NSRF Malaysia Decoded: Everything Your Company Needs for IFRS S1 & S2 Compliance

On 24 September 2024, Malaysia's Ministry of Finance and the Securities Commission Malaysia (SC) launched the National Sustainability Reporting Framework. Around 130 large Main Market issuers, representing over 80% of Bursa Malaysia's market capitalisation, began reporting under IFRS S1 and IFRS S2 for financial years starting 1 January 2025.

Malaysian issuers now carry three moving parts at once: the NSRF itself, the amended Bursa Main Market and ACE Market Listing Requirements issued in December,2024 and the ISSB climate-first sequencing logic. What IFRS S1 and S2 actually require under the national sustainability reporting framework Malaysia has adopted, and how the timeline unfolds group by group, is the practical question for every sustainability and finance lead.

This post breaks down the NSRF IFRS S1 S2 alignment, the phased NSRF timeline, Bursa integration, transition reliefs, and the assurance onramp.

What is the NSRF, and how does it align with IFRS S1 and S2?

The NSRF Malaysia is the National Sustainability Reporting Framework, adopting the IFRS Sustainability Disclosure Standards as the baseline for sustainability reporting by companies in Malaysia.

Baseline standards

The NSRF applies IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures), collectively the ISSB Standards, as issued by the International Sustainability Standards Board. The framework tracks the standards closely, with the same transition reliefs the ISSB permits.

Governance body

The national sustainability reporting framework Malaysia adopted was developed by the Advisory Committee on Sustainability Reporting (ACSR). Members include Bank Negara Malaysia, the Companies Commission of Malaysia, Bursa Malaysia, the Financial Reporting Foundation, and the SC's Audit Oversight Board.

Jurisdictional alignment

Malaysia joins more than 20 jurisdictions, collectively representing 55% of global GDP, using the ISSB Standards. The IFRS Foundation published Malaysia's Jurisdictional Profile, confirming the country's adoption approach with its transition reliefs.

NSRF reporting requirements under IFRS S1 and S2

The NSRF reporting requirements mandate that applicable entities publish a sustainability statement based on IFRS S1 and S2, co-published with the annual financial statements.

IFRS S1: general requirements

IFRS S1 sets the baseline. Companies disclose sustainability-related risks and opportunities that could reasonably be expected to affect enterprise value, across governance, strategy, risk management, and metrics and targets.

IFRS S2: climate-related disclosures

IFRS S2 applies the same four-pillar structure specifically to climate. It is built on the TCFD pillars and includes scenario analysis, transition planning, and Scope 1, 2, and 3 GHG emissions.

Financial materiality lens

The NSRF IFRS S1 S2 framework uses financial materiality. Only those sustainability matters that could influence the decisions of investors, lenders, and other capital providers are required. Organisations running a GRI-based materiality process will need to recalibrate, since GRI uses a broader stakeholder lens.

Location of disclosure

For listed issuers, the sustainability statement sits inside the annual report. For large non-listed companies, the Companies Commission of Malaysia will determine location through amendments to the Companies Act 2016.

NSRF timeline: phased adoption by Groups 1, 2, and 3

The NSRF timeline phases adoption across three groups between 2025 and 2027, structured by market and revenue size.

• Group 1: Main Market listed issuers with market capitalisation of RM2 billion or above, reporting under IFRS S1 and S2 for annual periods beginning on or after 1 January 2025. First reports land in 2026.

• Group 2: All remaining Main Market-listed issuers, from annual periods beginning on or after 1 January 2026.

• Group 3: ACE Market-listed issuers and large non-listed companies with consolidated group revenue of RM2 billion or above for two consecutive preceding financial years, from annual periods beginning on or after 1 January 2027.

According to SC Malaysia, around 130 companies fall into Group 1, representing over 80% of Bursa Malaysia's market capitalisation. Entities outside these thresholds may adopt voluntarily.

NSRF and Bursa Malaysia listing requirements integration

Bursa Malaysia amended its Main Market and ACE Market Listing Requirements on 23 December 2024 to embed NSRF obligations into the listing rules.

Sustainability statement mandated

Every listed issuer must prepare a sustainability statement under IFRS S1 and S2 as part of the annual report. The amendments apply across Group 1, 2, and 3 on their respective start dates.

Assurance disclosure

Listed issuers must state whether the sustainability statement underwent internal review by an internal auditor or independent assurance under recognised standards such as ISAE 3000 (Revised) or ISSA 5000. Conclusions from any independent assurance must be disclosed.

CSI platform

Bursa operates the Centralised Sustainability Intelligence (CSI) platform as the official submission channel for sustainability disclosures. Entities within scope upload disclosures for investor access and benchmarking.

Transition reliefs: climate-first and Scope 3 deferral

The NSRF provides additional transition reliefs that sequence adoption, beginning with climate and deferring the hardest data.

Climate-first sequencing

For the first two reporting periods, Group 1 and Group 2 companies may disclose only climate-related risks and opportunities under IFRS S2, deferring broader IFRS S1 topics. Group 3 receives the same relief for three years.

Principal business segments

During the relief window, climate-related disclosures may focus on principal business segments rather than the full group.

Scope 3 deferral

Disclosure of Scope 3 GHG emissions is deferred for two years for Group 1 and 2 and three years for Group 3. The exception: Bursa Main Market-listed issuers must disclose Scope 3 for business travel and employee commute from the start, following Bursa's existing rules.

Group-level exemption

Large non-listed companies whose holding entity already reports under ISSB or an equivalent framework, such as the European Sustainability Reporting Standards (ESRS), may leverage the holding company's disclosures.

Assurance roadmap for Scope 1 and Scope 2 emissions

The NSRF compliance bar for assurance rises from voluntary to mandatory reasonable assurance on Scope 1 and Scope 2 GHG emissions.

Group 1 first, from FY 2027

According to SC Malaysia, reasonable assurance on Scope 1 and Scope 2 emissions becomes mandatory for Group 1 companies for annual reporting periods beginning on or after 1 January 2027. Group 2 and Group 3 follow on their respective timelines.

Recognised assurance standards

Assurance engagements are expected to follow ISAE 3000 (Revised) or ISSA 5000, the IAASB's dedicated sustainability assurance standard. The full assurance framework, including accreditation of assurance providers, will be issued by the Sustainability Assurance Working Group (SAWG) following further consultation.

Key Takeaways

Malaysian reporting will move quickly from climate-first disclosures to full IFRS S1 topic coverage once the two-year relief window closes for Group 1. The assurance bar also shifts from today's internal review standard to mandatory reasonable assurance on Scope 1 and 2 emissions by 2027.

Oren helps Malaysian sustainability and finance teams build IFRS S1 and S2-aligned disclosures, calibrate materiality under the financial lens, and prepare Scope 1, 2, and 3 emissions data for assurance. Schedule a demo to see how.