Keynote Address at the Launch of the National Sustainability Reporting Framework (NSRF)
Speaker: YB Senator Datuk Seri Amir Hamzah Azizan, Finance Minister II
Speech Title: Building a Resilient and Innovative ICM for Global Impact
Location: Kuala Lumpur Delivered: 24 September 2024
Yang Berbahagia Dato’ Mohammad Faiz Azmi, Chairman, Securities Commission Malaysia Members of the media Ladies and Gentlemen Assalamualaikum warahmatullahi wabarakatuh dan Salam Sejahtera.
It is a pleasure for me to be here with you this afternoon, for the launch of the National Sustainability Reporting Framework (NSRF). A framework which charts Malaysia’s approach for sustainability reporting, using the disclosure standards issued by the International Sustainability Standards Board (ISSB Standards) as well as a framework for sustainability assurance.
Malaysia now joins more than 20 jurisdictions, collectively representing 55% of global GDP, which have decided or are taking steps to use the standards. This is another significant step forward in our commitment to integrate sustainability into the core of our economic development.
Sustainability is one of the six core values of Malaysia MADANI, alongside - care and compassion, respect, innovation, prosperity, and trust. The necessary foundations to build a better Malaysia for Malaysians.
The NSRF was developed by the Advisory Committee on Sustainability Reporting, which was formed last year with the support of the Ministry of Finance.
The Committee, which is chaired by SC and comprises the Audit Oversight Board, Bank Negara Malaysia, Bursa Malaysia, Companies Commission of Malaysia and the Financial Reporting Foundation, developed the framework after careful consideration of various factors, including companies’and ecosystem readiness as well as the support required for implementation.
The framework is more than just a regulatory advancement. It addresses the information needs of investors and financiers to help with capital allocation decisions, and more importantly promotes economic prosperity which is aligned with environmental stewardship and social responsibility.
Sustainability in Ekonomi Madani
Ladies and gentlemen
Global investors are showing a renewed interest in Malaysia’s reform narrative, as reflected in the optimism of the domestic capital markets and exemplified by the FBM KLCI etching new highs, as well as Foreign Direct Investments committed by global companies like Microsoft, Google, Byte Dance and Infineon Technologies.
We have seen the transformation in how investors approach their portfolios. Historically, financial metrics were the sole metric of success, but that is no longer the case today. This shift is not merely a trend but a reflection of a deeper understanding that long term value creation is intrinsically linked with sustainable and ethical practices.
Investors are evaluating companies based on their environmental impact, carbon footprint, waste management, to name a few – driven by the recognition that the financial risks associated with environmental degradation must be mitigated.
In short, sustainability is not an option—it is a necessity. Companies worldwide are being held to higher standards of environmental and social performance, and Malaysia is no exception.
The Government is committed to sustainable development, and it is embedded within our policy frameworks and priorities. Malaysia is one of the eight out of 10 countries in Southeast Asia that have announced target dates to achieve net zero carbon emissions by 2050 as outlined in the 12th Malaysia Plan.
To achieve these energy transition goals, we will need RM1.3 trillion between now and 2050. It includes investments in renewable energy, energy efficiency, and green mobility, as outlined in the National Energy Transition Roadmap, NETR. More must be done to ensure that investment reaches the right places, with maximum impact on sustainability. In addition, with increasing temperatures, we will also need to consider investments in responsiveness, adaptation and resilience.
The NSRF also has the support of the GLICs, which are prioritising investments that contribute to sustainability goals, and address critical issues such as climate action, social inequality and economic inclusivity. This is reflected in their investment and engagement policy, as well as targets – including net zero portfolios and net zero emissions for their own operations by 2050.
Considering the huge financing requirement, the capital market in Malaysia must be ready to facilitate fund raising and investments to support the Government’s priorities in achieving its sustainability and climate goals. A reliable reporting framework is therefore needed to ensure there is reliable data and information to facilitate financing.
Reporting & Ease of Doing Business
Ladies and gentlemen
A key outcome from the NSRF is to support the ease of doing business with respect to sustainability reporting. The establishment of the ISSB and its two inaugural standards was driven to address the absence of a unified set of standards for sustainability reporting and the need for a single common language.
Prior to this, companies across markets face the burden of complying with multiple reporting standards, which increases not just the complexity of reporting, but certainly, the cost.
By using the ISSB Standards, the NSRF intends to provide companies with an internationally-recognised and standardised framework to provide reliable, decision- useful and globally comparable sustainability disclosures.
The phased and developmental approach in how the NSRF will be implemented is designed with the intention to provide as long a runway as possible for companies to be ready. The framework also builds on the reporting foundations which Bursa Malaysia has put in place since 2015, through the Listing Requirements.
Markets across the globe are moving towards a globally aligned sustainability reporting standard, and the NSRF will enable companies, and Malaysia, get on that trajectory. The Advisory Committee has designed implementation support in the form of training and tools which will be made available to companies, including those which are focused on addressing the needs of medium and smaller companies.
This is expected to reduce the complexity and costs associated with sustainability reporting, allowing businesses to focus on what they do best: driving innovation, creating jobs, and contributing to economic growth.
Closing
Ladies and gentlemen,
In closing, I would like to encourage the companies which are coped-in under the NSRF, and other companies too, to embrace the framework and leverage the capacity and implementation support that will be made available. Use the framework as a tool to drive sustainable growth.
We need to lead by example, showing that economic prosperity and sustainability can, and must, go hand in hand.
On that note, it gives me great pleasure to officially launch, the National Sustainability Reporting Framework.
The Securities Commission Malaysia (SC) was established on 1 March 1993 under the Securities Commission Act 1993 (SCA). We are a self-funded statutory body entrusted with the responsibility to regulate and develop the Malaysian capital market.
