Malaysia's Sustainability Reporting Committee Outlines Approach to Non-Compliance

Malaysia's Advisory Committee on Sustainability Reporting (ACSR), chaired by the Securities Commission Malaysia (SC), has released its framework for addressing non-compliance with the country's developing sustainability reporting rules. The approach is designed to support a gradual transition as companies adapt to the standards aligned with the National Sustainability Reporting Framework (NSRF).

The SC said the strategy is being carried out in cooperation with Bank Negara Malaysia, Bursa Malaysia, the Companies Commission of Malaysia, and the Audit Oversight Board. Together, the authorities will adopt a phased review process that prioritizes practicality and recognises that reporting entities are at different stages of readiness.

The NSRF, introduced in September last year, applies to listed issuers on Bursa Malaysia's Main and ACE Markets as well as large non-listed companies with annual revenue of RM2 billion or more. It is aligned with the IFRS Sustainability Disclosure Standards (ISSB Standards), which many jurisdictions are currently integrating into their reporting regimes.

SC Chairman Dato' Mohammad Faiz Azmi acknowledged that companies face various challenges incorporating the new standards. "We recognise the challenges companies face… due to, among others, a lack of resources, the quality of external data or the difficulty in obtaining necessary expertise," he said. "Our approach is to balance the need for compliance with the varied levels of readiness across reporting entities."

Authorities said the early stages of enforcement will emphasise capacity-building and skills development, with regulators working directly with companies to correct deficiencies. In cases of general non-compliance, the primary response may involve guidance and corrective action rather than immediate penalties.

However, the SC stressed that serious or deliberate breaches - including fraudulent, misleading or materially inaccurate disclosures - will still trigger enforcement measures to maintain reporting integrity and protect investors.