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Malaysian SMEs Urged to Embrace Sustainable Living Amid Reporting Deadline

Update The Urgent Shift Towards Sustainability Reporting in Malaysia As Malaysia inches closer to its ambitious 2050 net-zero climate goals, businesses are feeling the heat to embrace sustainability reporting, particularly in the realm of greenhouse gas (GHG) emissions. The National Sustainability Reporting Framework (NSRF) mandates that large publicly listed companies disclose their entire GHG emissions by 2027, a move that has raised the stakes significantly for small- and medium-sized enterprises (SMEs) as well. Understanding Scope 3 Emissions The NSRF's requirement highlights the often-overlooked Scope 3 emissions, which account for indirect emissions within a company’s chain, broadly encompassing upstream suppliers and downstream customers. Ignoring these emissions is akin to leaving 70 to 90 percent of a company's carbon footprint unmeasured, making it a vital area of focus for comprehensive sustainability. The Role of SMEs in Sustainability Small businesses like Thumbprints Utd Sdn Bhd, a commercial printing company, are faced with unique challenges in obtaining Scope 3 emissions data from their suppliers, many of whom are also SMEs. Lim Chee Yoong, the company's executive director, emphasizes that despite the increasing importance of sustainability disclosures, the voluntary nature of current reporting hampers efforts to track GHG emissions effectively. The Global Context and Its Local Impact Globally, Scope 3 emissions can represent a significant portion of many companies’ total emissions. A study from KPMG indicates that only 21 percent of Malaysian publicly listed companies reported their Scope 3 emissions in 2023, compared to 39 percent across Asia Pacific. This low uptake poses a concern for Malaysia’s broader climate strategy, underscoring the necessity for both exporters and local suppliers to engage in sustainability practices to stay competitive. Sustainability as a Competitive Edge Embracing sustainable practices offers SMEs more than just compliance with regulations—it can also be a significant competitive advantage. As demand for sustainable business practices rises among consumers, those who adapt early could potentially tap into markets that prioritize eco-friendly products and services. By committing to transparent sustainability reporting, SMEs position themselves favorably with larger entities, particularly those that undergo strict sustainability assessments from organizations like EcoVadis. Future Predictions for Malaysian Businesses As the 2027 reporting deadline approaches, we can expect to see a shift in the corporate landscape. Companies that act now to gather data on their supply chains will not only comply with regulations but could also lead the way in promoting sustainability within their sectors. Such proactive measures will likely inspire a collaborative environment where businesses work together to create greener supply chains. Common Misconceptions About Sustainability Reporting A pervasive myth is that sustainability reporting is solely for large corporations. In reality, SMEs play a critical role, and neglecting to participate in this movement risks being left behind in an increasingly eco-conscious market. Understanding and meeting sustainability expectations is essential, especially as global trade begins to favor more responsible practices. Actionable Insights for SMEs For Malaysian SMEs ready to engage with sustainability reporting, starting with education and awareness is key. Businesses should consider workshops or partnerships with sustainability consultants to understand the reporting process and how to collect the necessary data. Small changes, like tracking emissions or engaging customers on sustainability initiatives, can set the foundation for a strong sustainability narrative. Engaging with your supply chain is crucial. Encourage suppliers to adopt sustainability practices as part of your contractual agreements. Furthermore, by adopting eco-friendly practices yourselves—such as reducing waste and using sustainable materials—you can foster a more responsible business culture. Concluding Thoughts on Sustainability for SMEs With the impending deadlines and increasing regulatory scrutiny, there has never been a better time for Malaysian SMEs to step up and embrace sustainability reporting. Not only does it align with national goals, but it also supports the shift towards a circular economy where businesses are both environmentally and socially responsible. In the long run, it’s about creating a sustainable future for Malaysia, one small step at a time.