Driving urgent, positive change through reporting

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As we navigate the current landscape, which presents various challenges, it is obvious that sustainability is at the front and centre of every agenda. There is increasing awareness that we are not on a sustainable path and that this will not only have an impact on people and the planet but also implications for the future viability of businesses. 
There is ample evidence of this, from serious concerns about child labour in the cobalt mines of Congo and the recent flooding on Mount Kinabalu to the world's largest iceberg breaking away from Antarctica and the continuing death toll from conflict. 
The 2023 World Economic Forum's assessment of top economic risks underscores this: Most of the top risks identified are environmental or social in nature with economic consequences, rather than economic risks per se. 
In terms of environmental risks, the Malaysian government is adopting a "whole-of-nation" approach to addressing the impact of climate change on economic sustainability, and it is embedded in the national plans, including the New Industrial Master Plan and the National Energy Transition Roadmap. Considering the huge financing requirement, the financial sector, particularly the capital market, must continue to facilitate financing and invest­ments in these key areas to support the govern­ment's priorities. 
To realise the energy transition alone, we need between RMl.2 trillion and RMl.3 trillion from now to 2050.
To facilitate fundraising, disclosure and reporting will be important. Reliable and compa­rable sustainability-related information is essen­tial to support the design of strategies, action plans and capital allocation decisions. 
The Securities Commission Malaysia (SC) welcomed the issuance of the International Sustainability Standards Board's (ISSB) inaugural standards in June this year. These standards provide a global baseline of sustainability-related disclosures for the capital markets, addressing the urgent need to address the fragmentation in reporting standards and frameworks.
The disclosure of sustainability information should be the result of robust internal processes to identify and effectively manage sustainability risks and opportunities. 
Forward-thinking companies will use the reporting process to drive change in their businesses while effectively meeting their stakeholders' needs. 
If reporting is treated as an end in itself,  then it is akin to someone committing to a diet and recording their calorie intake while still consuming the same amount of nasi lemak and teh tarik. A futile exercise.
But companies must be vigilant about greenwashing. Customers, investors, and regulators are questioning the veracity of some of the sustainability claims made by companies, with some companies facing legal action for such claims. Currently, the SC, through the national-level Advisory Committee on sustainability Reporting (ACSR), is looking into the implementation of the ISSB standards in Malaysia. Formed in April 2023 with the Ministry of Finance's endorsement, the ACSR - chaired by the SC - includes key entities such as Bank Negara Malaysia, Bursa Malaysia, the Companies Commission of Malaysia, the Audit Oversight Board and the Financial Reporting Foundation. The ACSR has also formed a consultative group with representation from key stakeholders, including listed issuers, accounting firms, assurance providers and investors, to provide views on the implementation of the ISSB standards as well as the assurance framework in Malaysia.
The engagement with the consultative group has provided the ACSR with frank and insightful feedback including on the poten­tial challenges and how these can be addressed. There is also agreement that there has been a lot of attention on the "E" aspect of ESG ( environ­mental, social and governance), but focus must also be placed on "S". 
We will need to balance all factors when determining the imple­mentation timing and approach􀀏 including maintaining Malaysia1s competitiveness as an investment destination and the overall readi­ness of the ecosystem. 
Feedback from a broader set of stakeholders is required to enable a holistic assessment and informed policy decisions. 
Hence, the ACSR is planning a wider public consultation in the first quarter of 2024, where we hope to gather feedback on the issues before we set the course for the implementation of sustaina­bility disclosure and assurance standards in Malaysia. 

Source: Driving urgent, positive change through reporting (December 25, 2023). Retrieved from The Edge Malaysia Newspaper: ESG Pullouts. p. 14
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