Increasingly, Malaysian businesses are recognising that investing in green practices is not a cost centre, but a financially sound decision. It cuts operating expenses, opens doors to new markets, enhances brand trust, and—importantly—improves access to capital. Environmental, Social and Governance (ESG) performance has become a core measure of business resilience and competitiveness, especially for enterprises seeking to future-proof their operations.
From Optional to Essential: Why SMEs Must Catch Up
Despite the national momentum, many small and medium enterprises (SMEs) still perceive sustainability as a “big business” issue or a luxury they can’t afford. However, a recent Alliance Bank survey found that nearly 40% of Malaysian SMEs that implemented ESG practices saw revenue growth exceeding 50%, largely from improved marketability and stronger stakeholder confidence.
This shows that sustainability is not only achievable for SMEs—it’s profitable. The real question is: Can you afford not to act?
As large corporations, government-linked companies (GLCs), and multinationals embed ESG criteria into procurement and supply chains, suppliers without clear sustainability commitments are increasingly filtered out. Banks are also shifting—offering better terms, higher limits, and preferential rates to ESG-aligned businesses. In short, sustainability is becoming the price of entry into serious commercial partnerships.
Regulatory Pressure is Rising—And It’s Local
Malaysia is tightening its sustainability frameworks. The Bursa Malaysia ESG Reporting Roadmap, starting with listed companies and eventually reaching SMEs, mandates enhanced disclosure on climate risks, emissions, and governance. It aligns with global standards like the IFRS S1 and S2, ensuring Malaysian businesses remain credible in global value chains.
Meanwhile, federal and state governments are taking firm steps. The National Energy Transition Roadmap (NETR) charts a low-carbon future, while incentives under Budget 2024—including the Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE)—are designed to make green upgrades more financially viable.
Sarawak, in particular, has taken a pioneering role, becoming the first state to pass a carbon emissions law via its Environment (Reduction of Greenhouse Gas Emission) Bill 2023. This move signals the direction in which other states may follow, accelerating the shift towards carbon pricing and emissions accountability nationwide.
Financing, Incentives and Support Need Scaling
The Green Technology Financing Scheme (GTFS) has helped hundreds of companies make the green transition, but more support is needed to reach SMEs. Application processes must be simplified, and financial institutions must be empowered to offer sustainability-linked loans tailored for smaller businesses.
In parallel, Malaysia must implement practical ESG reporting frameworks for SMEs—ones that consider business size and maturity, supported by digital tools, templates, and advisory assistance. Tax incentives like accelerated capital allowances for green equipment or double deductions for ESG certifications and training can help ease the financial burden of transformation.
Staying Competitive in the Region
Malaysia is in a race to remain attractive to green capital and ESG-focused investors. Countries like Singapore are already pulling ahead with clearer carbon pricing mechanisms, strong green finance ecosystems, and policy certainty.
To keep pace, Malaysia must offer not just incentives but clarity and consistency in policies, signalling to investors and businesses alike that our green economy agenda is serious and enduring.
ESG is the New Currency of Trust
Sustainability is no longer about optics. It is about resilience, relevance, and measurable returns. By 2030, businesses that invest in sustainability now will dominate market share. Those who delay risk falling behind in a global economy that increasingly prioritises low-carbon, transparent, and responsible value chains.
As Chartered Accountants and members of The Institute of Chartered Accountants in England and Wales (ICAEW), they play a pivotal role in this transition—translating ESG goals into financial models, risk forecasts, capital structuring, and operational advice. This is not about hype; it’s about helping clients realise real value and mitigate real risks.
A Strategic Imperative for Malaysia
For Malaysian businesses, sustainability is no longer a philosophical debate—it is a strategic imperative. The decision to go green is not just about doing good. It is about doing well—reducing costs, improving resilience, securing financing, and unlocking growth.
In this economy, sustainability is not the cost. It is the payoff.
