The Top 5 Challenges in ESG Reporting for Malaysian Companies
Reading Time: ~12 minutes
Key Takeaway: Many Malaysian companies struggle with ESG (Environmental, Social, and Governance) reporting due to unclear data, lack of expertise, and evolving global standards — but with the right structure and mindset, these challenges can be overcome to build trust and long-term value.
Introduction
Problem: ESG reporting is no longer optional. Investors, regulators, and customers now demand transparency on how your company manages sustainability. But for many Malaysian businesses, the process feels overwhelming.
Agitation: Without clear reporting, companies risk losing investor confidence, missing out on funding, or even facing reputational harm. Many teams find themselves drowning in data, unsure what to disclose or how to meet global standards.
Solution: This guide, “The Top 5 Challenges in ESG Reporting for Malaysian Companies,” breaks down the most common roadblocks — and offers practical ways to tackle them. Let’s make ESG reporting something your business can handle confidently and effectively.
Summary Box
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What it is: A practical guide to “The Top 5 Challenges in ESG Reporting for Malaysian Companies.”
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Why it matters: ESG reporting drives transparency, compliance, and brand credibility.
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What you’ll learn: The five biggest challenges Malaysian companies face — and how to solve them.
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Who it’s for: Business owners, sustainability officers, compliance teams, and corporate leaders.
The Top 5 Challenges in ESG Reporting for Malaysian Companies
ESG reporting is gaining serious traction across Malaysia — especially as Bursa Malaysia, global investors, and government policies push for more transparency. But many organizations are still figuring out how to report their sustainability performance in a meaningful way.
Let’s unpack “The Top 5 Challenges in ESG Reporting for Malaysian Companies” and what your business can do to address them.
1. Lack of Clear ESG Frameworks and Standards
One of the first challenges companies face is where to start. ESG reporting involves many international standards — and choosing the right one can feel confusing.
Common frameworks include:
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GRI (Global Reporting Initiative): Focuses on overall sustainability performance.
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SASB (Sustainability Accounting Standards Board): Tailored for financial and investor disclosure.
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TCFD (Task Force on Climate-related Financial Disclosures): Focused on climate risk.
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ISSB (International Sustainability Standards Board): Aims to unify sustainability reporting globally.
The Malaysian Context:
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Bursa Malaysia requires listed companies to issue sustainability statements aligned with GRI and TCFD.
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However, many small and medium-sized enterprises (SMEs) lack resources to follow these frameworks effectively.
Solutions:
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Pick one framework that aligns with your business goals — don’t try to use all at once.
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Get professional help to interpret guidelines correctly.
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Use software or templates for standardized reporting.
Without a clear framework, reports often end up inconsistent or incomplete — hurting credibility.
2. Poor Data Quality and Collection Systems
The second major issue is data — or more specifically, the lack of reliable data.
Many Malaysian companies collect sustainability data manually, using spreadsheets, emails, or even paper logs. This leads to errors, missing information, and inconsistent reporting across departments.
Examples of Common Data Problems:
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Different branches using different methods to measure energy or waste.
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HR not tracking social or diversity data accurately.
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Supply chain partners not sharing reliable environmental data.
Why It Matters:
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Investors expect quantifiable, verifiable data.
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Poor data quality can damage trust and raise red flags during audits.
Solutions:
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Implement centralized ESG data management software.
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Set up clear data collection protocols for every department.
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Conduct periodic data validation checks.
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Train staff on how to record and report ESG metrics consistently.
When data is clean and consistent, your ESG report becomes more powerful and credible.
3. Limited ESG Knowledge and Expertise
Even with the best intentions, many organizations struggle simply because they don’t have enough expertise in ESG reporting.
The Reality:
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ESG is still new for many Malaysian industries, especially SMEs.
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Internal teams often lack knowledge about sustainability metrics, materiality assessments, or global reporting trends.
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Without proper training, companies produce reports that tick boxes but lack real insight.
Examples of Gaps:
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Confusing “CSR activities” (like donations) with ESG performance metrics.
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Failing to link business strategy with sustainability outcomes.
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Misinterpreting climate data or risk disclosures.
Solutions:
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Appoint or train a Sustainability Officer within your organization.
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Engage external consultants to set up frameworks and processes.
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Provide ESG training sessions for management and staff.
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Participate in workshops or webinars by Bursa Malaysia or MGTC (Malaysian Green Technology and Climate Change Corporation).
Remember — ESG reporting isn’t about filling forms. It’s about showing genuine commitment and strategy alignment.
4. Supply Chain Transparency and Data Gaps
One of “The Top 5 Challenges in ESG Reporting for Malaysian Companies” lies outside the company — in the supply chain.
Even if your company manages its energy and waste well, your suppliers might not. That makes it difficult to report total sustainability performance accurately.
Typical Challenges:
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Suppliers not sharing environmental or labor data.
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Lack of standardized reporting among subcontractors.
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Overseas suppliers not following Malaysia’s ESG expectations.
Why This Matters:
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Many ESG frameworks require Scope 3 emissions (indirect emissions from suppliers) to be reported.
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Customers and investors increasingly assess your entire supply chain’s impact.
Solutions:
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Build ESG clauses into supplier contracts.
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Conduct supplier assessments or audits periodically.
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Create a supplier training or awareness program.
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Start with your top 10–20 suppliers before expanding further.
Supply chain engagement takes time — but it’s essential for full ESG compliance.
5. Balancing Cost, Resources, and Long-Term Goals
Finally, many Malaysian businesses see ESG reporting as expensive and time-consuming.
Hiring consultants, collecting data, and upgrading systems can strain budgets — especially for smaller firms. Yet, not reporting at all can harm reputation, limit investor access, and even affect tender eligibility in certain industries.
Challenges:
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Lack of budget for ESG programs and systems.
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Competing priorities — especially during economic downturns.
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Difficulty measuring the return on investment (ROI) from ESG efforts.
Solutions:
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Start small — focus on key areas like energy and waste.
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Use digital tools to cut manual workload.
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Apply for government grants or incentives (e.g., MGTC or MIDA programs).
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Treat ESG as a long-term investment, not a one-time expense.
Over time, good ESG performance leads to lower operating costs, stronger brand reputation, and easier access to financing.
How These Challenges Interconnect
These challenges don’t exist in isolation — they reinforce each other.
For example:
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Poor data systems make frameworks harder to apply.
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Lack of expertise leads to weak supplier engagement.
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Budget limits restrict training and technology adoption.
To overcome them, you need an integrated approach:
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Commitment from leadership.
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Clear roles and responsibilities.
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Digital tools for data management.
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Continuous learning and improvement.
Think of ESG reporting not as a burden, but as a strategic roadmap to improve business performance and resilience.
Building a Strong ESG Reporting Strategy
Here’s a step-by-step guide to help your company move from confusion to confidence.
Step 1: Conduct a Materiality Assessment
Identify which ESG topics matter most to your stakeholders — energy, diversity, waste, community engagement, etc.
This ensures your report focuses on what’s relevant, not just what’s trendy.
Step 2: Create an ESG Taskforce
Form a team with members from HR, Finance, Operations, and Sustainability.
Give them clear responsibilities and regular meeting schedules.
Step 3: Choose the Right Reporting Framework
Start with GRI for general reporting or TCFD for climate-related disclosures.
If you’re aiming for global investors, prepare for ISSB alignment in the near future.
Step 4: Set SMART ESG Targets
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Specific
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Measurable
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Achievable
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Relevant
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Time-bound
Example: “Reduce electricity use by 15% within 3 years.”
Step 5: Digitize Your ESG Data
Use simple cloud-based systems or dashboards to collect and track metrics automatically.
This saves time and ensures data accuracy.
Step 6: Communicate Progress Transparently
Publish your ESG report annually and share it on your website.
Include both achievements and challenges — transparency builds credibility.
Local Case Examples
Case 1: Manufacturing Company in Penang
A medium-sized electronics manufacturer struggled with inconsistent ESG data from its factories.
By introducing an internal energy monitoring system and training its engineers, it reduced reporting errors by 40% in one year.
Case 2: Property Developer in Selangor
A developer wanted to align with MyCREST and ESG standards but lacked technical know-how.
With consultant support and staff training, it improved energy design efficiency and secured a green certification that attracted investors.
Case 3: Financial Institution in Kuala Lumpur
The bank adopted the TCFD framework, focusing on climate risk disclosure.
Its improved transparency helped it attract new ESG-focused investment funds.
Each of these examples shows how structured action turns ESG reporting from a challenge into a growth opportunity.
Why ESG Reporting Is Worth the Effort
Despite the challenges, ESG reporting pays off in measurable ways:
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Investor confidence: More investors now require ESG disclosures.
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Operational efficiency: Energy and waste tracking reduce costs.
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Customer loyalty: Consumers prefer brands that care about sustainability.
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Regulatory compliance: Aligns with Bursa Malaysia and future global requirements.
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Competitive edge: Companies with solid ESG reports often win more tenders and contracts.
The earlier your company builds a solid ESG foundation, the easier it will be to adapt to new regulations and market expectations.
Conclusion & Call to Action
“The Top 5 Challenges in ESG Reporting for Malaysian Companies” are real — from data collection issues to limited expertise. But with clear frameworks, trained teams, and consistent effort, any business can overcome them.
ESG reporting isn’t just about compliance; it’s about showing leadership and accountability in a changing world. When done right, it strengthens reputation, builds investor trust, and opens doors to new opportunities.
If you’re ready to turn ESG challenges into measurable success, let’s get started.
📞 WhatsApp or call 0133006284 today to learn how we can help your company simplify ESG reporting and achieve sustainable growth — one report at a time. 🌿
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