SUSTAINABILITY reporting is now crucial for businesses to remain competitive. Regulations such as the European Sustainability Reporting Standards (ESRS), Carbon Border Adjustment Mechanism (CBAM), and Withhold Release Orders (WRO) compel companies to adopt sustainable practices to retain market access.

CBAM enforces carbon pricing on imports to align with the European Union (EU) climate goals, affecting nearly 57% of Malaysia’s exports to the EU by 2026 (BNM, 2023). Similarly, the ESRS, under the EU’s Corporate Sustainability Reporting Directive (CSRD), mandates comprehensive ESG disclosures, increasing transparency obligations for Malaysian firms exporting to the EU.

These requirements extend beyond the EU. The WRO, enforced by the US Customs and Border Protection (CBP), blocks goods linked to forced labour, prompting Malaysian industries to adopt stricter labour standards, independent audits, and compliance with International Labour Organization (ILO) principles.

Closer to home, Malaysia’s regulatory bodies are also reinforcing sustainability. Bank Negara Malaysia (BNM) introduced the Climate Change and Principle-based Taxonomy (CCPT) to embed ESG considerations into finance. Bursa Malaysia mandates listed companies to disclose ESG risks, sustainability performance and strategies in annual reports.

Meanwhile, the Securities Commission (SC) advances sustainable investment through the Malaysian Code on Corporate Governance (MCCG) and Sustainable and Responsible Investment (SRI) guidelines. The National Sustainability Reporting Framework (NSRF) requires companies listed on Bursa Malaysia’s Main and ACE Markets, along with large non-listed firms generating RM2bil or more in revenue, to comply in phases from 2025.

These initiatives signify a shift towards sustainable business practices. While the private sector’s need for sustainability reporting is evident, what about the public sector? The answer is a resounding yes.

Economic impact of public sector activities

The government plays a vital role in the economy, contributing 16% of Malaysia’s GDP (RM318bil in 2024). Public sector activities contribute to greenhouse gas (GHG) emissions across all scopes –

Scope 1 from government vehicles, Scope 2 from energy consumption in buildings, and Scope 3 from purchased goods transportation, waste disposal, civil servant commuting and business travel.

Measuring and reporting these emissions are essential for achieving Malaysia’s climate goals, as the public sector is also accountable for reducing carbon intensity by 45% by 2030 and achieving net zero by 2050. Sustainable procurement and operational efficiency can position the public sector as a model for low-carbon economic growth.

 

Employee welfare and social sustainability

With 1.7 million employees, the public sector plays a crucial role in shaping national workforce policies through employment standards. Sustainability reporting fosters transparency and accountability in key areas:

Working conditions – ensuring fair working hours and adherence to OSHA standards creates safer and more sustainable workplaces

Employee benefits and career progression – transparency in training programs, career progression, and welfare initiatives enhances employee satisfaction and long-term retention.

Fair promotion and salary policies – clear and equitable promotion and salary policies foster workplace diversity and inclusion. Legal employment of part-time and contract workers, along with fair wages and benefits, ensures workforce equity. By leading in ethical employment, the public sector sets a strong example for private enterprises to emulate.

 

Governance and accountability

Sustainability reporting enhances governance by ensuring transparency in anti-corruption and anti-bribery measures. Documenting such initiatives can help Malaysia improve its rankings, advancing from 57th place in 2023 towards its goal of the top 25 by 2033.

Fiscal responsibility is another key concern. The government allocates RM260bil annually for operations and RM68bil for development. Given the large sums and high transaction volumes in public procurement, inefficiencies and mismanagement pose risks. Integrating sustainability strategies in procurement enhances transparency, mitigates risks and ensures efficient public spending.

 

Driving the green public procurement policy

The Eleventh Malaysian Plan (2016–2020) targeted 20% green government procurement. Ministries and agencies must appoint Green Procurement Policy (GPP) focal points and submit annual plans. By 2018, RM904.4mil was spent on GPP, cutting 1,031.3 tonnes of CO2e emissions (IISD, 2024). However, further progress depends on efficient data collection and precise monitoring. Sustainability reporting frameworks enhance data tracking and ensure alignment with national sustainability goals.

 

Cybersecurity threats

The government is a prime cyber threat target due to its critical data. In 2023, the manufacturing, government and technology sectors made up 38.2% of cyberattack victims, with ransomware accounting for over 58% (Ensign InfoSecurity). Strengthening cybersecurity is vital to safeguarding sensitive data. Transparent reporting fosters public trust and ensures accountability in digital governance. Sustainability reporting can highlight government efforts in:

  • securing digital infrastructure
  • enhancing data resilience
  • preventing cyber threats.

 

Global and local leadership

A commitment to sustainability reporting strengthens Malaysia’s global standing while building public trust. The Ministry of Investment, Trade and Industry (Miti) sets a national benchmark by launching Malaysia’s first ministry-level sustainability report on Oct 1, 2024. Its report covers:

  • Environmental impact: GHG emissions (Scopes 1, 2 and 3), energy and water use and resource efficiency initiatives.
  • Social responsibility: employee welfare, diversity and community engagement.
  • Governance: transparency, ethical business practices and cybersecurity measures.
  • Economic impact: investment, trade and industrial development.

MITI’s leadership underscores the importance of public sector transparency and accountability. Other ministries should follow suit.

 

Conclusion

Public sector sustainability reporting is vital for accountability, shaping private sector practices, and strengthening Malaysia’s global sustainability leadership. With MITI setting the precedent, the government is advancing toward a more transparent, resilient and sustainable future.

As the policymaker and sustainability driver, the public sector must lead by example in achieving the SDGs and climate goals. Publishing sustainability reports demonstrates the government’s commitment to national sustainability objectives and fosters collaboration with the private sector.