation is progressing at an appropriate pace.
Board members may wish to consider:
- Does the Board receive regular updates on ESG and regulatory developments?
- Are sustainability-related risks and opportunities discussed in the context of business strategy?
- Does management have the right expertise, authority and budget?
- Are finance, risk and operational teams sufficiently involved?
- Does the organisation have reliable data and reporting processes?
- Is additional training, external advice or technology support required?
- Is the company preparing early enough for NSRF and future assurance expectations?
The Board’s responsibility is not fulfilled simply because ESG has been assigned to a committee or management team. It should remain informed, challenge assumptions and ensure that the organisation has the resources needed to respond effectively.
Should ESG Oversight Sit with the Full Board or a Committee?
Some companies may retain ESG oversight at the full Board level. Others may assign specific responsibilities to an existing audit, risk, governance or sustainability committee.
The most suitable approach depends on the company’s current governance structure, complexity and exposure to sustainability-related issues.
Before assigning responsibility, companies may wish to consider:
- Whether the committee has an appropriate mandate
- Whether its members have sufficient ESG knowledge
- How frequently sustainability matters should be reviewed
- What information should be presented
- How responsibilities connect with other Board committees
- Which matters require escalation to the full Board
The objective should be effective oversight rather than creating additional governance layers without a clear purpose.
How Should Senior Management Responsibilities Be Organised?
Senior management is responsible for translating the Board’s direction into coordinated implementation.
This may include:
- Establishing priorities and action plans
- Allocating budgets, people and systems
- Assigning responsibilities across departments
- Monitoring risks, targets and performance
- Resolving cross-functional issues
- Reporting progress and challenges to the Board
- Ensuring that sustainability disclosures are properly prepared and reviewed
Overall accountability may sit with the chief executive officer, chief financial officer, chief sustainability officer, chief risk officer or another senior executive.
The specific title is less important than whether the individual has sufficient authority, access to information and support from other functions.
Companies should consider whether management responsibilities are clearly defined and whether the accountable executive can mobilise the resources needed across the organisation.
Should the Company Establish an ESG Committee?
An ESG steering committee or working group may help coordinate responsibilities that sit across several business functions.
Potential participants may include representatives from:
- Finance
- Risk management
- Sustainability
- Operations
- Procurement
- Human resources
- Legal and compliance
- Company secretarial
- Internal audit
- Information technology
However, establishing a committee should not become an end in itself.
Companies may first consider:
- What decisions should the committee make?
- How will it support management accountability?
- Which functions need to participate?
- What information should be reviewed?
- How will unresolved matters be escalated?
- Could an existing management committee perform the role effectively?
For some organisations, strengthening an existing committee may be more practical than creating a separate ESG structure.
How Can Business Functions Contribute?
ESG governance is stronger when responsibilities are connected to normal business processes.
Finance teams may support financial impact assessments, budgeting, data controls and reporting consistency. Risk teams may incorporate sustainability-related risks into enterprise risk management. Operations may manage environmental and social performance, while procurement may address supplier requirements, supply-chain exposure and Scope 3 data.
Human resources may contribute workforce data, capability building and performance measures. Internal audit may review controls, governance processes and assurance readiness.
The sustainability team, where one exists, should coordinate and facilitate the process rather than become the sole owner of every ESG responsibility.
For further discussion on risk integration, refer to Sustainability Risk and Opportunity Assessment in Malaysia.
What Resources May Be Required for ESG and NSRF Readiness?
A key governance responsibility is ensuring that the company has sufficient resources to meet its sustainability objectives and reporting obligations.
Depending on the organisation’s current maturity, these resources may include:
- Board and management ESG training
- Dedicated or shared internal personnel
- Cross-functional data owners
- ESG policies and procedures
- GHG accounting capability
- Climate risk assessment expertise
- Data collection systems
- Reporting and internal review controls
- External technical or advisory support
- Budget for implementation and assurance preparation
Companies do not necessarily need to establish a large sustainability department. However, they should understand which capabilities are required, which can be developed internally and where external support may be appropriate.
How Bernard Business Consulting Supports ESG Governance
Bernard Business Consulting supports Malaysian organisations in reviewing and strengthening ESG governance based on their business context, maturity and reporting requirements.
This may include Board and senior management briefings, governance design, responsibility mapping, policy development, sustainability risk integration, ESG training and NSRF readiness support.
The objective is not to impose a standard governance model, but to help organisations understand their responsibilities, identify capability and resource needs, and establish arrangements that support informed oversight and credible reporting.
Further guidance is available through Bernard Business Consulting’s NSRF service page,
Build an ESG Governance Structure That Supports Informed Decision-Making
There is no universal ESG governance structure. The appropriate approach should reflect the organisation’s strategy, business model, risk profile, internal resources and reporting obligations.
What matters is whether the Board understands the evolving ESG landscape, whether management has clear accountability and whether the company has sufficient capability and resources to prepare for NSRF, IFRS S1 and IFRS S2.
Contact us to find out how Bernard Business Consulting can support your organisation with practical advisory, training, reporting and implementation support related to ESG governance, Board and management briefings, responsibility mapping, resource planning, sustainability policies, NSRF readiness and IFRS S1 and IFRS S2 implementation.
Webinar
How Can You Build Effective ESG Governance?
28th July 2026, 2:00 PM to 2:30 PM MYT
Build a strong ESG governance foundation for NSRF and IFRS S1 & S2 readiness. Learn practical approaches to governance structures, accountability and oversight that strengthen strategy, reporting and long-term business resilience.