PETALING JAYA: Malaysia’s environmental, social, and governance (ESG) landscape is set for significant transformation by 2030, driven by regulatory developments, investor expectations, and regional collaboration.
ESGpedia founder and managing director Benjamin Soh (pic) said, as sustainability reporting moves from voluntary commitments to mandatory requirements, businesses must integrate ESG considerations more deeply to remain competitive.
“A key milestone in Malaysia’s ESG evolution is the adoption of International Sustainability Standards Board (ISSB)-aligned sustainability disclosures.
“Under the National Sustainability Reporting Framework (NSFR), large-listed issuers will be required to publish ISSB-aligned sustainability reports starting in 2025, with Scope 3 emissions reporting mandated from 2027.
“This shift aims to enhance transparency and investor confidence, positioning Malaysian companies to attract global funds that prioritise sustainability,” he told SunBiz.
Beyond regulatory compliance, he noted that companies will face growing scrutiny over their supply chains.
“Businesses, particularly in manufacturing, palm oil, and energy-intensive industries, will need to conduct rigorous due diligence on suppliers’ ESG performance. Sustainable sourcing and emissions reduction strategies will become essential to maintaining market access,” he said.
Furthermore, Soh said the expansion of sustainable finance will also be a game-changer, with banks and financial institutions increasingly integrating ESG factors into risk assessments.
“This trend will lead to a greater availability of green bonds, sustainability-linked loans, and financial incentives for businesses with strong ESG commitments.
“Malaysia’s role as Asean chair is expected to accelerate regional collaboration on climate finance, carbon markets, and sustainability reporting.
“As Asean economies move toward harmonised sustainability standards, companies operating in Malaysia will need to align with both local and regional ESG expectations, fostering cross-border sustainable investments,” he remarked.
Despite these developments, he highlighted that some Malaysian businesses still view ESG compliance as a regulatory burden rather than a strategic opportunity.
“However, companies that embrace ESG early stand to gain significant advantages, including cost savings, enhanced investor confidence, and access to new markets,” he said.
He noted that energy efficiency, supply chain optimisation, and sustainable resource management can drive operational improvements while lowering carbon footprints.
“Businesses that proactively manage ESG risks will be seen as more resilient and attractive to investors, banks, and consumers who prioritise sustainability,” Soh added.
He explained that one of the biggest challenges in ESG implementation is the shortage of skilled professionals in Malaysia.
“Many businesses, especially SMEs, struggle to interpret and implement sustainability frameworks such as ISSB, Task Force on Climate-related Financial Disclosures, and Global Reporting Initiative.
“Without proper expertise in climate risk assessment, carbon accounting, and ESG data analysis, companies risk misreporting data, leading to regulatory and reputational risks,” he said.
He said the demand for ESG professionals with technical knowledge in greenhouse gas (GHG) emissions calculations, lifecycle assessments, and impact measurement is growing.
“As ESG compliance becomes a business necessity, upskilling initiatives and training programmes will be crucial to equipping Malaysia’s workforce with the expertise needed for the future,” he added.
Looking ahead, Soh said, with ESG expectations rising globally, Malaysian companies must shift their approach from regulatory compliance to long-term value creation.
“Businesses that take proactive steps in improving transparency, optimising resource use, and aligning with global sustainability standards will be best positioned to thrive in an increasingly ESG-driven economy.
“By 2030, Malaysia’s ESG landscape will be defined by greater accountability, stronger corporate sustainability commitments, and a more skilled workforce, setting the stage for a more resilient and competitive business environment,” he noted.
