Malaysia — the NSRF, an announced carbon tax, CBAM and EUDR

Malaysia requires listed issuers and large non-listed companies to report on the ISSB standards under the National Sustainability Reporting Framework, on a phased timetable. A domestic carbon price has been announced but not enacted, and two European Union regulations reach Malaysian exporters of metals, palm oil, rubber and wood.

What is in force

The National Sustainability Reporting Framework (NSRF) was developed by the Advisory Committee on Sustainability Reporting (ACSR) and launched on 24 September 2024 by Finance Minister II at the Securities Commission Malaysia.¹ The ACSR is chaired by the Securities Commission Malaysia, with the Audit Oversight Board, Bank Negara Malaysia, the Companies Commission of Malaysia, Bursa Malaysia and the Financial Reporting Foundation as members.¹ The framework uses IFRS S1 and IFRS S2, issued by the International Sustainability Standards Board, as the baseline sustainability disclosure standards for companies in Malaysia.²

Adoption is phased. Group 1 is the Main Market listed issuers with market capitalisation, excluding treasury shares, of RM2 billion and above as of 31 December 2024, and it reports for annual reporting periods beginning on or after 1 January 2025. Group 2, the other Main Market listed issuers, follows from 1 January 2026, and Group 3, ACE Market listed issuers and large non-listed companies, from 1 January 2027.²

The framework carries transition reliefs. For the first two reporting periods (Groups 1 and 2) and the first three (Group 3), applicable entities may disclose information on climate-related risks and opportunities only, and may focus climate disclosures on principal business segments. They need not disclose Scope 3 GHG emissions, except categories already required by their regulators.² Applicable entities shall adhere to their respective regulator’s requirements on the location and timing of reporting.²

On 8 December 2025 the ACSR set out how it reviews disclosures. General non-compliance is addressed through engagement and corrective action, and failure to correct deficiencies may result in enforcement action by the relevant authorities; enforcement remains a safeguard for wilful or serious breaches such as fraudulent or misleading material disclosures.³

Outside Malaysia, the EU Carbon Border Adjustment Mechanism (CBAM) is in its definitive regime. CBAM covers cement, electricity, fertilisers, iron and steel, aluminium and hydrogen as listed in Annex I, and the transitional reporting-only period ran from 1 October 2023 to 31 December 2025.⁴ Applications for authorised CBAM declarant status opened on 31 December 2024, and from 1 January 2026 goods may be imported into the customs territory of the Union only by an authorised CBAM declarant, with the annual declaration, certificate and penalty articles applying from that date. The quarterly certificate-holding requirement in Article 22(2) applies from 1 January 2027.⁵ The amending regulation introduces a 50-tonne cumulative annual de minimis threshold per importer for iron and steel, aluminium, fertilisers and cement (not electricity or hydrogen). It sets the annual CBAM declaration and certificate-surrender deadline at 30 September of the year following import, so the first declaration for 2026 imports is due by 30 September 2027.⁶

What is coming

The Budget 2026 speech delivered on 10 October 2025 stated that the Carbon Tax will be introduced starting next year, with an initial focus on the iron, steel and energy sectors. The speech added that its mechanism will be aligned with the National Carbon Market Policy and the upcoming Climate Change Bill.⁷ As of 17 August 2026 no gazetted carbon-tax legislation, rate, threshold or commencement date could be located from a Ministry of Finance or gazette source; reports that the tax and the Climate Change Bill are still being drafted are unconfirmed.⁷

Under the NSRF, Group 3 begins reporting from 1 January 2027, and the transition reliefs for Groups 1 and 2 lapse after two reporting periods, so the climate-only relief ends and Scope 3 GHG emissions come into scope.² Large non-listed companies whose holding company reports under other international frameworks may be exempted for three reporting periods subject to the Registrar’s decision, and thereafter use the ISSB Standards for annual reporting periods beginning on or after 1 January 2030.²

The EU Deforestation Regulation (EUDR) is the second EU rule with a Malaysian reach. EUDR covers cattle, cocoa, coffee, oil palm, rubber, soya and wood and the derived products listed in Annex I; operators and traders placing them on or exporting them from the EU market must exercise due diligence and submit a due diligence statement.⁸ Following the amendment, EUDR obligations apply from 30 December 2026 for medium-sized and large operators and traders and from 30 June 2027 for micro and small undertakings and natural persons established as such by 31 December 2024.⁹

Who it binds

The NSRF applies to Main Market listed issuers on Bursa Malaysia, ACE Market listed issuers, and non-listed companies with consolidated group revenue of RM2 billion and above for two consecutive financial years preceding the current financial year.² Entities in hard-to-abate sectors and CBAM sectors such as cement, iron, steel, aluminium, chemicals, fertilisers, electricity, hydrogen and petroleum are highly encouraged to report in accordance with the NSRF even where not scoped in.²

The carbon tax, as announced, would fall initially on the iron, steel and energy sectors.⁷ CBAM binds EU importers of the Annex I goods, and reaches the Malaysian installations that supply them through those importers’ obligations. EUDR binds EU operators and traders, and reaches Malaysian producers in their supply chains the same way.⁴⁸

Verification requirements

Under the NSRF, external assurance is currently voluntary. The stated aim is to mandate reasonable assurance on Scope 1 and Scope 2 GHG emissions for Group 1 for annual reporting periods beginning on or after 1 January 2027, Group 2 from 1 January 2028 and Group 3 from 1 January 2029, subject to further consultations. Engagements are expected to be performed under the assurance standards adopted by the Malaysian Institute of Accountants.² The ACSR consulted on a proposed sustainability assurance framework — covering adoption of international sustainability assurance standards, oversight of assurance providers, competency requirements for assurance leaders and timelines for external assurance — from 25 June 2025 to 6 August 2025.¹⁰ No final assurance framework had been located by the retrieval date.

For CBAM, the embedded-emissions data a Malaysian producer supplies feeds the EU importer’s annual declaration due by 30 September of the year following import.⁶ For EUDR, the evidence sits in the due diligence statement submitted by the EU operator or trader.⁸

What an organisation on ESGOS can do

A Malaysian organisation can find its listing in the directory and claim it from its profile page, or get listed, so that the record shows which NSRF group, if any, applies. It can then submit evidence: the sustainability statement prepared under IFRS S1 and S2, any assurance report obtained voluntarily, and the reliefs applied. An organisation making cement, iron, steel, aluminium, fertilisers, hydrogen or electricity for EU customers can complete a compliance profile with the embedded-emissions data CBAM asks for. One supplying palm oil, rubber, wood, cocoa or coffee into the EU can record the evidence an EUDR due diligence statement draws on. The verifiers directory lists accredited verification bodies drawn from national accreditation registers; verifiers accredited for CBAM are not yet published by the Commission, so the directory does not hold them. The exposure check shows how a product and market sit against CBAM, EUDR and the announced carbon tax.

Footnotes

1. National Sustainability Reporting Framework to Enhance Sustainability Disclosures (media release), Securities Commission Malaysia. ↩ ↩²

2. National Sustainability Reporting Framework, Securities Commission Malaysia (ACSR). ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸ ↩⁹

3. ACSR Sets Out Approach for Non-compliance to Sustainability Reporting Requirements (media release), Securities Commission Malaysia. ↩

4. Regulation establishing a carbon border adjustment mechanism (CBAM), EUR-Lex. ↩ ↩²

5. Regulation (EU) 2023/956 — consolidated text 02023R0956-20251020, EUR-Lex. ↩

6. Regulation amending the CBAM Regulation as regards simplifying and strengthening the mechanism, EUR-Lex. ↩ ↩²

7. Budget Speech (Fourth MADANI Budget), English translation, Ministry of Finance Malaysia. ↩ ↩² ↩³

8. Regulation on the making available on the Union market of certain commodities and products associated with deforestation (EUDR), EUR-Lex. ↩ ↩² ↩³

9. Regulation amending the EUDR as regards certain obligations of operators and traders, EUR-Lex. ↩

10. ACSR Invites Public Feedback on Proposed Framework on Sustainability Assurance (media release), Securities Commission Malaysia. ↩