Sustainability reporting has become a crucial part of corporate governance around the globe. As companies face increasing scrutiny regarding their environmental, social, and governance (ESG) practices, standardized sustainability disclosures are more important than ever.
In response to this demand, Malaysia has launched the National Sustainability Reporting Framework (NSRF), which provides a structured method for corporate sustainability disclosures. This framework is in line with the standards set by the International Sustainability Standards Board (ISSB), particularly IFRS S1 (General Requirements for Sustainability-Related Financial Disclosures) and IFRS S2 (Climate-Related Disclosures).
Through implementing the NSRF, Malaysia seeks to improve corporate transparency, accountability, and investor confidence, ensuring that businesses deliver consistent and comparable sustainability information. But what does this framework involve, and what effects does it have on businesses?
National Sustainability Reporting Framework (NSRF)
(NSRF) is Malaysia’s initiative to standardise corporate sustainability reporting, ensuring that companies provide clear, reliable, and globally recognised disclosures.
Purpose of the NSRF
- To align Malaysian businesses with global best practices in sustainability reporting.
- To ensure that investors and stakeholders have consistent, comparable, and transparent ESG data.
- To support Malaysia’s net-zero ambitions by emphasising climate-related disclosures.
- To help companies prepare for future regulatory and financial requirements in ESG reporting.
By integrating IFRS S1 and IFRS S2, the NSRF provides companies with a structured way to disclose sustainability-related financial information and manage climate risks. The NSRF introduces a clear and phased approach to sustainability reporting, making it easier for businesses to comply with global standards.
Climate-First Approach
One of the core principles of the NSRF is a climate-first approach, prioritizing climate-related disclosures. This is crucial for businesses as climate risks can significantly impact business operations, supply chains, and financial performance. Investors are increasingly focusing on climate disclosures when making investment decisions, and Malaysia has set net-zero commitments, and businesses play a key role in achieving these goals.
Phased Implementation
Recognising that businesses have different levels of readiness, the NSRF adopts a gradual approach, allowing companies to align with ISSB standards step by step. This means that early adopters can lead the way in best practices, smaller businesses get more time to adjust and integrate sustainability reporting and companies can incrementally adopt new reporting practices without disrupting operations.
Transition Reliefs for Companies
The NSRF acknowledges that full compliance with IFRS S1 and S2 can be challenging, so it offers transitional reliefs, including extended timelines for disclosing complex data, such as Scope 3 emissions, flexibility in reporting to ease the transition for companies new to sustainability disclosures and gradual integration of climate-related financial information.
PACE Support Hub
To assist businesses in adopting the NSRF, the PACE (Policy, Assumptions, Calculators, and Education) support hub has been established. It provides guidelines & policies to help companies align with IFRS sustainability standards, emissions calculators to simplify carbon accounting and reporting and educational programs & capacity building for sustainability teams.
The Importance of NSRF
The introduction of the NSRF is a major step forward for corporate sustainability in Malaysia.
- Enhances Corporate Transparency: Investors and stakeholders gain reliable, standardized ESG data, reducing the risk of greenwashing.
- Strengthens Malaysia’s Global Competitiveness – Companies with strong sustainability reporting attract international investors and funding opportunities.
- Encourages Business Resilience: Proper sustainability disclosures help businesses identify and manage risks, such as climate change, supply chain disruptions, and regulatory shifts.
- Supports Malaysia’s Sustainability Goals – The framework aligns businesses with the country’s net-zero and ESG commitments.
NSRF Sustainability Reporting Implementation Timeline (2025-2030)
The National Sustainability Reporting Framework (NSRF) follows a phased implementation approach to help businesses gradually adopt IFRS Sustainability Disclosure Standards (IFRS S1 & S2). The timeline applies to listed issuers and non-listed companies with revenue above RM2 billion, ensuring a smooth transition to sustainability reporting. The implementation of the NSRF will follow a phased approach, starting from annual reporting periods beginning on or after January 1, 2025.
NSRF Implementation Timeline (2025-2030)
This phased approach allows businesses to prepare strategically, adopt best sustainability practices, and build internal reporting systems, ensuring a smooth transition to global ESG standards.
Practical Steps in Adopting ISSB Standards Under NSRF
The National Sustainability Reporting Framework (NSRF) aligns with the International Sustainability Standards Board (ISSB) standards, which provide a globally consistent framework for sustainability disclosures. Businesses can follow these practical steps to implement the IFRS S1 (Sustainability-Related Financial Disclosures) and IFRS S2 (Climate-Related Disclosures) standards under the NSRF,
Critical Factors for Successful Adoption of NSRF & ISSB Standards
- Strong Leadership Commitment – Top management must drive sustainability initiatives and allocate resources.
- Clear Understanding of IFRS S1 & S2 – Businesses must grasp reporting requirements to ensure compliance.
- Robust Data Collection & Management – Implement systems to track emissions, and ESG performance, and ensure reporting accuracy.
- Integration of ESG & Financial Reporting – Align sustainability data with financial disclosures for transparency.
- External Assurance & Verification – Obtain third-party validation to enhance credibility and investor trust.
As global regulatory standards evolve, the NSRF ensures that Malaysian companies stay ahead of international ESG expectations.
The National Sustainability Reporting Framework (NSRF) marks a turning point for corporate sustainability in Malaysia. It’s not just about compliance—it’s about future-proofing your business, strengthening investor trust, and positioning yourself as a leader in the global sustainability movement.
Businesses that embrace the NSRF early will gain a competitive edge, attract sustainability-focused investors, and be better prepared for evolving regulations. The time to act is now. Start integrating sustainability into your business strategy, leverage the PACE Support Hub, and take the first step toward transparent, accountable ESG reporting.
