Malaysia NSRF Sustainability Reporting guide: Timeline, scope and requirements

What is the National Sustainability Reporting Framework in Malaysia?

The National Sustainability Reporting Framework (NSRF) is Malaysia's framework for using the IFRS Sustainability Disclosure Standards as the baseline for corporate sustainability reporting. It was launched in September 2024 by the Advisory Committee on Sustainability Reporting (ACSR).

The framework is intended to improve the consistency, comparability and reliability of sustainability information available to investors and other users of corporate reports. At the centre of the NSRF are two standards:

• IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information
• IFRS S2 – Climate-related Disclosures

The important point is that NSRF reporting is not separate from financial thinking. Companies need to explain sustainability and climate matters that can reasonably be expected to affect their cash flows, access to finance, cost of capital or overall business prospects over the short, medium or long term. Malaysia has chosen a phased implementation rather than requiring every company to meet the complete standard at once.

Malaysia NSRF timeline at a glance

The NSRF divides affected companies into three groups. The dates refer to annual reporting periods beginning on or after 1 January of the stated year. So a company with a financial year running from 1 January to 31 December and falling within Group 2 enters the NSRF reporting regime for its financial year beginning 1 January 2026. For many companies, NSRF preparation will also require a stronger ESG strategy and reporting process so sustainability information can be collected, reviewed and disclosed consistently.

Group 1: Large main market listed companies

Group 1 covers Main Market issuers with a market capitalisation of RM2 billion or above, excluding treasury shares, measured as of 31 December 2024. For companies listed after that date, the assessment is based on market capitalisation at the date of listing. Their first NSRF reporting periods began on 1 January 2025.

Once a Main Market issuer has been classified within Group 1, a later fall below RM2 billion does not automatically move the company out of the group. The SC's NSRF FAQ states that it is expected to remain within the Group 1 reporting timeline.

Group 2: Other Main Market listed issuers

Group 2 consists of Main Market listed issuers that do not fall within Group 1. Their NSRF reporting periods begin on or after 1 January 2026. This means that, as of 2026, the NSRF is no longer limited to Malaysia's largest listed companies. The remaining Main Market issuers are now part of the rollout.

Group 3: ACE Market and large non-listed companies

Group 3 starts for annual reporting periods beginning on or after 1 January 2027. For a non-listed company, the RM2 billion threshold is based on consolidated group revenue of RM2 billion or more for two consecutive financial years preceding the current financial year. It covers:

• ACE Market listed issuers; and
• qualifying large non-listed companies.

Where consolidated accounts are not required, the threshold is applied at company level. This is important for large private groups. NSRF is not simply a Bursa Malaysia requirement affecting public companies.

What does a company need to report under the NSRF?

The NSRF uses IFRS S1 and IFRS S2 as its baseline. In practice, the information needs to show investors how sustainability and climate issues connect with the actual business. The reporting framework follows four familiar areas:

Governance

Companies need to explain how sustainability and climate-related risks and opportunities are overseen. That includes the role of the board, relevant committees and management. Readers should be able to understand who is responsible, how information reaches decision-makers and how sustainability matters are monitored inside the organisation. IFRS S1 describes governance disclosures as information about the processes, controls and procedures used to monitor, manage and oversee sustainability-related risks and opportunities.

Strategy

A report should connect sustainability issues with the company's business model and future plans. For example, a manufacturer exposed to carbon pricing may have a transition risk. A property company may face physical risks linked to flooding or extreme weather. Another business may see commercial opportunities from energy efficiency, renewable power or changing customer requirements. Companies need to consider both current and anticipated effects rather than simply listing ESG topics.

Risk management

Companies should also consider how physical and transition risks could affect operations, assets and financial performance. A structured climate risk assessment and reporting process can help identify these exposures before the disclosure is prepared. Ideally, this should not sit in a completely separate ESG process. The SC's guidance for boards specifically highlights the importance of integrating sustainability- related risks and opportunities into the wider enterprise risk management system.

Metrics and targets

Reporting also needs evidence. Companies should identify the metrics they use to measure relevant sustainability or climate risks and opportunities and report progress against targets where applicable. For climate reporting, IFRS S2 includes cross-industry metrics, industry-based metrics and information about climate-related targets. This is where reliable data collection becomes particularly important.

What is the difference between IFRS S1 and IFRS S2?

The two standards work together, but they do different jobs. IFRS S1 covers wider sustainability-related financial information. IFRS S1 provides the overall foundation. It requires disclosure of material sustainability-related risks and opportunities that could reasonably be expected to affect the company's prospects. That includes possible effects on cash flow, financing and cost of capital over different time horizons.

The subject is therefore wider than climate alone. Depending on the business, relevant matters could eventually include issues connected with resources, workforce, supply chains, water, biodiversity, human capital or other sustainability factors where they create financially relevant risks or opportunities.

For many Malaysian companies, IFRS S2 will be the immediate priority because Malaysia is using a climate-first transition. IFRS S2 also requires industry-specific climate-related information and is accompanied by industry-based guidance derived from the SASB Standards. IFRS S2 deals with:

1. climate-related physical risks;
2. climate-related transition risks;
3. climate-related opportunities.

How does Malaysia's climate-first approach work?

The first NSRF report does not necessarily mean a company must immediately produce complete disclosure across every sustainability topic. Malaysia has introduced additional transition reliefs. Groups 1 and 2 receive these reliefs for their first two reporting periods, while Group 3 receives them for its first three reporting periods. There are three particularly important reliefs.

1. Companies can begin with climate-related disclosures

During the relief period, companies may disclose only climate-related risks and opportunities under IFRS S2. IFRS S1 still applies, but only to the extent required to support those climate disclosures. After the transition period ends, the company must move beyond climate and consider other material sustainability-related risks and opportunities. That means broader sustainability reporting begins from:

• 2027 for Group 1
• 2028 for Group 2
• 2030 for Group 3

2. Reporting can initially focus on principal business segments

Another transition relief allows companies to concentrate climate-related disclosures on their principal business segments. This can make the early reporting process more manageable for diversified groups with numerous subsidiaries, sites or operating divisions. It should not, however, be treated as a reason to ignore obviously material risks.

The reporting entity should still align with the entity covered by the related financial statements. During the transition period, however, the company may focus its climate-related disclosures on its principal business segments. Once the relief expires, that narrower segment-focused relief is no longer available.

3. Scope 3 GHG emissions can be deferred

Scope 3 becomes more difficult when emissions data sits with suppliers, contractors, logistics providers or other companies in the value chain. A structured supply chain ESG advisory approach can help businesses map these relationships and improve data collection. The NSRF therefore extends the IFRS transition relief for Scope 3. All relevant Scope 3 disclosures are expected from:

• 2027 for Group 1
• 2028 for Group 2
• 2030 for Group 3

Note: Any Scope 3 categories already required by another applicable regulator are not automatically covered by the relief.

What are Scope 1, Scope 2 and Scope 3 emissions under NSRF reporting?

IFRS S2 generally requires GHG emissions to be measured using the GHG Protocol Corporate Standard. A company already using another measurement method may use the applicable first-year transition relief. Companies should also consider the jurisdictional reliefs introduced through the December 2025 amendments to IFRS S2, which become effective for annual reporting periods beginning on or after 1 January 2027, with early application permitted.

Before these emissions can be reported properly, companies need a reliable GHG inventory and carbon accounting process covering the relevant Scope 1, Scope 2 and Scope 3 sources.

• Scope 1 emissions: Direct greenhouse gas emissions from sources a company owns or controls, such as company vehicles, boilers or on-site fuel use.
• Scope 2 emissions: Indirect emissions linked to purchased energy, mainly electricity, heating or cooling used in offices, factories, warehouses and other facilities.
• Scope 3 emissions: Other indirect emissions across the value chain, including purchased goods, transport, business travel, employee commuting, investments and use of sold products.

Materiality under the NSRF is financially focused

One common mistake is to assume that every sustainability issue mentioned by stakeholders must appear in an IFRS S1 report. That is not the test. Under IFRS S1, information is material when omitting, misstating or obscuring it could reasonably be expected to influence decisions made by the primary users of general-purpose financial reports.

Companies therefore need to connect sustainability matters with business prospects and financial decision-making. A material climate risk may affect insurance costs, asset values, production, supply continuity or future capital expenditure. A sustainability opportunity may influence revenue, access to new markets or financing. That link should be visible in the report.

When must the Sustainability Statement be published?

Malaysia did not adopt the IFRS S1 first-year transition relief that would allow sustainability-related financial information to be issued after the financial statements. The intention is for the sustainability information and financial information to reach the market together. For Bursa Malaysia-listed issuers, sustainability disclosures prepared under IFRS S1 and IFRS S2 form part of the annual reporting framework.

If an issuer publishes its audited annual financial statements before releasing the annual report, it must also issue its annual Sustainability Statement at that time. Both are then incorporated into the annual report. This creates a practical reporting challenge: sustainability data now needs to work to a timetable much closer to financial reporting.

Will NSRF sustainability reports require external assurance?

External assurance is an important part of Malaysia's direction of travel, but companies should distinguish between the existing NSRF requirements and proposals that are still being finalised. The practical message is simpler: businesses should start making sustainability data assurance-ready now.

The ACSR's proposed Sustainability Assurance Framework would introduce reasonable assurance for Scope 1 and Scope 2 GHG emissions, starting with:

• Group 1 – annual periods beginning on or after 1 January 2027
• Group 2 – 1 January 2028
• Group 3 – 1 January 2029

A 2025 consultation also proposed later reasonable assurance over IFRS S1 core content and Scope 3 emissions. However, as of the latest published SC material, the wider Framework for Sustainability Assurance remains under development, so companies should not present the proposed assurance timetable as though every element has already been finalised.

How should Malaysian companies prepare for NSRF reporting?

Waiting until the annual report is being drafted is too late. IFRS S1 and S2 rely on information that may need to be collected across finance, sustainability, risk, operations, procurement, HR and supply-chain teams. A practical readiness programme can start with these areas:

Confirm which NSRF group applies

Check listing status, market capitalisation or the large non-listed company revenue test. Then establish the first reporting period and when transition reliefs expire.

Define the reporting boundary

Align the sustainability reporting entity with financial reporting. Map subsidiaries, operations, principal business segments and important parts of the value chain.

Identify material risks and opportunities

Review physical climate risk, transition risk and wider sustainability issues. Link them with business strategy, cash flows, financing, assets and future performance rather than creating a generic ESG topic list.

Build a reliable GHG inventory

Start collecting Scope 1 and Scope 2 activity data. Identify Scope 3 categories, data owners, suppliers and calculation gaps before Scope 3 reporting becomes compulsory.

Connect sustainability with enterprise risk management

Climate and sustainability risks should have owners, assessment methods, controls and escalation processes just like other significant business risks.

Put governance in place

Clarify board oversight, management responsibilities, approval processes and reporting lines. The annual disclosure needs to reflect what actually happens inside the company.

Establish data controls

Keep source documents, calculation methodologies, emission factors, assumptions and approval records. A number in the sustainability statement should be traceable back to its source.

Prepare for assurance early

Do not wait for mandatory reasonable assurance before testing your controls. Internal review, data checks and assurance-readiness assessments can identify gaps while there is still time to correct them.

How EcoSphere Sustainability Solutions Pte. Ltd. helps businesses prepare for NSRF and GHG reporting

EcoSphere Sustainability Solutions Pte. Ltd. helps businesses in Malaysia measure, understand and report greenhouse gas emissions as part of wider ESG, carbon management and sustainability reporting work. Its advisory services cover carbon accounting, emissions measurement, sustainability reporting and decarbonization planning, helping companies turn operational and value-chain data into usable climate information. We can support businesses with:

• Scope 1 emissions: Identify and calculate direct emissions from company-controlled sources such as fuel use, equipment and vehicles.
• Scope 2 emissions: Assess emissions associated with purchased electricity and other energy used across offices, factories and facilities.
• Scope 3 emissions: Map relevant value-chain emission sources and determine which categories are material to the business.
• Carbon accounting and reporting: Organize emissions data so it can support ESG, climate and sustainability disclosures.
• Decarbonization planning: Use emissions results to identify practical areas where carbon reduction efforts can be focused.
• Product carbon and lifecycle assessment: For companies that need deeper product-level analysis, EcoSphere also provides LCA, carbon-footprint and environmental disclosure advisory.

For businesses that are unsure where their largest emissions sit, the first step is usually to establish a clear emissions boundary and build a reliable Scope 1, Scope 2 and Scope 3 inventory before setting reduction targets.