National Sustainability Reporting Framework (NSRF)

On the 20th of January, Securities Commission Malaysia released the National Sustainability Reporting Framework (NSRF) Guidance to help companies’ Board of Directors drive Sustainability Reporting.

What are the major changes?

The NSRF (National Sustainable Reporting Framework) Transition Guide (2001–2025) outlines significant updates in sustainability reporting to align with evolving regulatory and global ESG (Environmental, Social, and Governance) standards under the NSRF. Key changes include:

• Enhanced Reporting Standards: Introduction of stricter disclosure requirements, aligning with frameworks such as IFRS S1 & S2, TCFD, and ISSB.
• Increased Scope of Sustainability Metrics: Expansion of reporting metrics to include Scope 3 emissions, biodiversity impacts, and social responsibility aspects.
• Mandatory Compliance for Key Sectors: Sectors with high environmental impact, such as manufacturing and energy, will face stricter mandatory reporting requirements.
• Integration with Financial Reporting: Sustainability disclosures will be integrated into financial reporting to provide a holistic view of corporate performance.
• Technology and Data Requirements: Companies are encouraged to adopt digital tools for data collection, tracking, and automated sustainability reporting.

Implementation of the NSRF will be through a phased and developmental approach, supporting widespread adoption and continuous improvement in the quality of disclosures.

What are the implications on Cost, Manpower, and Reporting Volume for your organisation?

The transition to the new framework brings both challenges and opportunities in terms of operational impact:

• Cost Implications: Organisations will need to invest in compliance measures, including technology upgrades, third-party verification, and capacity-building programs. However, long-term savings can be realised through efficiency improvements and enhanced investor confidence.
• Manpower Requirements: Companies may need to expand their sustainability teams or upskill existing employees to meet reporting demands. External consultants and assurance providers might also play a bigger role.
• Volume of Reporting: The scope of disclosures will increase significantly, requiring more frequent data collection, stakeholder engagement, and rigorous assurance processes to ensure credibility.
• Operational Adjustments: Companies will need to enhance governance structures to integrate ESG considerations into decision-making and risk management.

The NSRF applies to the following market segments, with the following implementation dates:

Who Can Benefit from This Guide?

The NSRF Transition Guide is designed to assist a broad range of stakeholders in navigating these changes:

• Corporations & SMEs: Businesses of all sizes can use the guide to align with global sustainability trends, ensuring regulatory compliance and improving stakeholder trust.
• Investors & Financial Institutions: Enhanced transparency in sustainability reporting allows investors to make more informed decisions, reducing ESG-related financial risks.
• Regulators & Policymakers: Government agencies and regulatory bodies can leverage the framework to standardise reporting practices and drive national sustainability objectives.
• Consultants & Assurance Providers: Sustainability professionals can benefit from increased demand for advisory services, verification, and audit support.
• Academia & NGOs: Researchers and advocacy groups can utilise the framework to analyse corporate sustainability efforts and drive policy recommendations.

The NSRF applies to the following market segments, with the following implementation dates:

*Non-listed Companies (NLCos), if they meet the prescribed threshold of consolidated group revenue of RM2 billion and above for two consecutive financial years preceding the current financial year (Large NLCos). In the event there is no requirement to prepare consolidated account, the threshold of RM2 billion would be applicable at company level. This is intended to align with the entity’s existing financial reporting practices.

What does this mean for your organisation?