ESG Reporting Opens New Opportunities For Malaysia’s IPO Market

By Siti Noor Afera Abu

KUALA LUMPUR, Aug 23 (Bernama) -- Malaysia’s initial public offering (IPO) market is entering a new phase to strengthen environmental, social and governance (ESG) disclosures as companies are required to provide more detailed information on their sustainability performance.

ESGpedia vice-president Jozsef Acabo said such information was becoming increasingly important to investors in making investment decisions.

He said ESG reporting requires companies to disclose how they manage issues such as carbon emissions, energy use, environmental impact and other sustainability matters, alongside their financial performance.

Citing Deloitte’s Southeast Asia Mid-Year IPO Snapshot 2026, he noted that Malaysia’s capital market remained strong, with 36 companies listed in the first half of 2026, raising US$1.34 billion.

However, investors are also emphasising the quality of companies’ ESG disclosures, particularly as Malaysia’s National Sustainability Reporting Framework (NSRF) has expanded to all Main Market issuers this year.

“Newly listed companies will feel a short-term compliance adjustment, but the greater risk to momentum would be weak disclosure, which global funds would simply price as a discount.

“Incomplete disclosure is treated as unpriced risk, and investors price it,” he told Bernama.

Acabo said companies that failed to provide sufficient ESG information could face higher financing costs, lower valuations and more questions from investors before they decide to invest.

The reporting requirements are set to become more demanding in 2027, when companies will have to disclose more information on Scope 3 emissions, which refers to carbon emissions from activities across a company’s supply chain.

"For example, a manufacturer may know how much electricity and fuel it uses, but it may not have information on the emissions generated by its suppliers. These emissions form part of Scope 3," he explained.

Acabo said Scope 3 could account for between 70 and 90 per cent of a company’s total carbon footprint, making suppliers an important part of the reporting process.

However, he said the report from Eco-Business research showed that only 11 per cent of Malaysian public-listed companies disclosed Scope 3 emissions in the 2023 reporting cycle, compared with 39 per cent in the Asia-Pacific region.

"This means the pressure will not only be on large listed companies. Their suppliers, including small and medium enterprises (SMEs), will also increasingly need to provide reliable information on their carbon emissions," he said.

Acabo said many companies still collect ESG information manually, with data kept in different spreadsheets, websites and subsidiaries, making it difficult to verify its accuracy.

“The real shift required is towards continuous, digitalised carbon accounting rather than an annual reporting exercise,” he said.

He urged companies and SMEs to start collecting their relevant data so the information can be properly checked and verified before the new requirements take effect.

-- BERNAMA