You cannot mitigate what you do not know. This fundamental truth lies at the heart of Malaysia’s response to increasing climate risks that impact our people, economy and environment.

From rising sea levels and heavier rainfall to more frequent extreme weather events, the impact of climate change is being felt more intensely across the country — affecting not only vulnerable communities but also livelihoods and economic resources. Companies are also exposed to climate-related risks through intense flooding and extended droughts.

For Malaysia to meet its climate goals and ensure a just transition, consistent and measurable sustainability reporting is essential.

It is the critical first step in understanding where we are, what we face and how we can take action. Without clear, transparent data on climate risks and responses, efforts to adapt, mitigate and build resilience remain fragmented and insufficient.

For meaningful action to occur, however, sustainability reporting cannot just be a compliance exercise. It is the foundation for identifying, managing and ultimately mitigating risks.

National Sustainability Reporting Framework
Introduced last September by the Advisory Committee on Sustainability Reporting (ACSR) led by the Securities Commission Malaysia (SC), the National Sustainability Reporting Framework (NSRF) requires companies to disclose material physical risks they face, how they manage or adapt to these risks, and their financial impact or associated future costs.

This ensures the impact of climate risks and opportunities are integrated into their business strategies, and that they provide credible transition plans towards enhancing the sustainability of their businesses. By giving investors the information they need to make informed decisions, it also helps companies with their competitive edge.

The NSRF marks a pivotal shift towards more standardised corporate sustainability reporting. It also recently earned Malaysia international recognition from the IFRS Foundation for its level of adoption of the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board, or ISSB (ISSB Standards).

Helping companies keep PACE
It is critical that companies are well prepared to implement the ISSB Standards. While the NSRF adopts a phased approach, early preparation by companies is essential through upskilling and enhancements in the data collection processes, particularly for measuring Scope 3 greenhouse gas (GHG) emissions.

Much of the ACSR’s efforts are focused on capacity building and providing implementation support through PACE (Policy, Assumptions, Calculators and Education).

For example, the ACSR recently published two illustrative sustainability reports (ISRs) for the plantation and construction sectors. The ISRs have been developed to illustrate how a company might apply the ISSB Standards in these sectors.

In developing the ISRs, the ACSR engaged with the relevant sectors to solicit feedback on their reporting challenges. It has also reached out to relevant agencies to facilitate the availability and accessibility of climate-related data for companies.

The NSRF Preparers’ Programme under PACE also provides targeted capacity building on critical areas, including the disclosure of Scope 3 GHG emissions and climate-related scenario analysis.

Further, the proposed framework for sustainability assurance issued for consultation on June 25 supports efforts to ensure the reliability of sustainability disclosures. The aim is simple: to provide investors with the same level of confidence in sustainability reports, comparable to audited financial statements.

Towards a sustainable and resilient capital market
Moving forward, the SC has also begun assisting sustainability practitioners to form their own association to look at training needs, standards and member skills development.

This is in addition to supporting national policies and Asean initiatives. This covers the Asean Taxonomy, more effective voluntary carbon markets and creating adaptation financing guidance under the banner of mitigation co-benefits and adaptation for resilience for difficult-to-fund adaptation projects.

The implementation of the NSRF represents a strategic move to future-proof Malaysia’s capital market through transparent, credible and globally aligned sustainability disclosures.

Recognising that the transition phase poses challenges, we are committed to supporting companies as they navigate data gaps, enhance skills and resources, and raise the quality of sustainability disclosures.

It is time for all Malaysian businesses and sustainability professionals to measure what matters, so we can manage what is at stake.