ESG is here to stay
As we enter Q3 of 2025, ESG (Environmental, Social and Governance) conversations in Malaysia are becoming more urgent and action oriented. With Bursa Malaysia’s sustainability reporting guidelines[1] now in effect for Main Market companies (and ACE Market firms set to follow in 2026)[2], the revised reporting requirements compel listed companies to provide more concrete disclosures. It marks a significant shift from “sharing nice data” to “proving what is real”.
But the journey is not without its bumps. Business Today reported that the key issues faced by many companies are the lack of standardisation in reporting templates, heavily focused on environmental impact data, and poor ESG literacy. At the same time, while Bursa Malaysia encourages SMEs (small- and medium-enterprises) to get on board the green reporting route, many risk stalling their own growth by assuming that ESG is only beneficial to larger companies.
The pressure to meet ESG expectations is not just locally driven. Recently, the EUDR (European Union Deforestation-free Products Regulation) classified Malaysia as a “standard risk” country particularly in palm oil, rubber, and timber and led the Malaysian Government to establish a special committee to respond swiftly and fortify the country’s policies on sustainability[3].
Why it matters for Malaysian businesses?
Embedding ESG clauses in contracts transforms broad sustainability goals into clear, enforceable obligations. Examples include setting environmental performance standards, ensuring supply-chain traceability, and working only with suppliers who meet ethical practices.
As ESG regulations tighten globally, businesses in Malaysia, especially SMEs, are beginning to feel the pressure and are calling for a clear blueprint on ESG compliance or certifications to guide them forward. While stronger international ESG frameworks are being set by regulators and industry bodies, analysts found that actual integration remains minimal and leaves ample room for Malaysian businesses to align their operations with evolving global standards.
Support is within reach
While ESG adoption may still be gradual in Malaysia, momentum is slowly building, and institutional support is already in place. In July 2025, Capital Markets Malaysia launched its SEDG Greenhouse Gas Emissions Calculator and updated its Simplified ESG Disclosure Guide (SEDG) for SMEs in Supply Chains. On the financing side, it was reported[4] that Alliance Bank has already channelled up to RM14 billion in banking facilities to help SMEs strengthen their ESG practices and governance. The tools are there; the question is whether businesses will use them.
For Malaysian businesses, this much should be clear: act early on transparency and measurable impact and shape a resilient, competitive future.
[1] Sustainability reporting mandatory for M’sian listings, The Malaysian Reserve, 1 January 2025.
[2] Bursa Malaysia Requires Sustainability Reporting Using the IFRS Sustainability Disclosure Standards, Bursa Malaysia, 23 December 2024.
[3] Malaysia forms committee on EU deforestation rule, New Straits Times, 26 June 2025.
[4] Alliance Bank nears RM15bil goal in new sustainable loans, boosting SMEs in ESG, New Straits Times, 7 April 2025.
Companies wishing to learn more or seek assistance may contact UNGCMYB (UN Global Compact Network Malaysia & Brunei).