Question 1

When do IFRS S1 and IFRS S2 become mandatory for Malaysian companies?

Accepted Answer

Implementation is phased. Group 1 companies must comply for financial years beginning on or after 1 January 2025, Group 2 in 2026, and Group 3 (ACE Market and large non-listed companies) in 2027.

Question 2

What is the “climate-first” approach under Malaysia’s NSRF?

Accepted Answer

During the initial transition period, companies are required to disclose climate-related information under IFRS S2, with IFRS S1 applied only to climate. Other sustainability topics may be deferred.

Question 3

Are Scope 3 greenhouse gas emissions mandatory in Malaysia?

Accepted Answer

Yes, but with transition relief. Group 1 and 2 companies receive a two-year relief period, while Group 3 receives three years, unless Scope 3 disclosures are already required by another regulator.

Question 4

How do IFRS S1 and S2 differ from Bursa Malaysia’s earlier ESG requirements?

Accepted Answer

IFRS S1 and S2 focus on financial materiality, requiring companies to explain how sustainability and climate risks affect enterprise value, rather than providing high-level ESG narratives.

Question 5

What are the key challenges for Malaysian boards?

Accepted Answer

The main challenges are improving data quality, closing skills gaps in climate and sustainability reporting, and strengthening board-level governance and oversight.

Question 6

Will external assurance be required for sustainability disclosures?

Accepted Answer

Yes. Malaysia’s NSRF introduces mandatory reasonable assurance for Scope 1 and Scope 2 emissions, starting with Group 1 companies for financial years beginning on or after 1 January 2027.

Business Blogs in Malaysia

Navigating the NSRF: 5 Key IFRS S1 & S2 Challenges for Malaysian Finance Leaders

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