Malaysia is the first country in the world to provide small-to-medium enterprises (SMEs) within global supply chains with a streamlined and standardised set of guidelines in relation to environment, social and governance (ESG) disclosures
The guidelines, called Simplified ESG Disclosure Guide (SEDG), is for SMEs within supply chains in tracking their sustainability disclosures to remain relevant and competitive.
Launched by Capital Markets Malaysia (CMM) today (Oct 18), an affiliate of the Securities Commission Malaysia (SC), it is the first-of-its-kind guide that consolidates and simplifies the many complex global and local ESG-related frameworks to improve the availability of ESG data and information by SMEs.
Public and market consultations were conducted with multiple stakeholder groups – including large multinational and public listed companies SMEs, and regulatory and policy stakeholders for the guide.
SC executive chairman and CMM chairman Datuk Seri Dr Awang Adek Hussin said as there is a heightened regulatory scrutiny and investor demand for more deliberate company action towards net zero goals.
“As the global sustainability movement forges ahead, SC is committed to ensuring that our companies, both large and small, are prepared to meet global ESG requirements.
“Recognising that SMEs are particularly exposed to risks from supply chain vulnerabilities, the SC welcomes the release of the SEDG which will help SMEs get ahead of the curve and remain relevant in a constantly evolving global marketplace,” he said in a statement.
Awang added CMM will launch the Bahasa Malaysia and Simplified Mandarin versions of the SEDG by end 2023 to ensure enclusivity.
The release of the SEDG is aligned with recent national policy initiatives aimed at elevating business in Malaysia towards a synergy in commercial success and sustainability, particularly in the manufacturing sector.
These include the New Industrial Master Plan (NIMP) 2023, as well as the Industry Environmental, Social, and Governance (i-ESG) Framework and National Energy Transition Roadmap (NETR).
The SEDG comprises 35 priority disclosures that are aligned with local and global sustainability guidelines which will enable SMEs to respond to disclosure requests from multiple stakeholders.
It is further categorised into Basic, Intermediate and Advanced to cater to the different levels of sustainability maturity of each SME.
CMM general manager Navina Balasingam said the journey of adopting sustainable practices can be daunting for SMEs.
“As such, our goal is to empower them with a framework that provides straightforward guidance that is structured and practical for SMEs to navigate the process of tracking and reporting their ESG data.”
Beyond the Guide, CMM has also launched our SEDG Adopter Programme to support supply chain actors.
The Adopter Programme will provide SMEs with access to in-person training, tutorials, and workshops nationwide to guide SMEs in disclosing ESG data.
The programme aims to facilitate learning and sharing of experiences from a community of practitioners facing similar successes and challenges in implementing ESG reporting.
“We are encouraged by the overwhelming reception to the SEDG Adopter Programme. Their commitment to encourage and support SMEs within their networks to develop ESG reporting practices is highly commendable,” Navina said.
The early adopters of the SEDG from the various categories include CIMB Bank, Credit Guarantee Corporation, Generali, and Hong Leong Bank, among others.
The SEDG is aligned to global, local and government frameworks and reporting standards including the Global Reporting Initiative (GRI), the International Sustainability Standards Board (ISSB) and the Bursa Malaysia Listing Requirements. CMM also plans to launch specialised sectoral disclosure guidance in early 2024.
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