Thursday 28 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on October 17, 2022 - October 23, 2022

There have been significant developments in the sustainability landscape, particularly on the climate change front, in recent years. In response, Bursa Malaysia announced the enhanced sustainability reporting requirements for the Main Market and ACE Market listed companies in early October, with the aim of elevating the sustainability practices and disclosures of listed companies.

Reporting requirements for Main Market listed issuers will be implemented in phases, starting with the disclosure of the common sustainability matters and its related indicators for financial year ending (FYE) on or after Dec 31, 2023, culminating with sustainability reporting aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations for FYE on or after Dec 31, 2025.

ACE Market listed corporations will adopt the enhanced sustainability disclosures on a staggered basis, with disclosures of prescribed sustainability information taking effect for FYE on or after Dec 31, 2024, and concluding with the disclosure of their basic transition plans for FYE on or after Dec 31, 2026.

What is TCFD?

The TCFD provides investors with information about what companies are doing to mitigate the risks of climate change.

There are four thematic areas under the TCFD: governance; strategy; risk management; and metrics and targets. Under these themes, there are 11 recommendations, including the need to describe the board’s oversight of climate-related risks and opportunities and the organisation’s processes for identifying and assessing climate-related risks.

Highlights of the enhanced sustainability reporting requirements:

1. For Main Market listed companies:

• Disclosure of a common set of prescribed sustainability matters and indicators that are deemed material for all listed issuers, as well as the management of such matters; and

• Requiring climate-related disclosures in line with TCFD recommendations.

2. For ACE Market listed companies:

• Requiring disclosure of the prescribed information currently required of Main Market listed issuers, such as sustainability governance, scope of sustainability statement, basis for the scope, materiality assessment and management of material sustainability matters;

• Disclosure of a common set of prescribed sustainability matters and indicators deemed material for all listed corporations; and

• Disclosure of a basic plan to transition towards a low-carbon economy in a dedicated section in the sustainability statement.

3. Required disclosures for both main market and ace market listed companies

• At least three financial years’ data, on a rolling basis, for each reported indicator;

• Performance target in respect of each reported indicator, if such a target has been set;

• Summary of such data and corresponding performance target in a prescribed format; and

• Statement on whether the sustainability statement has been subject to internal review by the internal auditor or independent assurance performed in accordance with recognised assurance standards. The statement must include the subject matter and scope covered, as well as conclusions from the independent assurance. 

This requirement is applicable for sustainability statements issued for the FYE on or after Dec 31, 2023, for Main Market listed companies, and on or after Dec 31, 2025, for ACE Market listed companies.

What are common indicators?

They include anti-corruption, diversity, energy management and labour practices and standards. For example, under the anti-corruption indicator, companies need to disclose the percentage of employees who have received training on anti-corruption, percentage of operations assessed for corruption-related risks and confirmed incidents of corruption and action taken. 

Where to find resources?

Bursa has released the updated “Sustainability Reporting Guide and Toolkits”. This resource comprises key questions that listed issuers should address, methodologies to measure the indicators, updated definitions, case studies and other information.

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