2024 has been a significant year for environmental, social, and governance (“ESG”) issues and sustainability, both globally and in Malaysia. In this article, we highlight the major developments and initiatives that have taken place over the past year, showcasing Malaysia’s dedication to sustainable practices and responsible business conduct.
Looking ahead, the outlook for 2025 appears promising, with continued government commitment to sustainability reflected in initiatives such as the National Energy Transition Roadmap (“NETR”) and Budget 2025, which prioritise renewable energy and carbon reduction strategies.
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2024 Highlights
[February 2024] Advisory Committee on Sustainability Reporting (“ACSR”) published the public consultation paper on National Sustainability Reporting Framework (“NSRF”)
The Advisory Committee on Sustainability Reporting (“ACSR”), chaired by the Securities Commission Malaysia (“SC”) holds public consultations to gather feedback from stakeholders on the use of the sustainability disclosure standards issued by the International Sustainability Standards Board (“ISSB”) in Malaysia. The online public consultation was scheduled for six weeks. The public could provide views and feedback on critical considerations including implementation approach, timing and assurance of sustainability disclosures in Malaysia.
[July 2024] Environmental Quality (Amendment) Act 2024 comes into operation
The Malaysia government announces amendments to the Environmental Quality Act (“EQA”), introducing stricter penalties for environmental violations. The maximum fine for serious offenses, such as water pollution, oil spills, and failure to comply with environmental impact assessments, has been raised to RM1 million. These stricter penalties aim to deter environmental violations and promote responsible environmental practices.
[September 2024] Malaysia launched the National Sustainability Reporting Framework
Malaysia has taken significant steps to enhance its sustainability profile. The National Sustainability Reporting Framework (“NSRF”), launched by the Securities Commission Malaysia on September 24, 2024, is a key initiative in this regard. The NSRF aims to ensure consistent, comparable, and reliable sustainability information from Malaysian companies, aligning with global best practices. By adopting the International Sustainability Standards Board (“ISSB”) standards, Malaysia is positioning itself as a leader in sustainable finance and investment.
[September 2024] The National Sustainability Reporting Framework aims for phased implementation of Scope 3 emissions disclosure
The National Sustainability Reporting Framework (“NSRF”) in Malaysia has a phased approach to Scope 3 emissions disclosure. Initially, it mandates the disclosure of Scope 1 and 2 emissions and allow companies to not disclose Scope 3 emissions, except for categories already required by respective regulators. Starting from 2027, Group 1 companies (Main Market listed issuers with market capitalisation of RM2 billion and above) are expected to disclose Scope 3 emissions and aim for reasonable assurance for Scope 1 and 2 emissions. While Scope 3 emissions are not immediately mandated, the NSRF encourages best practices and their disclosure. The framework recognises the complexity of calculating and verifying Scope 3 emissions, especially for SMEs. To facilitate gradual implementation, the NSRF allows companies to prioritise climate-related disclosures and may introduce specific requirements for Scope 3 emissions and assurance in future reporting cycles.
Read more: https://bernardbc.com/what-are-scope-1-2-and-3-emissions/
[September 2024] Malaysia launched the National Climate Change Policy 2.0
Malaysia’s National Climate Change Policy 2.0 was launched on September 30, 2024. This updated policy sets a new framework for the country’s transition to a low-carbon economy, reaffirming its commitment to achieving net-zero greenhouse gas emissions by 2050. It addresses current and emerging climate change challenges and provides a roadmap for building resilience and capacity at all levels.
[October 2024] The European Commission announced the one-year delay to the implementation of the EUDR
The European Union Deforestation Regulation (“EUDR”) was initially set to come into force on December 30, 2024. However, due to the complexity of the regulation and the challenges faced by businesses, particularly small and medium enterprises (“SMEs”), in complying with its requirements, the European Commission proposed a 12-month delay. This proposal was approved, pushing the implementation date to December 30, 2025, for large companies and June 30, 2026, for SMEs. While the delay has been welcomed by many businesses, some environmental groups have expressed concerns about the potential impact on deforestation efforts.
[October 2024] Malaysia announced carbon tax to facilitate net zero transition
Malaysia’s Budget 2025 introduced a carbon tax set to be implemented in 2026. This tax will primarily target the iron, steel, and energy industries. The revenue generated from this tax will be allocated to fund green research and technology programs, promoting a sustainable future. This move aligns with Malaysia’s commitment to reducing its carbon footprint and transitioning to a low-carbon economy. It’s anticipated that the carbon tax will encourage industries to adopt cleaner technologies and reduce their greenhouse gas emissions.
Read more: https://bernardbc.com/malaysias-budget-2025-esg-and-sustainability-highlights/
2025 Outlook
2025 is poised to be a pivotal year for ESG and sustainability. As regulatory pressures intensify, investor expectations rise, and climate change concerns loom large, organisations are compelled to adopt more sustainable practices. This year will witness a convergence of technological advancements, policy shifts, evolving consumer preferences, and spirituality, shaping the future of ESG and sustainability.
Here are three key trends to watch in 2025:
1. Advancement of Carbon Accounting Software
As regulatory pressures and investor demand for accurate carbon data intensify, carbon accounting software will become increasingly sophisticated. These tools will streamline the process of measuring, reporting, verifying, and offsetting greenhouse gas emissions, enabling organisations to make informed decisions and achieve their climate goals.
2. Implementation of Decarbonisation Solutions
The year 2025 will see a surge in the implementation of decarbonisation solutions across various industries. Renewable energy sources, energy efficiency measures, and carbon capture, utilisation, and storage (“CCUS”) technologies will gain traction. Companies will invest in innovative solutions to reduce their carbon footprint and mitigate climate change risks.
3. Emergence of Inner Development Goals
Alongside traditional ESG metrics, a growing focus on inner development goals (“IDGs”) will emerge. IDGs emphasise the importance of human capital, well-being, and organisational culture in driving sustainable business practices. Companies will prioritise employee well-being, ethical leadership, and social impact to create a more resilient and purpose-driven organisation.
2024 has been a year of significant progress in the realm of ESG and sustainability. As we move into 2025, we can anticipate further advancements in ESG and sustainability. With continued technological innovation, evolving regulatory frameworks, and heightened investor expectations, organisations will be compelled to prioritise sustainability. By embracing these trends and adopting sustainable practices, we can create a more resilient and equitable world for generations to come.
Bernard Business Consulting’s Solutions
At BBC, we are committed to helping organisations navigate the complexities of ESG and sustainability. Our team of sustainability practitioners provide comprehensive and customisable sustainability services, which include:
- Awareness: Engaging workshops and mindfulness programmes
- Monitoring: ESG and sustainability, Greenhouse gases, Product carbon footprint, CBAM, EUDR, SBTi, etc.
- Decarbonisation: Innovative solutions such as Greenhouse Solar Dryer, Solar Air Dryer, Sustainable plantation management, smart energy management system, Life Q chlorine dioxide disinfectant, etc.
Contact us for more information.
Live
ESG and Sustainability: 2024 Highlights and 2025 Outlook
2024 has been a transformative year for ESG and sustainability. We anticipate more exciting developments in 2025. Watch the recording of our live session to hear what our sustainability practitioner has to say.