Review of Sustainability Reporting Requirements Under the Main Market and ACE Market Listing Requirements

Since the onset of the COVID-19 pandemic, the imperative for greater compliance with Environmental, Social and Governance (“ESG“) standards has accelerated through societies across the globe. Investors, public interest groups and governments around the world are calling for higher ESG standards among businesses, demonstrating a trend that is clearly on the uptick. The COP26 meeting which was held in Glasgow last November has witnessed greater commitment by member countries to reduce greenhouse gas emissions. In line with this, Malaysia, as part of its pledge to global standards, presented its updated Nationally Determined Contributions (NDCs) on climate ambition to reduce economy-wide carbon intensity (against GDP) by 45% by 2030[1]. These commitments translate into a need for higher quality of information to be provided by companies to the public on the steps they are taking in addressing sustainability risks and opportunities. At the same time, the impact of climate change on businesses also requires a data-driven approach to ensure that companies themselves have the resilience to manage these risks.

In 2015, Bursa Malaysia introduced its sustainability reporting framework which became applicable for annual reports issued for financial years ending on or after 31 December 2016. The approach at the time was premised on the fact that companies may be at varying levels of understanding and that preparation of the Sustainability Statement required under Practice Note 9 of Bursa’s Main Market Listing Requirements can be challenging for early reporters and smaller listed issuers. However, fast forward some six years, the market regulator is cognisant that a more standardised approach with quantitative reporting metrics will provide a sound basis for comparative analysis on a company’s material ESG risks. Moreover, as many Malaysian companies, including those which are listed, are part of the global supply chain, there is mounting pressure on companies to adhere to international standards in terms of ESG compliance.

Bearing this in mind, Bursa Malaysia, on 23 March 2022, issued a Consultation Paper containing seven main proposals on sustainability reporting and seeking the views of the public on the proposed amendments to the Main Market Listing Requirements and the ACE Market Listing Requirements. The proposals in summary are set out in this article.

[1] Interview with COP26 lead delegate Datuk Seri Zaini Ujang, Secretary General of the Ministry of Environment and Water (KASA), reported in the Edge Malaysia, 22 November 2022, “After COP 26, Malaysia’s Road Forward”.