Understanding the National Sustainability Reporting Framework (NSRF)
On 24 September 2024, Malaysia released the National Sustainability Reporting Framework (NSRF) to inform the companies of reporting on environmental, social, and governance (ESG) performance in a clear, consistent, and internationally aligned manner. The NSRF has been developed with an aim of helping Malaysia transition to sustainable business operation in line with increases in regulatory and investor expectations and is based on the international standards for sustainable accounting, including IFRS S1, which relates to general sustainability-related disclosures, and IFRS S2, which relates to climate-related risks and opportunities.
This paper will dissect the NSRF, its applicability in Malaysian companies and the efforts to be made by companies to align with sustainability reporting and requirement, as stipulated by the changing ESG requirements.
What is the National Sustainability Reporting Framework (NSRF)?
The national framework of sustainability reporting offers a systematic system in which Malaysian enterprises report risks, opportunities, and performances connected with environmental, social and economic aspects. It establishes explicit reporting expectations in order to create trust and accountability and assist organisations to remain competitive in a highly competing market.
Through its close association with international frameworks like the ISSB standards, IFRS S1 and IFRS S2, the NSRF also means that local requirements of the companies in Malaysia will be in tandem with global compliance requirements and at the same time realise the expectations of international investors.
The Role of the NSRF in Malaysia’s ESG Landscape
The NSRF is central to the overall ESG strategy of Malaysia, which complements the Malaysia ESG framework and also the SSA framework prepared by Bursa Malaysia. It incorporates the major global reporting standards, such as the UN Sustainable Development Goals (SDGs), the Global Reporting Initiative (GRI), and the Task Force on Climate-Related Financial Disclosures (TCFD).
In order to support digital and standardised reporting, Bursa Malaysia, has also launched the Centralised Sustainability Intelligence (CSI) platform that is the official platform of submitting ESG disclosures under the sustainability reporting framework.
Moreover, major providers closely cooperate with Bursa Malaysia to assist businesses that carry out ESG reporting to provide a convenient solution on data preparation and platform reporting to maintain compliance.
Who Should Conform to the NSRF?
The NSRF is applicable to a broad spectrum of organisations in Malaysia including listed issuers and large non listed organisations. Though some of them can be adopted initially on a voluntary basis, compliance is slowly turning into a compulsory measure at various levels of companies, in accordance with national ESG goals.
Phased Implementation
The implementation of the NSRF has a three-year plan, which is structured:
- 2025: Main Market with large issuers of a minimum market capitalisation of RM2 billion.
- 2026: Remaining issuers of the Main Market.
- 2027: Large non-listed companies and issuers of ACE Market.
This gradual process gives the businesses time to develop internal capacity and incorporate ESG reporting into the current operations.
Why NSRF is important to Malaysian Businesses?
Improving Corporate sustainability
The NSRF is an initiative that urges organisations to consider the aspect of sustainability in their business plans. Reporting on emissions, resource consumption and labour practices enable companies to identify the operational risks as well as establish measurable improvement goals. This also serves national interests in a broad way including climate adaptation and low-carbon development.
Building Stakeholder Trust
ESG performance has become an area of transparency expected by investors, regulators and consumers. A sustainability report prepared in Malaysia can reinforce the credibility and show the interest in the long-term value creation. The NSRF provides a way of companies to communicate on ESG efforts in a standardised manner, enhancing trust and stakeholder engagement.
Surviving in a Global Economy
Conformity to the IFRS S1, IFRS S2, and the general ISSB standards enables Malaysian firms to fulfill the demands of international investors and business associates. This puts them in a better position in cross-border dealings particularly in those sectors where ESG reporting is a major component of a procurement or partnership decision.
Endorsing the Net-Zero Goals of Malaysia
In its national low-carbon roadmap, Malaysia has also pledged to ensure net-zero emissions by 2050. The NSRF plays a part in this by assisting companies to monitor and report the climate information, which eventually enhances the quality and provision of climate reporting nationally.
Key Requirements of the NSRF
Principles of a Sustainability Reporting Framework
The sustainability reporting framework demands the companies to report under three ESG pillars:
- Environmental: Carbon emission, energy conservation, waste disposal, water saving.
- Social: Diversity and inclusion, employee well-being, labour practices.
- Governance: Diversity of the board, anti-corruption policies, ethics policies.
These indicators can help the stakeholders measure the risk exposure as well as the long term sustainability strategy of the company.
Reporting Standards and Guidelines
The NSRF complies with the global standards of reporting including the GRI, Sustainability Accounting Standards Board (SASB), and ISSB standards. Specifically, the general sustainability-related disclosures are described in IFRS S1, and climate reporting in IFRS S2. It is anticipated that companies will use these standards in preparing their sustainability report in Malaysia.
Bursa Malaysia provides templates and guidance documents which are aimed at standardisation of reporting formats and enhance comparability.
Data Gathering and Reporting
The key to effective ESG reporting is accurate data collection. Firms should collect quantitative and qualitative data on a cross-functional basis, such as environmental performance reporting, HR reports, and board governance reporting. The avoidance of greenwashing issues is possible by transparency and regularity.
Centralised Sustainability Intelligence (CSI) Platform
The designated system is the CSI platform to submit NSRF reports that are submitted by Bursa Malaysia. It can enable centralised data uploads, real-time analytics and benchmarking tools, enhancing the quality and efficiency of climate reporting. All reporting entities should adopt the CSI platform under the framework.
Deadlines and Reporting Frequency
The frequency of reporting is likely to be on an annual basis and will fall in line with the financial year cycles. Depending on their categorisation, companies are required to furnish their sustainability report in Malaysia before the deadline stipulated in the NSRF. Failure to comply can lead to the removal of listing or cause regulatory inquiry.
NSRF Steps to a Sustainability Reporting
Understand the Framework
Start by reading the national sustainability reporting framework, its timelines, reporting templates and guidance documents. Find out the ESG priorities of your organisation and match them with the reporting requirements of the IFRS S1 and IFRS S2.
Build Internal Capacity
Establish a sustainability working group or have an ESG officer to manage data gathering and compliance. The operational teams can also be made acquainted with reporting demands, risk areas, and significance of proper climate reporting through training sessions.
Invest in Technology and Tools
Digital tools are significant in the management of the ESG reports. ESG software has the capability of making the data consolidation process easier, create reports according to the standards of ISSB and submit them via the CSI platform. Certain platforms currently have AI functionalities that assist in data mapping, identifying inconsistency, and creating draft narrative content that is similar to the IFRS S1 and IFRS S2 to aid a more efficient and precise reporting process.
Engage Stakeholders
Report on your sustainability objectives, as well as informing significant stakeholders about your reporting. These are internal teams, shareholders, regulators and customers. Alternatively, third-party consultants or ESG experts can also be considered by businesses to enhance quality of reporting and steer them through regulation.
Submit and Monitor Reports
After collecting and certifying data, place it through the CSI site as per your reporting time. After submitting, compare performance with the industry standards and revise your ESG approach based on stakeholder reactions.
Further Action on Climate Reporting under NSRF
The national sustainability reporting framework is a turning point in companies that are involved in operating in Malaysia especially as the scrutiny and regulatory demands by the investor are ever increasing. As the phased rollout is already in progress, companies should focus on ESG preparedness, not only to stay afloat, but to be competitive in a changing global environment.
With the increased technicality and time constraints of the sustainability reporting process, the appropriate support can go a long way in facilitating the process.
Partnership with BoardRoom
BoardRoom Malaysia provides custom assistance to companies that are about to prepare the NSRF, especially in our SSA-related services. We also offer professional advice on ESG disclosure, regulatory compliance, and submission to the platform in conjunction with Bursa Malaysia through theCSI platform.
Having created your first sustainability report in Malaysia or trying to advance the current practices, we assist in making the reporting process less complex, beginning with the initial planning and bringing it to the end. Get in touch with us here atBoardRoom Malaysia to inquire how to assist your next reporting period.
Contact BoardRoom for more information:
Chong Kok Wai
Regional Director of Sustainability