CMM enhances ESG disclosure guidelines for SMEs across five sectors

PAID JAYA: Capital Markets Malaysia (CMM), an affiliate of the Securities Commission Malaysia (SC), today announced enhanced environmental and social disclosure guidelines for small and medium-sized enterprises in the supply chains of five key sectors of the Malaysian economy – energy, transport and logistics, construction and real estate, agriculture and manufacturing.

The industry guides expand on the Simplified ESG Disclosure Guide (SEDG), published by CMM on October 18, 2023, to provide SMEs with a streamlined and standardized set of ESG disclosures expected from companies operating in global supply chains.

Malaysia is the first country to issue SME disclosure guidelines, aligned with various global and local ESG disclosure frameworks, to encourage more SMEs to adopt ESG reporting best practices as the country collectively seeks to transform and improve its economy at local and international levels.

The newly introduced sector guidelines have been developed in response to feedback collected by CMM through public and market consultations with a wide range of stakeholder groups, including multinationals, listed companies, SMEs and regulatory and policy stakeholders. The intention is to address the need for additional guidance on disclosure expectations specific to SMEs in these five key sectors.

SC and CMM chairman Datuk Seri Dr Awang Adek Hussin said: “The complexities and challenges of doing business locally and internationally show no sign of abating. Instead, scrutiny of businesses and enterprises is increasing, especially those operating in global supply chains, and our SMEs are the most vulnerable. SEDG was launched last year in response to challenges highlighted by SMEs in our previous engagement with market stakeholders.

Today, he added, the CMM is refining the guidance to ensure that SMEs across sectors are prepared and equipped to mitigate industry-specific vulnerabilities while keeping pace with the scale of change required to meet national and global standards.

“Industries identified as priority in the sector guides are based on the importance of their contribution to Malaysia’s gross domestic product, economic contribution and impact. To this end, industry guidelines pay more comprehensive and detailed attention to the disclosure of environmental and work-related information,” said Awang Adek.

CMM CEO Navina Balasingam commented: “While SEDG is designed with broad applicability in mind, the publication of the SEDG Sector Guidelines comes at a key time when global agencies and regulators are increasingly focusing ESG on nature-based risks and rights responsibilities human. The sector guides are an up-to-date source of information that focuses on relevant environmental and social issues for SMEs in these five industries.

She expressed confidence that the sector guidance would have a similar impact, helping companies in these five sectors respond to the increased disclosure requirements required of their stakeholders.