Petaling Jaya: Malaysia’s environmental, social and governance (ESG) landscape is driven by regulatory development, investor expectations and regional collaboration, and is set for significant transformation by 2030.
Benjamin Soh, Founder and Managing Director of Esgpedia (photograph) As sustainability reporting moves from voluntary commitment to essential requirements, businesses need to deeper integration of ESG considerations to stay competitive.
“A key milestone in Malaysia’s ESG evolution is the adoption of sustainability disclosures placed on the International Committee on Sustainability Standards (ISSB).
“The National Sustainability Reporting Framework (NSFR) will require large listed publishers to publish sustainability reports that have been lined up with the ISSB from 2025 to 2025.
“This shift is aimed at positioning it to increase transparency and investor confidence and attract global funds that prioritize sustainability for Malaysian companies,” he told Sunbiz.
Beyond regulatory compliance, he noted that businesses face increasing surveillance over supply chains.
“Companies, especially in manufacturing, palm oil and energy-intensive industries, need to implement strict due diligence on the ESG performance of their suppliers. Sustainable sourcing and emission reduction strategies will become essential to maintain market access,” he said.
Additionally, Soh said the expansion of Sustainable Finance is also a game changer, with banks and financial institutions increasingly integrating ESG factors into risk assessments.
“This trend will lead to increased availability of green bonds, sustainability-related loans and financial incentives for companies with strong ESG commitments.
“Malaysia’s role as ASEAN Chairman is expected to accelerate regional cooperation on climate finance, carbon markets and sustainability reporting.
“As the ASEAN economy moves towards harmonious sustainability standards, businesses operating in Malaysia need to promote cross-border sustainable investment, tailored to both regional and regional ESG expectations,” he said.
Despite these developments, he emphasized that some Malaysian companies view ESG compliance as a regulatory burden rather than a strategic opportunity.
“But companies that employ ESG are gaining significant benefits, such as reducing costs, increasing investor confidence and access to new markets,” he said.
He said energy efficiency, supply chain optimization and sustainable resource management can drive operational improvements while reducing carbon footprint.
“Companies that actively manage ESG risks are considered more resilient and attractive to investors, banks and consumers who prioritize sustainability,” Soh added.
He explained that one of the biggest challenges in ESG implementation is the lack of skilled experts in Malaysia.
“Many businesses, particularly small and medium-sized businesses, have struggled to interpret and implement sustainability frameworks such as the ISSB, the Task Force on Climate-Related Financial Disclosures, and the Global Reporting Initiative.
“Without proper expertise in climate risk assessment, carbon accounting, and ESG data analysis, companies come with the risk of misreporting data misconceptions, leading to regulatory and reputational risks,” he said.
He said there is an increasing demand for ESG experts with technical knowledge in calculating greenhouse gas (GHG) emissions, lifecycle assessment and impact measurement.
“As ESG compliance becomes a business need, high-end initiatives and training programs will become important to equip the Malaysian workforce with the expertise they need for the future,” he added.
Soh said that with ESG expectations rising globally, Malaysian companies must shift their approach from regulatory compliance to long-term value creation.
“Improved transparency, optimizing resource use and taking proactive measures to meet global sustainability standards are ideally suited to thriving in an increasingly ESG-driven economy.
“By 2030, Malaysia’s ESG landscape will set the stage for a more resilient and competitive business environment, defined by greater accountability, stronger corporate sustainability commitment and a more skilled workforce,” he said.
