KUALA LUMPUR: The Capital Markets Malaysia (CMM), an affiliate of the Securities Commission Malaysia (SC), today launched additional environment, social and environment (ESG) guidance on disclosure expectations for small and medium enterprises (SMEs) in five sectors.
The sector guides for SMEs in energy, transport and logistics, construction and real estate, agriculture, and manufacturing feature enhanced environment and social disclosure guidelines, and are an extension of its simplified ESG disclosure guide (SEDG), released by CMM on Oct 18, 2023.
The guides were developed in response to feedback gathered by CMM during their public and market consultations with multiple stakeholder groups, including multinational companies (MNCs), public-listed companies (PLCs), SMEs, regulatory and policy stakeholders.
The intention is to address the need for additional guidance around the disclosure expectations specific to SMEs in these five key sectors.
Categorised into basic, intermediate and advanced, the sector guides follow the main SEDG guide, and cater to the different levels of sustainability maturity of each SME.
They delve into environmental considerations which are reflected in the form of additional disclosures required by individual sectors to better capture the impact of the companies on the ecosystem around them, including specific material considerations such as biodiversity, nature-related and climate disclosures that are likely to impact all five high-emissions industries.
CMM has also released a human rights and labour rights guide which incorporates considerations to help companies achieve a deeper understanding of these standards, specifically to address the global concern of forced labour which are especially relevant to the labour-intensive agriculture, manufacturing and construction & real estate sectors.
The sector guides are aligned to global, local and government frameworks and reporting standards including the International Sustainability Standards Board, The Greenhouse Gas Protocol, the Global Reporting Initiative, the Bursa Malaysia Listing Requirements, Bursa's Sustainability Reporting Guide as well as the Malaysian Code on Corporate Governance.
"Today, we are enhancing the guidance in five sectors to ensure that SMEs within these sectors are prepared and equipped to mitigate industry-specific vulnerabilities and at the same time, keep up with the magnitude of change required to meet national and global standards," SC executive chairman and CMM chairman Datuk Seri Dr. Awang Adek Hussin said in the statement.
He added that the industries prioritised in the sector guides are based on the significance of their respective contribution to Malaysia's gross domestic product (GDP), economic participation and impact.
He said for this purpose, the sector guides offer a more comprehensive and detailed attention to environmental and labour-related disclosures.
Meanwhile, CMM general manager Navina Balasingam said while the SEDG was designed with broad applicability, the sector guides come at a crucial period where global agencies and regulatory bodies are widening their ESG focus on nature-related risks and human rights responsibilities.
"The response from SMEs, major multinational supply chain players, financial institutions, government agencies and non-governmental organisations (NGOs) to the release of the SEDG last year was overwhelmingly positive. We are confident that the sector guides will have a similar impact in helping companies within these five sectors to respond to the enhanced disclosures required of their stakeholders," she added.
Navina said CMM's Adopter Programme has also been instrumental in providing SMEs knowledge exchange and networking opportunities as well as in-person workshops and tutorials to gain valuable insights on ESG disclosures and reporting that ensure they meet the various global and local standards.