Malaysia Releases Simplified ESG Disclosure Guide for SMEs in Supply Chains

Capital Markets Malaysia (CMM), an affiliate of the Securities Commission Malaysia (SC), has launched a Simplified ESG Disclosure Guide (SEDG).

The move makes Malaysia the first country globally to provide small-to-medium enterprises (SMEs) within global supply chains with a streamlined and standardised set of guidelines in relation to environment, social, and governance (ESG) disclosures.

The SEDG is said to consolidate and simplify the many complex global and local ESG-related frameworks to improve the availability of ESG data and information by SMEs.

In formulating the Guide, public and market consultations were conducted with multiple stakeholder groups — including large multinational and public listed companies (PLCs), SMEs, and regulatory and policy stakeholders, to better understand the disclosure challenges, needs, and expectations of SMEs within the supply chain.

Dato’ Seri Dr. Awang Adek Hussin, Executive Chairman of SC, and Chairman of CMM said: “As the global sustainability movement forges ahead amid heightened regulatory scrutiny and investor demand for more deliberate company action towards net zero goals, the SC is committed to ensuring that our companies, both large and small, are prepared to meet global ESG requirements.”

“Recognising that SMEs are particularly exposed to risks from supply chain vulnerabilities, the SC welcomes the release of the SEDG which will help SMEs get ahead of the curve and remain relevant in a constantly evolving global marketplace,” he said.

The release of the SEDG is aligned with recent national policy initiatives aimed at elevating business in Malaysia towards synergy in commercial success and sustainability, particularly in the manufacturing sector, as the nation steps up its net zero commitments.

These include the New Industrial Master Plan (NIMP) 2023, as well as the Industry Environmental, Social, and Governance (i-ESG) Framework and National Energy Transition Roadmap (NETR).

The SEDG comprises 35 priority disclosures that are aligned with local and global sustainability guidelines which will enable SMEs to respond to disclosure requests from multiple stakeholders, including but not limited to customers, investors, banks, and regulators.