THE Securities Commission Malaysia (SC) has taken a significant step in promoting sustainability reporting by forming the Advisory Committee on Sustainability Reporting (ACSR). 

With the endorsement of the Ministry of Finance (MoF), the ACSR aims to facilitate the implementation of the forthcoming International Sustainability Standards Board (ISSB) Sustainability Disclosure Standards (ISSB Standards) within Malaysia. 

The ISSB is scheduled to release these standards by the end of June this year, it said in a release on May 24. 

SC chairman Datuk Seri Dr Awang Adek Hussin said that the setting up of ACSR is timely as businesses and investors face real sustainability risks, for example, financial losses from disruption to operations and supply chain due to extreme weather conditions, but also opportunities including to decarbonise and transition to clean energy. 

“Reliable and comparable sustainability-related information across markets is therefore crucial to support the design of strategies, action plans and capital allocation decisions,” he said. 

The ACSR’s primary focus will be on identifying enablers that can support the effective implementation of the ISSB Standards in Malaysia. 

This entails developing an approach and timeline for implementation, while considering the readiness of the market to meet the reporting requirements. 

To address concerns regarding the reliability of information and the risk of greenwashing, the ACSR will discuss matters related to the assurance of sustainability statements. 

Awang Adek stressed the importance of consultation and engagement with relevant stakeholders to avoid imposing unnecessary reporting burdens and additional costs for businesses. 

Their input, he said, will help shape the future direction of sustainability reporting in Malaysia. It is worth noting that listed issuers on Bursa Malaysia have already been required to disclose sustainability information since 2015, giving them a head start in this area. 

Bursa Malaysia recently strengthened its sustainability reporting requirements to align better with global expectations, including the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). 

The enhanced requirements are based on the TCFD’s core pillars, which the ISSB Standards also incorporate. 

This similarity between Bursa Malaysia’s reporting requirements and the ISSB Standards offers a solid foundation for listed issuers on Bursa Malaysia to transition towards more advanced reporting practices. 

Chaired by the SC, the ACSR includes representatives from Bank Negara Malaysia (BNM), Bursa Malaysia, the Companies Commission of Malaysia, the Audit Oversight Board and the Financial Reporting Foundation. — TMR / pic MUHD AMIN NAHARUL

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• This article first appeared in The Malaysian Reserve weekly print edition