Executive Summary
This guide provides a practical introduction to Environmental, Social, and Governance (ESG) reporting for Small and Medium-sized Enterprises (SMEs) in Malaysia. We explain what ESG is, why it matters for your business, and provide a simple framework to help you get started on your ESG journey.
What is ESG?
ESG stands for Environmental, Social, and Governance. It is a framework for assessing a company's performance on a wide range of sustainability and ethical issues.
- Environmental: This includes a company's impact on the environment, such as its carbon footprint, energy consumption, water usage, and waste management.
- Social: This covers a company's relationships with its stakeholders, including its employees, customers, suppliers, and the local community. Key issues include diversity and inclusion, human rights, and consumer protection.
- Governance: This refers to how a company is governed, including its board structure, executive compensation, shareholder rights, and internal controls.
Why is ESG Important for Malaysian SMEs?
While ESG reporting has traditionally been the domain of large corporations, it is becoming increasingly important for SMEs in Malaysia for several reasons:
- Access to Finance: Banks and investors are increasingly using ESG criteria to make lending and investment decisions.
- Supply Chain Requirements: Large corporations are increasingly requiring their suppliers to meet certain ESG standards.
- Talent Attraction and Retention: Employees, especially younger generations, want to work for companies that are committed to sustainability and social responsibility.
- Brand and Reputation: A strong ESG performance can enhance your brand and reputation, and help you to attract and retain customers.
How to Get Started with ESG Reporting
Getting started with ESG reporting can seem daunting, but it doesn't have to be. Here is a simple four-step process for Malaysian SMEs:
- Assess Your Material ESG Issues: Identify the ESG issues that are most relevant to your business and your stakeholders.
- Collect Data: Start collecting data on your performance on these issues. You may already have much of this data available in your existing systems.
- Set Goals and Targets: Set realistic goals and targets for improving your ESG performance over time.
- Report on Your Performance: Start reporting on your ESG performance to your stakeholders. This can be done through a simple sustainability report or by including ESG information in your annual report.
Related Services
Our Audit & Assurance Services can provide assurance on your ESG reporting. Our Corporate Finance Advisory team can also help you to understand how ESG can create value for your business.
Last updated: 15 Oct 2025