Important update
This article was originally published as a September 2024 announcement of Malaysia’s National Sustainability Reporting Framework (NSRF). The implementation timetable has since commenced and supporting guidance has been issued.
For the current requirements, entity groups, transition reliefs, Scope 3 timetable and proposed assurance pathway, read our updated guide: Malaysia’s National Sustainability Reporting Framework (NSRF) Explained.
Malaysia’s Finance Minister II, Datuk Seri Amir Hamzah Azizan, announced on 24 September 2024 that the National Sustainability Reporting Framework (NSRF) would be implemented in phases for listed companies and large non-listed companies.
The phased approach aimed to provide sufficient preparation time. Support and training were expected to be offered, particularly to small and medium enterprises (SMEs), to help reduce the complexity and costs associated with sustainability reporting.
The first phase was scheduled to begin in 2025 with large Main Market companies, with a market capitalisation of RM2 billion and above, adopting the International Sustainability Standards Board (ISSB) Standards. This would then extend to other Main Market companies in 2026, followed by ACE Market companies and large non-listed companies in 2027.
The announcement was reported by The Malaysian Reserve, which highlighted the phased approach for Main Market and ACE Market issuers, as well as large non-listed companies. Read the original report: “Malaysia’s NSRF to be implemented in phases”.
Original phased implementation timeline
The phased approach was designed to allow affected organisations time to develop reporting capability and establish the processes needed for sustainability-related financial disclosures.
Why this announcement mattered
The NSRF marked an important step in bringing sustainability-related financial information closer to mainstream corporate reporting in Malaysia.
Amir Hamzah highlighted the growing importance of sustainability in attracting investment. The government also estimated that RM1.3 trillion would be required to support Malaysia’s transition to cleaner energy sources, including renewable energy, energy efficiency and green mobility.
With the NSRF launch, Malaysia joined more than 20 jurisdictions representing around 55% of global GDP that were moving towards IFRS S1 and IFRS S2 adoption.
Datuk Mohammad Faiz Azmi, then chairman of the Securities Commission Malaysia, emphasised the importance of NSRF adoption for Malaysia’s role in global supply chains and as an open trading economy.
The government and regulators presented the framework as a way to improve transparency, strengthen investor confidence and support Malaysia’s relevance in global capital markets. However, the practical benefits for individual companies will depend on the quality of their governance, data and implementation.
What companies need to prepare for
NSRF preparation involves more than producing a sustainability report. Companies need to connect sustainability-related information with business strategy, risk management and financial planning.
Key areas include:
- Governance: Establish clear board and management accountability for sustainability-related risks and opportunities.
- Climate risks and opportunities: Identify issues that may affect business strategy, operations and financial performance.
- GHG data: Build reliable Scope 1 and Scope 2 emissions data, supported by documentation and internal review.
- Scenario analysis: Assess how climate-related scenarios may affect the resilience of business strategy.
- Cross-functional coordination: Involve finance, sustainability, risk, operations, procurement, legal and internal audit teams.
Challenges to anticipate
The phased timetable gives organisations more time to prepare, but credible reporting still requires significant work. Common challenges include incomplete emissions data, unclear data ownership, limited technical capability, weak internal controls and difficulty integrating climate considerations into financial planning.
Disclosure by itself does not reduce climate or sustainability-related risks. Its value comes from helping organisations make better decisions, improve risk management and strengthen long-term resilience.
Current NSRF guidance
The NSRF follows a climate-first and developmental approach. Current guidance covers transition reliefs, Scope 3 emissions, board responsibilities and the pathway towards assurance of sustainability-related information.
For the latest requirements and practical implementation guidance, read:
Malaysia’s National Sustainability Reporting Framework (NSRF) Explained
You may also find these guides useful:
- NSRF Readiness Checklist: Key ESG Actions Every Malaysian Public Listed Company Should Take
- ESG Reporting Without a Sustainability Team: How Malaysian PLCs Can Prepare for NSRF
- ESG Governance Structure for Malaysian Companies
- Preparing for Sustainability Reporting Assurance in Malaysia
Reference
- The Malaysian Reserve: Malaysia’s NSRF to be implemented in phases
- Securities Commission Malaysia: NSRF policy documents and guidance
This article is provided for general information only and does not constitute legal, accounting or assurance advice. Please refer to the relevant regulator and qualified advisers for current requirements applicable to your organisation.
Need support with NSRF preparation?
Bernard Business Consulting supports Malaysian companies in preparing for NSRF and IFRS S1/S2 reporting requirements. Our services include NSRF readiness assessments, ESG governance design, climate-risk and opportunity assessments, GHG emissions accounting, climate scenario analysis, sustainability reporting and assurance readiness.
Contact us to discuss a practical sustainability reporting roadmap for your organisation.
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