Capital Markets Malaysia releases proposed Simplified ESG Disclosure Guide for public consultation

• 4-week public consultation period, final guide to be launched in Nov
• The guide will help PLCs close the gap in their supply chain reporting

Capital Markets Malaysia (CMM) has released the proposed Simplified ESG Disclosure Guide (SEDG) for public consultation. The SEDG aims to provide practical, structured guidance on disclosures expected of small-to-medium enterprises to ESG matters.

The SEDG was developed to provide SMEs with a simplified and standardised set of ESG disclosures, enabling them to adopt sustainability, remain competitive and relevant, and respond to disclosure requests from stakeholders, including customers, investors, banks and regulators.

The guide references local reporting requirements, including those under Bursa Malaysia's Sustainability Reporting Guide as well as the Malaysian Code on Corporate Governance, as well as main global frameworks and reporting standards, including the Global Reporting Initiative (GRI), the International Sustainability Standards Board (ISSB) to name a few.

Dr Awang Adek Hussin, Executive Chairman of SC and CMM, said, "The SC recognises the challenges faced by companies, especially SMEs, in embedding sustainability practices in their business operations. This Guide is a crucial step for all companies and businesses in Malaysia to address sustainability considerations within the supply chain as both countries and businesses globally step up their net zero commitment, thus heightening regulatory scrutiny and consumer concerns around the matter."

While there is no indication that SMEs will be required to report on their ESG performance, the fact remains that many of them are vendors to publicly listed companies, who are required to start filing disclosures with Bursa Malaysia. One of the challenges that need to be addressed are disclosures related to supply chains and the Scope 3 emissions that need to be accounted for in the reports produced by publicly listed companies. In drafting the SEDG, CMM has consulted with multi-stakeholder groups, including large multinational and publicly listed companies, to understand their disclosure needs from their supply chain and with SMEs and corporate governance stakeholders. 

CMM will launch the SEDG by November and consider all comments during the four-week public consultation period which commenced yesterday, 26 July.

Interested parties and the public are invited to submit their comments and feedback at FormSEDG before the closing date on 25 August.