In an era where environmental, social, and governance (ESG) factors are paramount to investors, Malaysia is taking a significant step forward with the implementation of the National Sustainability Reporting Framework (NSRF). Developed by the Securities Commission Malaysia (SC), the NSRF is a crucial initiative designed to ensure corporate Malaysia provides consistent, reliable, and comparable sustainability information to attract both local and international investors.

What is the NSRF?

The NSRF is Malaysia’s answer to global sustainability reporting standards, specifically the IFRS Sustainability Disclosure Standards (IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures) issued by the International Sustainability Standards Board (ISSB). The framework follows a phased and developmental approach to support widespread adoption and continuous improvement in the quality of disclosures across the corporate sector.

Key Principles and Phased Implementation

The NSRF is built on a “climate-first” approach, prioritizing climate-related disclosures to support Malaysia’s national net-zero goals. This focus on transparency and accountability helps companies provide clear data on their climate risks and opportunities.

The implementation is phased to accommodate companies with varying levels of maturity in sustainability practices. This approach allows companies to gradually adopt the ISSB standards, providing them with time to build capacity and align with global best practices.

The phased timeline is as follows:

• Group 1 (2025 onwards): Main Market listed issuers with a market capitalization of RM2 billion and above.
• Group 2 (2026 onwards): Main Market listed issuers with a market capitalization below RM2 billion.
• Group 3 (2027 onwards): ACE Market listed issuers; and Large Non-listed Companies (Large NLCos) with annual revenue of RM2.0 billion and above for two consecutive financial years preceding the current financial year.

Supporting the Transition: The PACE Initiative

To ease the adoption process, the SC has introduced the PACE initiative, which stands for Policy, Assumptions, Calculators, and Education. PACE provides companies with the necessary tools and guidance to meet their reporting requirements, including:

• Policy Guidance: Offering detailed policy insights and practical advice on how to integrate sustainability into business strategies and reporting processes.
• Assumptions: Consensus-driven support on critical reporting assumptions, helping companies standardize their disclosures and ensure comparability across industries.
• Emissions Calculators: Tools that help companies accurately measure their carbon footprint, ensuring transparent and credible emissions reporting.
• Educational Resources: Access to learning materials, webinars, and capacity-building workshops tailored to support companies in adopting the ISSB Standards.

Why the NSRF Matters

For companies, the NSRF is more than just a compliance exercise; it is an opportunity to enhance transparency, improve risk management, and strengthen investor confidence. By aligning with global standards, Malaysian companies can showcase their commitment to sustainable practices and gain a competitive edge in the global market.

Resources: 

• The National Sustainability Reporting Framework
• Navigating the Transition: A Guide for Boards
• Malaysian Code of Corporate Governance

Disclaimer

The information provided herein is for general information purposes. While we strive to ensure the accuracy of the information, we make no warranties or representations about the completeness, accuracy and usefulness of this information. We assume no responsibility or liability for any errors or omissions in the content of this document. You are advised to refer to the website link(s) provided, where applicable or the regulatory body mentioned herein and/or contact us directly, contact@datamet.com.my.