A Beginner’s Guide to Bursa Malaysia’s ESG Reporting Requirements

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A Beginner’s Guide to Bursa Malaysia’s ESG Reporting Requirements

Reading Time: Approximately 7-8 minutes

Key Takeaway: Are you a public listed company in Malaysia, or perhaps an investor looking at Malaysian stocks? You've probably heard the buzz about ESG – Environmental, Social, and Governance. It's no longer just a nice-to-have; it's becoming a must-do, especially with Bursa Malaysia's ESG Reporting Requirements getting stricter. Many companies feel a bit lost on where to start or what exactly they need to report. This article is designed to be A Beginner's Guide to Bursa Malaysia's ESG Reporting Requirements, breaking down the complex jargon into simple, actionable steps. We'll help you understand why it matters, who needs to comply, and what key information you'll need to share to meet these evolving standards and stay ahead of the curve.

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Problem: Many public listed companies (PLCs) in Malaysia, and those aspiring to be listed, are aware of the growing importance of ESG (Environmental, Social, Governance) but feel overwhelmed by Bursa Malaysia's ESG Reporting Requirements. The technical language and the perceived complexity can lead to confusion, delayed compliance, or even under-reporting, risking reputational damage and investor scrutiny.

Agitate: Without a clear understanding of A Beginner's Guide to Bursa Malaysia's ESG Reporting Requirements, companies might struggle to collect the right data, fail to meet mandatory deadlines, or miss out on the strategic benefits of strong ESG performance. This can translate into reduced investor confidence, difficulty attracting green financing, and a competitive disadvantage in an increasingly sustainability-focused market.

Solve: This article offers A Beginner's Guide to Bursa Malaysia's ESG Reporting Requirements, simplifying the process and making it accessible for everyone. We'll break down the key elements of Bursa Malaysia's framework, explain who needs to report and when, and outline the essential information to include. By demystifying ESG reporting, we aim to equip companies with the knowledge to confidently meet their obligations, enhance their transparency, and unlock the long-term value that comes with responsible business practices.

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Summary

A Beginner's Guide to Bursa Malaysia's ESG Reporting Requirements means understanding what information listed companies need to share about their impact on the environment, how they treat people, and how well they are managed.

• What is ESG?
• Environmental: How a company impacts nature (e.g., carbon emissions, waste, water use).
• Social: How a company affects people (e.g., employee well-being, community involvement, diversity).
• Governance: How a company is run (e.g., fair leadership, anti-corruption, ethics).
• Why is it important?
• Mandatory: Bursa Malaysia now requires it for listed companies.
• Investors Care: More investors look at ESG to decide where to put their money.
• Good for Business: Helps companies manage risks, find opportunities, and improve their reputation.
• Who needs to comply & When (Phased Approach):
• Main Market (Large-Cap): Companies with over RM2 billion market value: Start reporting from annual reports for financial years ending on or after December 31, 2025 (with data from FY2024).
• Other Main Market Companies: Start reporting for financial years ending on or after December 31, 2026.
• ACE Market Companies: Start reporting for financial years ending on or after December 31, 2027.
• What to report:
• A Sustainability Statement in your annual report.
• Information aligned with IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) standards.
• Includes a prescribed summary performance table with ESG metrics and targets.
• Must cover data for the last 3 financial years on a rolling basis (eventually).
• May require internal review or independent assurance.
• How to report: Through the Bursa Malaysia ESG Reporting Platform (part of Bursa LINK system).

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1. What is ESG and Why Does it Matter to Companies in Malaysia?

You've probably heard the letters "ESG" buzzing around in business news, investor talks, and company meetings. But what exactly do they mean? Let's break it down simply.

ESG stands for Environmental, Social, and Governance. It's a way of looking at how a company acts in the world, beyond just its profits.

• E is for Environmental: This is about how a company affects the planet.
• Think about: How much energy does the company use? Does it use clean energy? How much water does it use, and how much waste does it produce? Does it pollute the air or water? How is it dealing with climate change risks like floods or droughts?
• Examples: Reducing carbon emissions (the stuff that causes global warming), recycling waste, managing water carefully, protecting natural habitats.
• S is for Social: This is about how a company affects people – its employees, customers, suppliers, and the communities where it operates.
• Think about: Are employees treated fairly? Is the workplace safe? Does the company have a diverse workforce (different genders, backgrounds, etc.)? Does it give back to the community? Are its products safe for customers?
• Examples: Fair wages, good health and safety programs, employee training, community development programs, ensuring ethical supply chains.
• G is for Governance: This is about how a company is run and managed. It's about leadership, rules, and how decisions are made.
• Think about: Does the company have a fair and diverse board of directors? Does it have strong rules against bribery and corruption? Are shareholders treated fairly? Is there good risk management in place?
• Examples: Clear business ethics, transparent reporting, independent board members, strong internal controls to prevent fraud.

Why does all this matter for companies, especially those listed on Bursa Malaysia?

1. It's the Law (Soon!): Bursa Malaysia, our stock exchange, is making ESG reporting mandatory for all listed companies. This isn't just a suggestion anymore. They've updated their rules to ensure companies share this information. This is a big deal!
2. Investors Demand It: More and more, big investors (like pension funds and global investment firms) want to know how well companies handle ESG issues before they put their money in. They believe companies with good ESG practices are less risky and will do better in the long run.
3. Better Business, Better Reputation: Companies that focus on ESG often find ways to save money (like using less energy), attract better talent, and build a stronger, more trusted brand. It's not just about doing good; it's about doing good business.
4. Future-Proofing: The world is changing. Climate change, social inequality, and demands for transparency are big topics. Companies that understand and manage their ESG risks are better prepared for the future.

So, if you're a public listed company (PLC) in Malaysia, understanding Bursa Malaysia's ESG Reporting Requirements is no longer optional. It's a key part of staying competitive and attractive to investors. Let's dive into A Beginner's Guide to Bursa Malaysia's ESG Reporting Requirements to see what you need to do.

 

2. Who Needs to Report and When? (The Phased Approach)

Bursa Malaysia understands that getting ready for ESG reporting takes time. That's why they've introduced the new requirements in phases, meaning different types of companies have different deadlines. This gives companies a chance to get their ducks in a row.

Here's a breakdown of who needs to report and when:

• Group 1: Large-Cap Main Market Companies
• Who: These are the biggest companies listed on the Main Market of Bursa Malaysia, specifically those with a market value (market capitalization) of RM2 billion and above.
• When: These companies need to start preparing their sustainability information from January 1, 2025. Their first official Sustainability Statement (the report) that follows the new, stricter rules will be for financial years ending on or after December 31, 2025. This means the data they report will generally be for their 2025 financial year, and eventually, they'll need to show data for the past three financial years.
• Group 2: Other Main Market Companies
• Who: These are the rest of the companies listed on the Main Market, basically those with a market value below RM2 billion.
• When: These companies get a bit more time. They need to start reporting under the new requirements for financial years ending on or after December 31, 2026.
• Group 3: ACE Market Companies
• Who: These are companies listed on the ACE Market, which is usually for smaller, growth-oriented companies. This group also includes large non-listed companies with annual revenue of RM2 billion or more (though for them, it's the Securities Commission, not Bursa, directly mandating this).
• When: They have the longest lead time. They need to start reporting under the new requirements for financial years ending on or after December 31, 2027.

Important Note on Transition: During these transition periods, Bursa Malaysia is offering some "relief measures." This means they're giving companies some flexibility, especially for things like detailed climate-related disclosures (like Scope 3 emissions, which are indirect emissions). The goal is to help companies get used to the new rules without being overwhelmed.

Why is it phased?

It's about being fair and practical. Larger companies usually have more resources (money, staff) to gather and report this kind of information. Smaller companies need more time to build up their systems and understanding. This phased approach helps everyone gradually move towards better ESG reporting.

 

3. What Information Do You Need to Report? (The Sustainability Statement)

When Bursa Malaysia talks about ESG reporting, they're mainly referring to a document called the "Sustainability Statement." This statement needs to be included in your company's annual report. It's a narrative (a story, basically) about how your company manages its material (most important) economic, environmental, and social risks and opportunities.

The big change is that this Sustainability Statement now needs to be prepared based on international standards. Bursa Malaysia is aligning with the IFRS Sustainability Disclosure Standards, specifically:

• IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information. This standard is like a general rulebook for all sustainability reporting. It asks you to explain how sustainability issues (like climate change, water scarcity, or human rights) could affect your company's financial situation – both risks and opportunities.
• IFRS S2: Climate-related Disclosures. This standard focuses specifically on climate change. It requires companies to explain their climate-related risks and opportunities. This includes:
• Governance: How your board and management oversee climate-related risks and opportunities.
• Strategy: How climate-related risks and opportunities impact your business strategy and financial planning.
• Risk Management: How your company identifies, assesses, and manages climate-related risks.
• Metrics and Targets: This is where you put numbers! For example, your greenhouse gas (GHG) emissions (Scope 1 and Scope 2 are usually mandatory, with Scope 3 disclosures being optional unless mandated by other regulators), energy consumption, water use, and targets for reducing these.

Key things you must include in your Sustainability Statement:

• Materiality Assessment: This is a fancy term for figuring out what ESG issues are most important to your business and your stakeholders (like investors, employees, customers, and the community). Not every ESG issue is equally important for every company. A factory will have different "material" issues than a software company. You need to explain how you decided what's important.
• Governance Structure: Explain who in your company is responsible for managing sustainability matters. Is it the board of directors? A special committee? A sustainability manager?
• Strategic Management: How does your company plan to manage these important ESG issues? What are your goals, and how will you achieve them?
• Metrics and Targets: This is where you put the numbers! You need to show your performance and progress over the past three financial years (on a rolling basis, meaning each year you add the latest data and drop the oldest). This often includes:
• Environmental:
• Greenhouse gas (GHG) emissions (Scope 1, Scope 2, and potentially Scope 3)
• Energy consumption (total, and maybe by renewable vs. non-renewable sources)
• Water withdrawal and consumption
• Waste generation and diversion (how much is recycled vs. sent to landfill)
• Social:
• Employee diversity (e.g., gender, age, ethnicity)
• Employee training hours
• Health and safety performance (e.g., number of injuries, fatalities)
• Community investments/donations
• Governance:
• Board diversity
• Anti-corruption policies and training
• Data on significant risks related to corruption
• Summary Performance Table: Bursa Malaysia requires you to put a summary of your key ESG data in a specific table format within your Sustainability Statement. This makes it easy for investors to compare data across different companies.
• Internal Review or Independent Assurance: You need to state whether your Sustainability Statement has been reviewed internally (by your internal auditors) or if an independent third party has checked and confirmed the accuracy of your information. This adds credibility to your report.

What about the Bursa Malaysia Sustainability Reporting Guide?

Bursa Malaysia has also published a Sustainability Reporting Guide (now in its 4th Edition). This guide is super helpful because it provides more detailed instructions, examples, and toolkits to help companies prepare their Sustainability Statement in line with the new requirements. It's a "must-read" resource for any company starting this journey.

 

4. How Do You Report It? (The ESG Reporting Platform)

Bursa Malaysia has created a special online platform to help companies submit their ESG data. This is called the Bursa Malaysia ESG Reporting Platform, and it's part of the existing Bursa LINK system.

Here's how it generally works:

• Data Input: Listed companies will input their sustainability data into this platform. This includes the metrics and targets we talked about earlier (emissions, energy use, etc.).
• Generating the Table: The platform will then automatically generate the required summary performance table based on the data you've entered.
• Inclusion in Annual Report: This generated table must then be included in your company's official Sustainability Statement, which is part of your annual report.
• Data Integrity: It's important to be accurate because once the data is submitted, it typically cannot be changed, ensuring the integrity of the information.
• Resources: Bursa Malaysia also provides user guides and videos to help companies navigate the platform.

Why an online platform?

• Standardization: It helps ensure that all companies report their data in a consistent format, making it easier for investors to compare companies.
• Efficiency: It streamlines the submission process.
• Transparency: It creates a centralized place for sustainability data.

 

5. Getting Started: Tips for Beginners

If all this sounds a bit overwhelming, don't worry! Many companies are in the same boat. Here are some simple steps to help you begin your ESG reporting journey:

• Start Early: Don't wait until the last minute! Gathering data and setting up systems takes time.
• Form a Team: Get people from different departments involved – HR, operations, finance, legal, and even top management. Sustainability affects everyone in the company.
• Understand Your "Materiality": Figure out which ESG issues are truly important to your business. Don't try to report on everything at once. Focus on what matters most and what you can control. Bursa Malaysia's guide helps with this.
• Collect Data Systematically: Start tracking your energy use, water consumption, waste generation, employee numbers, training hours, etc. Even if you don't have perfect data now, start collecting it consistently. The better your data, the more accurate and useful your report will be.
• Set Goals (Even Small Ones): Once you know your current performance, set realistic targets for improvement. For example, "reduce electricity use by 5% next year."
• Use the Bursa Malaysia Resources: They have published detailed guides, toolkits, and an ESG Reporting Platform. Use them! They are designed to help you.
• Learn from Others: Look at the Sustainability Statements of other companies (especially those in your industry) that are already doing good ESG reporting. See what they include and how they present their information.
• Consider External Help: If you feel completely lost, consider getting help from consultants who specialize in ESG reporting. They can guide you through the process, help with data collection, and even advise on strategy.
• Communicate Internally: Make sure your employees understand why ESG is important and how their actions contribute to your company's sustainability goals.

Remember: ESG reporting is a journey, not a one-time event. It's about continuously improving your company's environmental, social, and governance practices, and then transparently sharing that progress with the world. By doing so, you're not just meeting a requirement; you're building a more resilient, responsible, and attractive business for the long term.

In summary, A Beginner's Guide to Bursa Malaysia's ESG Reporting Requirements reveals that reporting on Environmental, Social, and Governance (ESG) factors is now a mandatory and strategic imperative for public listed companies in Malaysia. Bursa Malaysia's new rules are being phased in, starting with large-cap Main Market companies for financial years ending on or after December 31, 2025, and extending to all Main and ACE Market companies in subsequent years. The core requirement is a Sustainability Statement in your annual report, which must align with international standards like IFRS S1 and S2, covering everything from climate-related risks and carbon emissions to employee well-being and governance structures. This reporting, often facilitated through the Bursa Malaysia ESG Reporting Platform, demands a clear understanding of your material ESG issues, robust data collection, and a commitment to transparency and continuous improvement. By embracing these requirements, companies not only ensure compliance but also enhance investor confidence, attract sustainable financing, and bolster their long-term resilience in a rapidly evolving global market.

Feeling overwhelmed by Bursa Malaysia's new ESG reporting requirements? Don't navigate this complex landscape alone! Our expert team specializes in helping companies understand, prepare for, and comply with all aspects of ESG reporting, from materiality assessments and data collection to report preparation and strategic advice. We can guide you through Bursa Malaysia's guidelines and help you turn compliance into a competitive advantage. Take the first step towards a transparent and sustainable future for your business! WhatsApp or call us today at 0133006284 for a comprehensive consultation.