Malaysian regulators set phased action on corporate sustainability reporting non-compliance

Malaysian financial regulators have outlined how they will address corporate failures to comply with the country’s emerging sustainability reporting requirements. The authorities said they will adopt a “phased and practical” approach as companies adjust to the new National Sustainability Reporting Framework, which introduces mandatory disclosure standards aligned with international benchmarks.

The framework, introduced in 2024, requires large public and certain private companies to disclose sustainability-related information, including environmental, social and governance data. Regulators emphasised the importance of supporting companies through education, capacity building and corrective engagement during the initial transition period, rather than rushing straight to penalties.

While the early focus will be on helping organisations build reliable and consistent reporting practices, authorities have also signalled that formal enforcement measures will be available for those that fail to remedy reporting gaps or engage meaningfully with compliance expectations. In cases of willful or serious non-compliance - such as misleading or materially incomplete disclosures - more stringent action may be taken to uphold market integrity and protect stakeholders.

The regulatory stance seeks to balance corporate readiness with accountability as Malaysia strengthens its sustainability disclosure ecosystem. The phased approach aims to encourage broad compliance while ensuring that sustainability reporting becomes more consistent, transparent and aligned with global standards over time.

Phased enforcement on sustainability-reporting non-compliance signals Bursa Malaysia and adjacent regulators are moving from guidance to enforcement over the next reporting cycle, and non-compliant issuers should be planning remediation now. Our ESG-strategy and sustainability-due-diligence teams help clients evaluate reporting gaps, build reporting infrastructure and align with NSRF, ISSB and Bursa expectations.