KUALA LUMPUR (Sept 24): Listed companies on Bursa Malaysia's Main Market and ACE Market, as well as large non-listed companies with annual revenue of RM2 billion and above, will have to comply with the newly launched National Sustainability Reporting Framework (NSRF) in phases. 

The NSRF, according to the Securities Commission Malaysia (SC), addresses the use of the IFRS Sustainability Disclosures Standards issued by the International Sustainability Standards Board (ISSB) as the baseline for sustainability disclosures for companies in Malaysia. 

The first phase, effective next year, will apply to large listed-companies on the Main Market with market capitalisation of RM2 billion and above. 

This will then be extended to other Main Market listed issuers in 2026, followed by listed companies on the ACE Market as well as large non-listed companies in 2027, the SC said. 

With the launch of the NSRF, Malaysia joins more than 20 jurisdictions around the world, representing a collective global gross domestic product (GDP) of 55%, which have adopted or are moving towards implementing IFRS S1 and S2 standards, pertaining to sustainability and climate-related financial disclosures. 

"Under the NSRF, the large listed issuers on Bursa's Main Market, about 130 companies will have to comply with IFRS S1 and S2 next year [2025], with a focus on climate-disclosures and the first report is due in 2026," SC chairman Datuk Mohammad Faiz Azmi said during his speech at the launch on Tuesday. 

"You are the ones with significant impact to the capital markets and represent over 80% of market capitalisation on Bursa Malaysia," he added. 

The NSRF is developed by the Advisory Committee on Sustainability Reporting (ACSR), which is chaired by the SC with members comprising representatives from Bank Negara Malaysia, Companies Commission of Malaysia, Bursa Malaysia Bhd (KL:BURSA), and the Financial Reporting Foundation. 

Although not all international markets require stringent sustainability reporting, Mohammad Faiz stressed that it is important for Malaysia, as a trading nation with a significant role in the global supply chain, to adopt the standards in an open way to reap the benefits of being an adopter. 

"It makes us more, rather than less, likely to meet purchaser requirements in the global supply chain given the increasing focus on sustainability information and the number of detailed survey questions they send out to all of you. 

"Rather than resisting it, we should embrace it and use it strategically to make our markets more attractive," he added. 

Finance minister II Datuk Seri Amir Hamzah Azizan, who graced the launch, said that the framework is more than just a regulatory advancement, as it addresses the information required by investors and financiers to help with capital allocation decisions.  

More importantly, the new sustainability reporting framework promotes economic prosperity that is aligned with environmental stewardship and social responsibility, he said.

"We have seen the transformation in how investors approach their portfolios. Historically, financial metrics were the sole metric of success, but that is no longer the case today. This shift is not merely a trend but a reflection of a deeper understanding that long-term value creation is intrinsically linked with sustainable and ethical practices. 

"Investors are evaluating companies based on their environmental impact, carbon footprint, waste management, to name a few — driven by the recognition that the financial risks associated with environmental degradation must be mitigated.

"In short, sustainability is not an option — it is a necessity. Companies worldwide are being held to higher standards of environmental and social performance, and Malaysia is no exception," Amir added.

Following the launch of the NSRF, Bursa Malaysia has issued a public consultation paper seeking public feedback on the proposed sustainability reporting enhancements to the Main Market and ACE Market listing requirements. 

To comply with the framework, Bursa Malaysia proposed to require a listed issuer to prepare its sustainability statement in accordance with the ISSB standards, complemented by relevant existing disclosures in the sustainability reporting framework introduced in September 2022.

The adoption of the ISSB Standards, however, will be implemented in phases, complemented by appropriate relief measures to facilitate and ease compliance by listed issuers.

Separately, the stock exchange is also seeking feedback on two other areas of review to the listing requirements. They relate to the mode of general meetings and the publication of the initial public offering adviser’s name in a listed issuer’s public documents for a specified period.