With Bursa Malaysia mandating the adoption of International Financial Reporting Standards (IFRS) S1 and S2, starting with climate-first reporting for top publicly listed companies (PLCs) in 2025, the transition to a mandatory, globally-aligned sustainability disclosure regime is upon us.
While this transition impacts all industries, it presents a unique and pressing challenge for the Malaysian health care sector, where Environmental, Social, and Governance (ESG) factors are intrinsically linked to the core business.
This industry grapples with highly specialised risks, such as managing over 49,100 tonnes of clinical waste annually, addressing inequities in healthcare access between urban and rural areas, and navigating the complex governance of a dual public-private system.
Currently, a significant disclosure deficit exists between what companies report and what the new standards demand. A 2024 report from the Securities Commission Malaysia and the World Bank highlighted critical gaps in environmental data.
This is reinforced by studies showing how weak quantitative reporting is; for instance, a study on Penang-based private limited companies found that only 7.2 per cent fully disclosed waste generation data, and less than 2 per cent reported on key air pollutants. This is simply not enough for investors who need robust, comparable data.
Think of old sustainability reports as a basic health check-up, offering a simple summary like “the patient is generally healthy”. The new IFRS standards, however, are like a full MRI scan.
They demand detailed, verifiable data that shows investors exactly what is happening inside the company, from its carbon footprint to its supply chain labor practices.
The consequences for companies that fail to provide this MRI-level detail are severe. They risk diminished access to capital from ESG-focused investors, exclusion from global supply chains, and significant reputational damage.
The case of Top Glove, which faced United States import bans and a market collapse over forced labour allegations, serves as a stark warning of what can happen when ESG risks are mismanaged. This is creating a two-tier market, where ESG-ready firms attract investment while laggards are penalised.
To address this challenge, we need a practical, user-friendly tool that can be integrated into Bursa Malaysia’s national Sustainability Accelerator (SA) programme.
It will empower health care companies to conduct confidential self-assessments, identify their specific disclosure gaps, and build a clear roadmap for compliance, ultimately strengthening their position in this new investment landscape.
Preparing for these new standards is not merely a compliance exercise; it is a strategic imperative for future-proofing our key economic sectors and enhancing the integrity of the entire Malaysian capital market.
Prof Long Chiau Ming, Dr Woon Chin Ong, and Prof Ong Hwai Chyuan are from Sunway University.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
