Malaysia's Climate Disclosure Rules: What You Need to Know

Malaysia climate disclosure at a glance

Malaysia's National Sustainability Reporting Framework, launched by the Advisory Committee on Sustainability Reporting on 24 September 2024, requires companies listed on Bursa Malaysia and large private companies with annual revenue of RM2 billion (about USD 490 million) and above to report under the global sustainability standards IFRS S1 and IFRS S2, phased from financial years beginning 1 January 2025.

The framework builds on nearly a decade of mandatory sustainability reporting in Malaysia, and it reaches further than most listed-only regimes by bringing large private companies into scope.

Below: how Malaysia got here, what the rules require, who reports and when, why it matters across the region, and how to prepare.

How Malaysia got here: a progressive decade

Malaysia has required listed companies to report sustainability information for nearly ten years, tightening the rules in three steps.

• 2016, narrative reporting begins. Bursa Malaysia amended its Main Market and ACE Market Listing Requirements in 2015, effective from December 2016, to require a sustainability statement in annual reports. Companies described their material economic, environmental, and social risks against guidance drawn from the Global Reporting Initiative standards.

• 2022, climate enters the rules. Bursa Malaysia enhanced the framework in September 2022, adding prescribed sustainability indicators, a statement of assurance, and climate disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) in a dedicated section of the sustainability statement. Main Market companies phased these in, with climate disclosures starting in financial year 2025.

• 2024, ISSB adoption. The National Sustainability Reporting Framework moves Malaysia from the TCFD structure to the full IFRS S1 and IFRS S2 standards, adds Scope 3 emissions and reasonable assurance over time, and extends mandatory reporting to large private companies.

Because the four pillars of the Task Force recommendations (governance, strategy, risk management, and metrics and targets) carry directly into IFRS S2, listed companies are extending an existing discipline rather than starting from zero.

What Malaysia's climate disclosure rules require

In-scope companies must prepare a sustainability statement in accordance with IFRS S1 and IFRS S2, published in the annual report at the same time as the financial statements.

• IFRS S1 (General Requirements): the disclosure architecture. Companies report material information about sustainability-related risks and opportunities that could reasonably be expected to affect cash flows, access to finance, or cost of capital over the short, medium, and long term.

• IFRS S2 (Climate-related Disclosures): the climate-specific requirements, built on the four pillars of governance, strategy, risk management, and metrics and targets. This includes Scope 1, Scope 2, and (after transition reliefs expire) Scope 3 greenhouse gas emissions.

• The Greenhouse Gas Protocol as the measurement standard: IFRS S2 paragraph 29(a)(ii) requires emissions to be measured in accordance with the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (2004).

Bursa Malaysia gave the framework teeth for listed companies on 23 December 2024, when it amended the Main Market and ACE Market Listing Requirements to require the sustainability statement in annual reports.

Malaysia removed the IFRS S1 relief that lets companies publish sustainability disclosures after their financial statements: both come out together. Companies must also make an explicit and unreserved statement of compliance with the standards once fully adopted.

Who is in scope

Every company listed on Bursa Malaysia, plus large private companies, reports under the framework in one of three groups.

Malaysia's exchange has two boards. The Main Market is for established companies with a profit track record or large size, and hosts the country's big-cap issuers. The ACE Market (Access, Certainty, Efficiency) is a sponsor-driven board for smaller, growth-stage companies that do not yet meet Main Market thresholds. The smaller ACE Market companies report later, in Group 3, with a longer transition period.

Listed companies: three groups

• Group 1: Main Market companies (including real estate investment trusts and business trusts) with market value of RM2 billion (about USD 490 million) and above as of 31 December 2024, or at the date of listing after that. Climate-first reporting from financial year 2025.

• Group 2: all other Main Market companies. Climate-first reporting from financial year 2026.

• Group 3 (listed): ACE Market companies. Climate-first reporting from financial year 2027.

Large private companies

Private companies with annual revenue of RM2 billion (about USD 490 million) and above join Group 3 from financial year 2027. The threshold is measured as group revenue of RM2 billion or more for two consecutive financial years. A subsidiary whose parent already reports under standards aligned with the International Sustainability Standards Board, or equivalents such as the European Sustainability Reporting Standards, can build on the parent's disclosures; a subsidiary whose parent reports under other international frameworks can receive a three-period exemption, subject to the decision of the Registrar at the Companies Commission of Malaysia.

Supply-chain implications: the rule itself does not mention suppliers. However, the practical consequence: once Scope 3 reporting starts in FY2027, every significant supplier to a Malaysian listed group becomes a data source, whether in Malaysia or across Southeast Asia and beyond. Suppliers in palm oil, electronics, and food value chains should expect emissions data requests from listed and large private Malaysian customers before their own jurisdictions mandate reporting.

Key dates and milestones

During the transition, Groups 1 and 2 can limit disclosures to climate-related risks and opportunities, and to principal business segments, for their first two reporting periods; Group 3 gets three periods. The assurance framework, including who can provide assurance, will be announced after further consultation.

Why this matters beyond Malaysia

The framework reaches well past Bursa Malaysia's listed companies.

1. Supply-chain ripple across Southeast Asia and East Asia. Malaysian groups in palm oil, electronics manufacturing, and food production sit in the middle of regional value chains. Their Scope 3 obligations from financial year 2027 turn into data requests for suppliers in Indonesia, Thailand, Vietnam, and China, regardless of what those suppliers' home regulators require.

2. Regional convergence on the global standards. Malaysia now sits alongside Singapore, Hong Kong, Australia, and Japan in the group of jurisdictions adopting IFRS S1 and S2. A company with entities in several of these markets can build one IFRS S2-aligned inventory and reporting process and reuse it across jurisdictions.

3. Private companies are in scope. Most Asian regimes start and stop with listed companies. Malaysia's RM2 billion (about USD 490 million) revenue threshold pulls large private companies into mandatory reporting from financial year 2027, a template other Southeast Asian regulators watching the rollout could use to extend disclosure beyond their own exchanges.
   

How companies should prepare

Group 2 companies are measuring financial year 2026 now, and Group 3 companies have one year of runway. The preparation work is the same in every group.

• Establish your greenhouse gas inventory. Build Scope 1, 2, and 3 measurement on the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (2004), the measurement basis IFRS S2 mandates. The two-period Scope 3 relief is preparation time, since the categories take the longest to source.

• Map your value-chain exposure to Malaysian reporters. If your customers include Bursa-listed groups, their Scope 3 numbers include you. Knowing which customers report, and when, tells you when the data requests arrive.

• Build assurance-ready processes early. Reasonable assurance on Scope 1 and 2 is targeted from 2027 for Group 1, subject to consultation. Reasonable assurance is the same bar auditors apply to financial statements, so methodology documentation, source-data traceability, and review controls need to be in place during measurement, well before the assurance engagement starts.

• Build on the frameworks you already use. Malaysia's previous listing requirements embedded the four pillars of the Task Force on Climate-related Financial Disclosures, which carry directly into IFRS S2. Existing climate, CDP, or EU Corporate Sustainability Reporting Directive work maps onto the framework rather than starting from zero.

How Terrascope can help

Terrascope's AI-powered platform helps companies operating in Malaysia move from baseline emissions data to audit-ready disclosures, including MUI Group, the Bursa-listed conglomerate that measured Scope 1, 2, and 3 emissions across its key businesses and built an initial decarbonisation plan in four weeks.

• Scope 1, 2, and 3 emissions measurement. Integrations pull emissions data from your source systems monthly, so your inventory stays current across every entity and business segment in scope.

• Audit-ready reporting. Audit Trail makes every figure traceable from data entry to disclosure, with assurance-provider access built in for the reasonable assurance engagements arriving from 2027.

• Supply-chain intelligence. Analytics shows you where your Scope 3 hotspots sit before the disclosure deadline, so the two-period relief becomes reduction planning time.

• Multi-framework alignment. ISSB Reporting drafts your IFRS S1 and S2 disclosures from your measured data, reviewed by your team, ready for the sustainability statement in your annual report.

Frequently asked questions

Need to get ahead of Malaysia's reporting requirements? Speak to a Terrascope expert today.