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Public Consultation on Proposed Framework for Sustainability Assurance

02 July 2025

The Advisory Committee on Sustainability Reporting1 (“ACSR”) was set up by the Securities Commission Malaysia (“SC”), with the endorsement of the Ministry of Finance (“MOF”) in May 2023, to support the implementation of the IFRS Sustainability Disclosure Standards in Malaysia.
 
The ACSR was charged with two primary responsibilities, namely, to: 
  1. assess the use and application of the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB), specifically IFRS S1 - General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2 - Climate-related Disclosures (collectively “ISSB Standards”); and
  2. develop a sustainability assurance framework for Malaysia. 
The assessment culminated in the adoption of the ISSB Standards as the baseline sustainability disclosure standards in the National Sustainability Reporting Framework (“NSRF”) issued by the Ministry of Finance of Malaysia on 24 September 2024.2
 
Thereafter, the ACSR published a consultation paper on 25 June 2025 seeking public feedback on the Proposed Framework for Sustainability Assurance (“Proposed Framework”).
 
The Proposed Framework
 
The Proposed Framework seeks to promote investor confidence in the sustainability reports issued by applicable entities3. To this end, the Proposed Framework seeks to address the following matters surrounding sustainability assurance in Malaysia: 
  1. The adoption of international standards relating to sustainability assurance;
  2. Oversight over sustainability assurance providers4;
  3. Competency requirements for the sustainability assurance engagement leader5; and
  4. Timeframe for external reasonable assurance6 on sustainability information. 
Adoption of international standards
 
The ACSR proposes that the following international standards in relation to sustainability assurance be adopted: 
  1. International Standard on Sustainability Assurance 5000, General Requirements for Sustainability Assurance Engagements (“ISSA 5000”) issued by the International Auditing and Assurance Standards Board (“IAASB”) be adopted as the recognised sustainability assurance standard in Malaysia.
  2. International Standard on Quality Management 1 (“ISQM 1”) issued by the IAASB be adopted as the only recognised quality management standard to be complied with by all firms7 that provide sustainability assurance services in Malaysia.
  3. International Ethics Standards for Sustainability Assurance (including International Independence Standards) (“IESSA”) issued by the International Ethics Standards Board for Accountants) be adopted as the recognised ethical standard to be complied with by sustainability assurance practitioners8 in Malaysia. 
Oversight of sustainability assurance providers
 
Recognising that regulatory oversight aimed at ensuring that the sustainability assurance providers comply with the relevant sustainability assurance and ethical standards is necessary to
promote quality of sustainability assurance work, the ACSR proposes that the role of the SC’s Audit Oversight Board (“AOB”) be expanded to regulate sustainability assurance providers of applicable entities.
 
The AOB’s expanded role will include the registration and inspection of sustainability assurance providers and carrying out enforcement actions in instances of significant non-compliances with the recognised sustainability assurance and ethical standards.
 
Competency requirements for the sustainability assurance engagement leader
 
To ensure that a sustainability assurance engagement leader possesses sufficient competence, knowledge and experience to properly execute a sustainability assurance engagement, the ACSR proposes that a sustainability assurance engagement leader who seeks registration with the AOB must meet the following competency requirements: 
  1. the individual should possess a degree or diploma from a local or foreign educational institution that is recognised by the Malaysian Qualifications Agency (MQA) or possess any other professional qualifications deemed relevant to sustainability assurance work;
  2. the individual should have at least six years of accumulative work experience in performing audit or assurance engagements within which the individual should have at least two years of work experience as an engagement team leader or supervisor responsible for supervising audit or assurance engagements; and
  3. the individual has acquired sustainability-related certifications that are recognised by the AOB. 
In relation to the foregoing, the AOB may recognise a certification programme of the Securities Industry Development Corporation (SIDC) or any other professional bodies if the certification programme can provide an individual with a good understanding of the following: 
  1. the reporting requirements under ISSB Standards;
  2. the connectivity between sustainability reporting and financial reporting;
  3. the requirements of the international standards relevant to the performance of a sustainability assurance engagement such as ISQM 1, ISSA 5000 and IESSA;
  4. the exercise of professional scepticism and professional judgment on the engagement; and
  5. any legal and regulatory requirements applicable to a sustainability assurance engagement in Malaysia. 
Upon achieving certification, an individual is further required to complete 20 hours of training annually that may be acquired internally within the firm or externally relating to sustainability assurance engagement such as sustainability reporting, sustainability assurance, relevant ethical standards, ISQM 1 or sustainability related topics.
 
Timeframe for external reasonable assurance
 
The ACSR proposes that external reasonable assurance be made mandatory for sustainability information such as the IFRS S1 core contents (Governance, Strategy, Risk Management and Metrics and Targets) and GHG emissions.
 
Having taken into consideration the varying levels of readiness and maturity of the applicable entities, the ACSR has proposed the following timelines for external mandatory assurance as proposed below:
 
Assurance for Scope 1 GHG emissions9 and Scope 2 GHG emissions10
 
Applicable entities Proposed timeline for external reasonable assurance for annual reporting periods beginning on or after
Group 1:
Main Market listed issuers with market capitalisation of RM2 billion and above		 1 January 2027
Group 2:
Main Market listed issuers (other than listed issuers in Group 1)  		 1 January 2028
Group 3:
ACE Market listed issuers and large non-listed companies with annual revenue of RM2 billion and above		 1 January 2029
 
Assurance for IFRS S1 core contents (Governance, Strategy, Risk Management and Metrics and Targets) and Scope 3 GHG emissions11
 
Applicable entities Proposed timeline for external reasonable assurance for annual reporting periods beginning on or after
Group 1:
Main Market listed issuers with market capitalisation of RM2 billion and above		 1 January 2030
Group 2:
Main Market listed issuers (other than listed issuers in Group 1)		 1 January 2031
Group 3:
ACE Market listed issuers and large non-listed companies with annual revenue of RM2 billion and above		 1 January 2033
 
Deadline for feedback
 
The consultation questions can be accessed here. Responses must be submitted to the ACSR by 6 August 2025.
 
Comments
 
The phased rollout of the implementation of the NSRF commenced for Main Market listed issuers categorised under Group 1 with effect from their annual reporting periods commencing on 1 January 2025 or later, and will be extended to Main Market listed issuers categorised under Group 2 with effect from their reporting periods commencing on 1 January 2026 or later, and thereafter to ACE Market listed issuers and large unlisted companies with annual revenue of RM2 billion and above categorised under Group 3 with effect from their annual reporting periods commencing on 1 January 2027 or later. When the Framework for Sustainability Assurance is launched, the applicable entities will have to subject their sustainability reports to mandatory assurance by sustainability assurance providers in accordance with the applicable timeframes set out in the Framework for Sustainability Assurance.
 
 
 
Article by To’ Puan Janet Looi (Partner) and Siti Ayenaa Binti Mohd Anis (Associate) of the Corporate Practice and ESG Practice of Skrine.
 
 
 
1 The ACSR is chaired by the Securities Commission Malaysia. The other members of the ACSR are representatives from the Audit Oversight Board (AOB), Bank Negara Malaysia (BNM), the Companies Commission of Malaysia (CCM), Bursa Malaysia Bhd and the Financial Reporting Foundation (FRF).
2 The NSRF can be accessed here.
3 The expression “applicable entities” means listed issuers on the Main Market and ACE Market of Bursa Malaysia and large non-listed companies with annual revenue of RM2 billion and above.
4 The expression “sustainability assurance provider” means an individual sustainability assurance engagement leader or firm who provides sustainability assurance services.
5 The expression “sustainability assurance engagement leader” means an individual appointed by the firm who is ultimately responsible for the sustainability assurance engagement and for the assurance report that is issued on behalf of the firm.
6 The expression “reasonable assurance” means a high but not an absolute level of assurance that the practitioner obtains about whether the sustainability information reported is free from material misstatement. In the assurance report for a reasonable assurance engagement, the assurance conclusion is expressed in the form of an opinion as to whether the entity’s sustainability information is prepared, in all material aspects, in accordance with the applicable criteria.
7 The expression “firm” means any conventional partnership under the Registration of Businesses Act 1956, limited liability partnership under the Limited Liability Partnerships Act 2012 or company under the Companies Act 2016 which provides sustainability assurance services.
8 The expression “sustainability assurance practitioner” means the individuals conducting the sustainability assurance engagement comprising the engagement leader and other members of the engagement team.
9 The expression “Scope 1 GHG emissions” means emissions from operations that are owned or controlled by the reporting entity.
10 The expression “Scope 2 GHG emissions” means emissions from the generation of purchased or acquired electricity, steam, heating or cooling consumed by the reporting entity.
11 The expression “Scope 3 GHG emissions” means all indirect emissions (not included in Scope 2 GHG emissions) that occur in the value chain of the reporting entity, including both upstream and downstream emissions.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

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