Banks Increasingly Require Firms Seeking Loans To Provide Sustainability Reports -- ESGright
By Nur Athirah Mohd Shaharuddin
KUALA LUMPUR, July 2 (Bernama) -- It will be hugely advantageous for big companies as well as small and medium enterprises (SMES) to comply with sustainable reporting requirements so that they have access to capital and markets and retain their competitiveness.
Prathab V, principal consultant of Malaysia-based consulting and training firm ESGright Sdn Bhd, said this is because banks and other financial institutions are increasingly requiring companies applying for loans to provide their environmental, social and governance (ESG) reports and demonstrate their sustainability performance.
While it is mandatory for all listed companies to issue a sustainability statement, it is optional for unlisted companies. However, to have better access to capital and global markets, it will be advantageous for all companies to prepare their sustainability report, he told Bernama.
As such, the government, through various industry regulators and sustainability guidelines, has been encouraging businesses to undertake sustainability reporting, said Prathab.
Better Sustainability Reports Means Better Access To Capital
Companies that do better in terms of sustainability reporting would have better access to capital and smart capital, “while those which do not, eventually, whether they like it or not, risk losing out to their competitors,” he said.
“As sustainability considerations become integral to investment decisions, financing access, risk management and corporate strategy, Malaysia has recognised the urgent need to strengthen professional capacity in this field.
“So, it is a good practice as well to embark on sustainability reporting, to state your policies, governance systems and so on, put everything in place,” he said, adding that it does not cost a lot.
He was speaking to Bernama after a recent meeting co-organised by ESGright and Global Reporting Initiative (GRI) with about 40 top corporate sustainability leaders and industry stakeholders for a meaningful exchange on the future of ESG reporting.
GRI is an international organisation that develops sustainability reporting standards.
Malaysia Has Among Highest Number of GRI Professionals In ASEAN
He said the participants at the meeting collectively represented a combined market capitalisation of over RM380 billion, highlighting the significance of the dialogue across key market players.
Since 2023, ESGright has grown to become the fifth largest GRI professional sustainability trainers globally in terms of the number of participants trained in 2025. In the Asia-Pacific region, ESGright is ranked third.
To date, Malaysia has one of the highest numbers of GRI professionals in the ASEAN region, underscoring the government’s commitment towards sustainability, said Prathab.
In addition, the company was recently appointed as the first approved education partner in Malaysia by the International Financial Reporting Standards (IFRS) Foundation, which provides globally recognised qualifications focused on sustainability-related financial disclosures.
Prathab said it is designed to equip corporate professionals, investors, auditors, consultants and sustainability practitioners with the knowledge and practical competencies in sustainability-related financial disclosures aligned with International Sustainability Standards Board (ISSB) standards.
Meanwhile, GRI chief executive officer Robin Hodess said that based on what is happening in developed markets where ESG is prioritised, a right-sized sustainability reporting framework tailored to the business needs and resource capacity of SMEs would “future-proof and future-fit their companies.”
“I've been encouraged in the ASEAN region that business is strongly committed to ESG and to sustainability,” she said, adding that it would do well for SMEs, especially suppliers, to join the bandwagon in sustainability reporting.
SMEs Need Greater Support In Adopting Sustainability Requirements
For instance, as suppliers, it will also help them gain access to supply chain opportunities, which are pivotal for them to remain competitive.
She said SMEs face different challenges compared with larger corporations as they have limited resources, thus requiring greater support in adopting sustainability-related requirements.
“So, a much smaller set of disclosures that are appropriate to what is really needed would also help SMEs progress on their sustainability journey, even if their efforts are not as ambitious as those of larger companies,” she said when asked whether SMEs would be hard-pressed to adopt sustainability requirements.
Hodess said it is also important to ensure that the information SMEs are asked to disclose is meaningful for their own business needs, particularly in helping them access supply chain opportunities and meet customer expectations.
She said many large Malaysian companies, particularly listed firms, were among the early adopters of ESG practices.
Before Bursa Malaysia made sustainability disclosures mandatory, they had already been reporting in line with the GRI Standards, a globally recognised sustainability reporting standard, she said.
This is due to their recognition of the additional market-driven requirements that exist today, whereby embedding ESG reporting into their business practices makes it easier for them to export their products and compete in international markets, she added.
Compliance Fatigue a Challenge Companies Face
However, Hodess said ESG reporting has become increasingly complex due to the growing number of reporting frameworks and disclosure requirements.
She said companies needed guidance to navigate these requirements, fulfil their reporting obligations, engage investors and other stakeholders, implement internal improvements and ultimately strengthen their sustainability performance.
Prathab said one of the biggest challenges some companies face is “compliance fatigue” due to the increasing number of reporting requirements and guidelines they must follow.
Companies need to balance the responsibility of meeting compliance requirements with their primary priority of generating profits for shareholders, he said.
“Each company should examine what it can do best to make the greatest contribution in a particular area, such as the environment or biodiversity and focus on doing that one area really well.
“This will create a lot more impact rather than trying to do everything perfectly,” he said.
-- BERNAMA