KUALA LUMPUR (June 16): The IFRS Foundation acknowledged Malaysia’s adoption of the ISSB standards with limited transition, representing the only jurisdiction in the Asean region, in a jurisdictional profile released last Friday.
The IFRS formed the International Sustainability Standards Board (ISSB) in 2021, which has developed the IFRS S1 and S2 sustainability disclosure standards, out of a desire to unite the fragmented landscape of reporting frameworks and standards.
The IFRS monitors the application of these standards in each jurisdictions, and publishes jurisdictional profiles to highlight progress. An initial set of 17 jurisdictional profiles were released on June 12, including that of Malaysia’s.
The profiles were developed based on the Jurisdictional Guide, and on bilateral engagement with jurisdictions and an independent review, before being confirmed by representatives of the ISSB.
In a press statement, the Securities Commission of Malaysia (SC) said this recognition underscores the global standing of Malaysia’s National Sustainability Reporting Framework (NSRF), which phases in the adoption of the ISSB standards. The NSRF is developed by the Advisory Committee on Sustainability Reporting (ACSR).
The NSRF starts with a limited transition approach, and extends transitional reliefs, including for “climate-first” reporting and the deferred Scope 3 greenhouse gas (GHG) emissions disclosures.
“The ACSR is cognisant of the high standards the ISSB Standards has set for sustainability reporting, and the challenges this may pose to entities. We remain committed to equipping reporting entities to meet these requirements,” said SC chairman Datuk Mohammad Faiz Azmi.
The NSRF introduced the PACE (policy, assumptions, calculators, education) initiative, which provides training, tools and resources for companies. Other upcoming initiatives, said the SC, include the development of illustrative sustainability reports to guide company disclosures, and an NSRF Preparer’s Programme to strengthen capacity.
Under the NSRF, Main Market-listed issuers with a market capitalisation of RM2 billion and above are expected to prepare ISSB-aligned sustainability reports by 2025, with full adoption of the S1 and S2, and Scope 3 GHG emission disclosures by 2027.
Other Main Market-listed issuers must follow the rules by 2026 and 2028, while ACE Market-listed issuers and non-listed companies with annual revenue of RM2 billion and above are expected to follow the reporting guidelines by 2027 and 2030.
The ISSB report notes that legislative amendments to expand the remit of the Malaysian Accounting Standards Board as the national standard setter for sustainability-related disclosures, and consequential amendments to other relevant legislation, including towards the Companies Act 2016, must also be undertaken.