Takeaways
- NSRF positions Malaysia to adopt global sustainability standards (IFRS S1 & S2), bringing clarity and rigour to ESG disclosures.
- The phased rollout (2025–2030) allows companies to scale maturity, but early movers will gain strategic advantage.
- Scope 3 emissions and external assurance are the toughest hurdles. Those who prepare ahead will mitigate compliance risks.
- Organisations that embed NSRF readiness into their core strategy will build long-term stakeholder trust, investor confidence, and operational resilience.
With global capital increasingly flowing to sustainable businesses, regulators are tightening disclosure rules worldwide. Malaysia’s NSRF is a strategic leap—institutionalising sustainability disclosures in tandem with global norms.
For local and regional companies, NSRF is more than a regulatory requirement. It’s a market differentiator: those who act early can lead in transparency, secure investor trust, and embed climate resilience into their DNA.
Table of Contents
What is Malaysia’s National Sustainability Reporting Framework (NSRF)
Launched on 24 September 2024, the National Sustainability Reporting Framework (NSRF) sets Malaysia’s corporate sustainability reporting on a path aligned with IFRS Sustainability Disclosure Standards (ISSB). It leverages IFRS S1 (General Requirements) and IFRS S2 (Climate Disclosures) as its foundational pillars.
By standardising sustainability disclosures, NSRF helps ensure that sustainability data is consistent, comparable and credible. It is a key step toward market confidence and regulatory trust.
Why it matters
With global capital increasingly flowing to sustainable businesses, regulators are tightening disclosure rules worldwide. Malaysia’s NSRF is a strategic leap to institutionalise sustainability disclosures in tandem with global norms.
For local and regional companies, NSRF is more than a regulatory requirement. It’s a market differentiator: those who act early can lead in transparency, secure investor trust, and embed climate resilience into their DNA.
Who Needs to Comply and When
NSRF divides entities into three groups:
- Group 1: Major Main Market listings with market capitalisation ≥ RM 2 billion and selected financial institutions.
- Group 2: Other Main Market listed companies.
- Group 3: ACE Market listed firms and large non-listed firms (revenue ≥ RM 2 billion).
Implementation Timeline
Scope 3 emissions—indirect emissions throughout an organisation’s value chain—often make up the largest share of total corporate emissions but are the most difficult to measure and report.
The unified standards will reinforce Scope 3 accounting by combining:
- The GHG Protocol’s detailed 15 categories Scope 3 framework, covering upstream and downstream activities.
- ISO’s third-party verification and assurance standards, which promote trustworthy and consistent reporting.
This comprehensive approach will meet growing investor and regulator expectations for transparent, complete value chain emissions disclosure. Organisations—especially SMEs—are encouraged to pursue capacity-building and practical guidance to meet these complex requirements.
What Disclosures Must Be Made
Under NSRF’s adoption of IFRS S1 and S2, organisations must disclose across these areas:
Governance: Board oversight and roles
Strategy & Business Model: How sustainability affects and is affected by operations
Risk Management: Identification and mitigation of sustainability risks
Metrics & Targets: Quantitative KPIs and emissions (Scope 1, 2, eventually 3)
Climate Disclosures: Climate-related scenario analysis, resilience, transition strategy
All disclosures must follow the principle of financial materiality: only those matters likely to influence investor decisions are required.
Transition Reliefs and Flexibility
To ease adoption, NSRF offers:
- Delayed Scope 3 reporting for certain groups in early years
- Segment-based disclosures, allowing focus on material business lines
- Exemptions for non-listed entities under parent firms already reporting under equivalent standards
- Proportional reporting—smaller entities may start with simplified disclosures
These mechanisms ensure NSRF is more accessible, not burdensome.
Assurance and Credibility
Mandatory external assurance is central to NSRF’s credibility.
- Reasonable assurance will be required initially for Scope 1 & 2 disclosures by Group 1 (by 2027).
- Assurance providers must adhere to recognised professional standards, ensuring sustainability data is reliable and not merely aspirational.
This move is intended to counter greenwashing and align sustainability data with the rigour applied to financial reporting.
How Businesses Should Prepare
We often see companies diving into NSRF readiness with quick fixes or template-driven reports. It feels like progress, but without a solid foundation, the effort usually leads to patchy results, inconsistent data, and lost opportunities.
Here is the Strategic Action Plan that companies can follow to embed NSRF into their core business strategies and operations:
- Gap Assessment
Benchmark your current ESG practices against IFRS S1 and IFRS S2 requirements. This reveals weaknesses in governance, risk management, and disclosure quality. Without this baseline, companies cannot prioritise improvements or demonstrate readiness. - Materiality Assessment
Identify the sustainability themes most relevant to your business and stakeholders. This ensures focus on the issues that drive financial impact, regulatory relevance, and investor interest. Skipping this step often results in reporting on everything and nothing at the same time. - Data Architecture
Build reliable systems to capture emissions, non-financial metrics, and assurance-ready datasets. Strong data architecture reduces errors, improves comparability, and makes reporting scalable across operations and value chains. Poor systems, in contrast, create inefficiencies and compliance risks. - Target and Scenario Analysis and Development
Set measurable, science-based targets and conduct climate-related scenario analysis. By modelling different climate futures, companies can stress-test their strategies and prepare for regulatory, market, and environmental shocks. Without this forward-looking planning, businesses risk being caught off guard. - Narrative Crafting
Translate technical disclosures into a clear story linking sustainability performance to financial outcomes. A strong narrative engages investors, builds trust, and positions the company as a responsible leader. Weak narratives leave reports unread and strategies misunderstood. - Assurance Planning
Engage assurance providers early to ensure data systems meet audit requirements. Waiting until the last minute leads to costly adjustments and audit failures. Early planning builds confidence and credibility in sustainability disclosures. - Capability Building
Invest in training, culture, and tools such as a ESG Software. Without capability building, companies risk treating NSRF as a compliance exercise rather than an opportunity for strategic transformation.
Besides, leadership involvement, cross-departmental alignment, and early investment are critical success factors. Strong board oversight, collaboration between finance, sustainability, operations, and IT, and a proactive mindset will determine whether NSRF adoption is seen as a compliance burden or a competitive advantage.
Webinar
October 9, 2025 @ 2:00 PM to 2:30 PM MYT
Understanding Malaysia’s National Sustainability Reporting Framework
Gain practical insights into Malaysia’s National Sustainability Reporting Framework (NSRF), its links to IFRS S1 & S2, and actionable steps for compliance, governance, and value creation.