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Navigating the New Era of Mandatory Sustainability Reporting in Malaysia

Introduction

On April 30, 2026, the Companies Commission of Malaysia (“SSM”) released a Consultative Document on The Proposed Amendments to the Companies Act 2016 [Act 777] on Sustainability Reporting, signaling a transformative shift from voluntary practice currently to a mandatory “comply or explain” regime for non-listed companies (“NLCOs”).

These proposed changes are designed to align Malaysia's corporate reporting with international standards, specifically the International Financial Reporting Standards (“IFRS”) S1 and IFRS S2 ensuring that local businesses remain globally competitive.

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A Phased Implementation Roadmap

To allow companies to build the necessary reporting capabilities, SSM has proposed a three-phase approach to the content of these reports:

Phase 1 Mandatory (Comply or Explain) Climate Disclosures	Greenhouse Gas (“GHG”) Emissions Scope 1 and Scope 2 only
Phase 2 Mandatory (Comply or Explain) Simplified Sustainability Disclosures	Simplified sustainability disclosures, such as governance and oversight of sustainability matters, identification of material risks and opportunities and selected environmental, social and governance indicators (i.e. waste management, labour practices, anti-corruption).
Phase 3 Adoption of IFRS S2 (with Transition Reliefs)	Climate-related Disclosures aligned with IFRS S2

Who will be affected?

The timeline for adoption would depend on the size of the entity, categorized by revenue and employee count:

Qualifying Thresholds	Phase 1 Commencement Period	Phase 2 Commencement Period	Phase 3 Commencement Period
RM1 billion – RM2 billion revenue or ≥ 500 employees	2028	2029	2032
RM100 million – RM1 billion revenue or 250 – 499 employees	2030	2031	N/A
RM15 million – RM100 million revenue or 100 – 249 employees	2032	2033	N/A
Below RM15 million or 100 employees	Not subject to sustainability reporting requirements but may voluntary opt-in

Reliability through the Assurance Framework

To ensure the quality and reliability of these disclosures, SSM proposes introducing Sustainability Assurance Providers (“SAPs”). The definition of "auditor" under the CA 2016 will be expanded to include SAPs, who must meet specific criteria, including at least five years of audit or assurance experience and recognition by the Minister of Domestic Trade and Cost of Living. The implementation of mandatory assurance will also follow a phased timeline corresponding to company size:

Qualifying Thresholds	Internal Assurance	Limited Assurance	Reasonable Assurance
RM1 billion – RM2 billion; or ≥ 500 employees	2028 – 2030	2028 – 2030	-
RM100 million – RM1 billion; or 250 – 499 employees	2030 – 2032	2030 – 2032	-
RM15 million – RM100 million; or 100 – 249 employees	2032 - 2034	2032 – 2034	-
Below RM15 million and 100 employees	Not subject to sustainability reporting requirements but may voluntary opt-in

Conclusion

Next Steps for Businesses

The transition to statutory compliance means that sustainability performance will now be a matter of legal accountability instead of merely corporate social responsibility.

The public consultation period is open until June 2, 2026. We recommend that companies begin assessing their current data collection capabilities and governance structures to prepare for these upcoming requirements.

For organisations seeking further guidance, our ESG Advisory team would be pleased to provide support in initiating and advancing your sustainability reporting journey.

Start Your Sustainability Reporting Journey

Prepare for Malaysia’s mandatory sustainability reporting requirements. Speak to our ESG Advisory team to assess your readiness and build a compliant, future-ready reporting framework.