Bursa Malaysia recently unveiled its enhanced sustainability reporting requirements in the Main Market Listing Requirements (Main LR) and the ACE Market Listing Requirements (ACE LR) for publicly listed companies (PLCs). This move is a clear signal of the stock exchange operator’s intention to implement stringent requirements and enhance the country’s sustainability reporting framework to elevate listed companies’ sustainability practices and disclosures. The new rules present a challenge to Malaysian companies who are not in line with internationally recognised sustainability frameworks. ESC’s sustainability services can help these companies adapt to stay competitive in this new era of “ethical capitalism”.
Sustainability reporting to be standardised
Although Bursa Malaysia previously required PLCs to submit narrative statements of their sustainability activities beginning in 2016, there have been no strict regulations on international standards for PLCs to follow for Environmental, Social, and Governance (ESG) or sustainability-related reporting.
Therefore, sustainability reporting differs from one company to the next and often gives wooly notions of “Corporate Social Responsibility” (CSR). While most companies opt to reference either the GRI (Global Reporting Initiative) or TCFD (Task Force on Climate-related Financial Disclosures) standards, some companies choose to go “freestyle” and not reference any set of reporting guidelines at all. This lack of uniformity has made it difficult for investors to compare the sustainability efforts of Malaysian companies.
Under the new reporting framework, Malaysian PLCs will have a prescribed set of standards to report on in their annual sustainability report. These will be closely aligned with international ESG standards and cover financial, environmental, and social risks and opportunities. Significantly, Bursa plans to incorporate the TCFD model as a baseline standard for climate reporting in Malaysia. This means companies will need to demonstrate a commitment to accounting for climate-related risks and sustainable development to remain commercially viable. The new reporting requirements could come into effect as early as 2024.
The growing importance of ESG in Malaysia
Bursa Malaysia’s announcement comes as the ISSB (International Sustainability Standards Board) moves to create an internationally recognised set of ESG standards for climate and sustainability reporting. When finalised, IFRS S1 (focussing on sustainability efforts) and IFRS S2 (focussing on climate) will form a set of globally standardised guidelines for companies to demonstrate their corporate responsibility.
In the current market, companies that align with ESG standards are seen as sustainable investments than those which don’t. Therefore, having a universally agreed upon set of reporting standards will help investors to make better investment decisions, ensuring that their investments remain sustainable, in line with Malaysia’s goal of becoming net zero by 2050. As such, Malaysian companies will need to adapt quickly to meet both international and national standards proposed by Bursa.
Developing your company’s sustainability strategy
As one of Asia’s leading sustainability consulting firms, ESC can help Malaysian PLCs to navigate the new reporting requirements set forth by both Bursa and ISSB. We offer a wide range of solutions for clients looking to strengthen their commitment to sustainability and reduce their carbon footprint. Our sustainability consultants have deep insights into various sustainability reporting frameworks, including GRI and TCFD standards.
As ESG issues become more crucial in investment practices, ESC can help companies develop sustainability strategies and roadmaps, calculate carbon footprints, transition to renewable energy, find opportunities in the circular economy, and assess sustainability risks in the supply chain.
ESC has helped companies in various industries across Asia to devise both medium and long term sustainability strategies. For instance, we supported an oil and gas company to conduct a Climate Change Risk Assessment (CCRA) for a new energy complex in Malaysia. We helped a multinational data centre company build a sustainability and decarbonisation strategy for its operations across Asia and conducted a study on renewable energy options in Malaysia for a high-end PCB manufacturer to achieve its renewable energy target.
So, while global market trends nudge industries towards more ethical business practices, ESC can help companies in Malaysia and across Asia to adapt to the changing times.
Interested to know more about how your company can demonstrate its commitment to sustainability and tackling climate change? Then contact us.