Question 1

What is IFRS S2 and when does it apply to Malaysian companies?

Accepted Answer

IFRS S2 Climate-Related Disclosures requires companies to report climate risks and opportunities that could affect their cash flows, financing access, or capital costs. Group 1 entities (Main Market issuers ≥RM2 billion market cap) started climate-first reporting in January 2025. Group 2 entities begin January 2026, and Group 3 (ACE Market and large NLCos ≥RM2 billion revenue) start January 2027.

Question 2

Which greenhouse gas emissions must Malaysian companies report under IFRS S2?

Accepted Answer

Companies must report Scope 1, Scope 2, and Scope 3 greenhouse gas emissions measured according to the Greenhouse Gas Protocol standards. Malaysian companies can defer full Scope 3 reporting until their full IFRS S1 and S2 adoption dates, but must continue reporting business travel and employee commuting emissions that have been mandatory since 2021.

Question 3

What are the four pillars of IFRS S2 compliance in Malaysia?

Accepted Answer

The four pillars are: Governance (board oversight of climate risks), Strategy (transition plans and scenario analysis), Risk Management (integration of climate risks into overall risk processes), and Metrics and Targets (cross-industry and industry-specific performance measurements with progress tracking towards climate goals).

Question 4

What transition reliefs are available for Malaysian companies adopting IFRS S2?

Accepted Answer

Main Market issuers receive two years of Additional Transition Reliefs, allowing climate-first reporting and principal business segment focus. Large non-listed companies may get up to three years exemption if their holding company uses equivalent standards like European Sustainability Reporting Standards. Full Scope 3 reporting deferrals apply until full adoption dates.

Question 5

How does Malaysia's IFRS S2 implementation compare to other countries?

Accepted Answer

Malaysia is the only ASEAN jurisdiction adopting ISSB Standards with a 'limited transition' approach recognised by the IFRS Foundation. This positions Malaysian companies advantageously with globally comparable disclosure standards, reduced jurisdictional risk, and enhanced investor confidence compared to regional peers without standardised climate reporting frameworks.

Business Blogs in Malaysia

Understanding IFRS S2: Climate-Related Disclosures for Malaysian Businesses

The Digital ESG Revolution: How Malaysian SMEs Can Transform Compliance into Competitive Advantage

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