Malaysian listed companies are making progress in sustainability reporting, but significant gaps remain in translating climate-related risks into measurable financial implications and decision-useful information for investors, according to a joint study by the Minority Shareholders Watch Group (MSWG) and Climate Governance Malaysia (CGM).
The study, “Malaysia’s First Wave of NSRF,” examined sustainability-related disclosures from 91 Group 1 listed issuers under Malaysia’s National Sustainability Reporting Framework (NSRF), providing an early assessment of corporate readiness as the country moves towards fuller implementation of sustainability disclosure requirements.
The assessment used a methodology developed by the Securities Commission Malaysia and an AI-assisted process to evaluate a substantial volume of disclosures. The results were subsequently reviewed and validated through human assessment to improve consistency, contextual judgement and reliability.
The study identified five broad findings from Malaysia’s first NSRF reporting cycle, with companies generally demonstrating progress in establishing reporting structures but uneven maturity in the quality and usefulness of disclosures.
MSWG and CGM found that climate-related risks are becoming increasingly visible in corporate disclosures, but their potential financial implications are still weakly articulated.
Governance structures and responsibilities are also widely disclosed. However, the study found less evidence demonstrating how these structures actually influence boardroom decisions, corporate strategy and capital allocation.
Risk-management processes were generally more developed than the metrics, targets and underlying data needed to quantify companies’ exposure and measure their performance.
Disclosure shortcomings were particularly concentrated in five technical areas — climate-related targets, climate resilience, cross-industry metrics, financial effects and greenhouse gas emissions.
Overall, the study concluded that Malaysian companies are building the necessary sustainability reporting capabilities, although the maturity and decision-usefulness of their disclosures remain uneven.
MSWG chief executive officer Dr Ismet Yusoff said the first reporting cycle represented an important starting point, but companies would need to make their sustainability information more closely connected to financial performance.
“The first reporting cycle is an important foundation. The next phase must focus on making sustainability disclosures more connected, financially meaningful and useful to investors,” he said.
Ismet said minority shareholders need information that goes beyond identifying sustainability risks to explain how those risks could affect a company’s strategy, financial prospects and allocation of capital.
CGM founder and non-independent director Datin Seri Sunita Rajakumar said Malaysia’s early adoption of requirements aligned with the International Sustainability Standards Board (ISSB) places the country within a wider global transition towards a common baseline of investor-focused sustainability disclosure.
She said the first reporting cycle should therefore not be judged on whether companies achieved perfect disclosures immediately, but on whether it builds the capabilities, governance and market discipline required for reporting standards to mature.
“As global expectations continue to evolve, the real measure of progress will be whether sustainability information becomes increasingly comparable, decision-useful and embedded in how companies think about resilience and long-term value creation,” Sunita said.
The findings suggest the next stage of Malaysia’s sustainability reporting journey will increasingly shift from whether companies disclose sustainability information towards how effectively they connect that information with business strategy, financial performance and investment decisions.
Beyond its assessment of the 91 listed issuers, the report includes CGM’s perspective on Malaysia’s climate governance and sustainability reporting landscape.
It also examines issues including emissions measurement, corporate reporting readiness, scenario analysis, the financial implications of carbon pricing and the integrity of sustainability claims.
The joint study is intended to serve as a reference for company boards, listed issuers, regulators, investors and other capital-market participants as Malaysia progresses towards fuller implementation and assurance under the NSRF.
MSWG and CGM said the first reporting cycle indicates that the foundations for sustainability reporting are taking shape, but improving the comparability, financial relevance and usefulness of disclosures will be critical as Malaysia’s NSRF regime matures.
