Malaysia outlines phased approach for sustainability reporting non-compliance

Malaysia’s Advisory Committee on Sustainability Reporting (ACSR) has outlined how regulators will address cases where companies fail to comply with the nation’s mandatory sustainability reporting standards. The guidelines are designed to balance a supportive transition period with clear accountability for non-compliance, acknowledging that many firms are still preparing to adopt the new reporting regime. Under the approach, regulators will initially prioritise capacity building, engagement and corrective action rather than immediate penalties. This reflects recognition of the challenges companies face in adopting the International Sustainability Standards Board-aligned disclosure standards under the National Sustainability Reporting Framework. Authorities aim to ensure disclosures become consistent, comparable and reliable over time as organisations build necessary skills and data systems. If a reporting entity is unable or unwilling to address identified deficiencies after engagement and support, regulators may escalate to enforcement actions. In particular, cases of willful or serious breaches — such as fraudulent disclosures or deliberate omissions — will be subject to formal enforcement to protect market integrity and public interest. The phased strategy involves cooperation among multiple Malaysian regulators, reflecting a coordinated effort to strengthen corporate sustainability practices. By balancing transitional support with eventual accountability measures, the plan seeks to encourage broad compliance while safeguarding confidence in sustainability reporting outcomes.