ESG IN MALAYSIA - PROGRESS, PITFALLS AND LESSONS FROM ISO - HARD TALK - NIK ZAFRI

Back in the 90s, ISO certifications were all the rage. Everyone wanted one, often not to improve their systems, but simply because they didn’t want to be left behind. That was the wrong mindset. ISO and any system was meant to shape culture, discipline, and resilience, not just tick compliance boxes.

Today, the buzzword is ESG (Environmental, Social, Governance). Since 2023, I’ve seen ESG on the agenda of almost every organization I visit in Malaysia. But those with real system implementation experience know this - ESG isn’t a sprint. It takes time to embed into culture.

Malaysia has made some strong moves such as the National Energy Transition Roadmap (NETR) and National ESG Framework (NSRF), net-zero by 2050 targets, and even carbon market development. GLCs like Petronas, Sime Darby, and Maybank are integrating ESG into strategy and reporting. Industries like palm oil and electronics are under global pressure to comply. Green bonds, sustainability-linked loans, and Bank Negara’s climate risk measures show regulators are also pushing.

But the gaps are clear. SMEs which make up 97% of businesses often see ESG as costly compliance. Data is fragmented, standards vary, and greenwashing risks remain. Malaysia lacks ESG professionals, and universities are not producing enough ESG-literate graduates. On top of that, “S” (Social) and “G” (Governance) often take a back seat to “E” (Environment), while enforcement remains patchy.

So when some claim being a “leader” in ESG, I see it differently - it's a kind of defensive mechanisms towards a consultant especially an assessor. We can claim leadership in ambition and frameworks, but not yet in consistent execution. It’s better to say “we are working on it” than “we know everything.” The ISO era taught us the same lesson - systems must live in culture, not just compliance reports.

First of all, before claiming leadership in ESG, know the rules first. Standards such as ISO and other international frameworks provide guidelines, but ESG implementation is not a one-size-fits-all matter. Different industries have different approaches, and even within the same sector, practices can vary. From one system to another, from one implementation to another, the problems and shortcomings are also unique to the nature of each industry.

Regionally, Malaysia is ahead of several ASEAN peers, but not yet at Singapore’s level in governance and investor recognition. Globally, we are still developing with the next big tests being mandatory reporting in 2025, carbon pricing, SME adoption, and strong enforcement against greenwashing.

ESG in Malaysia is real, but uneven. The challenge now is not to chase labels of “leadership” but to build authentic, lasting practice from the boardroom to the supply chain, from corporates to SMEs.

So stop "boasting"