Greenhouse Gases (GHG) Emissions: The Next Phase of Reporting and Its Challenges

Since 2025, Bursa Malaysia has implemented a multiphase IFRS S1 and S2 sustainability reporting, requiring companies of various sizes to establish robust GHG accounting such that material climate risks, Scope 1–3 emissions, transition plans, and emissions targets are disclosed. BDO Governance Advisory (BDO GA), has assisted numerous organisations in managing this transition, providing specialised expertise, structured methodologies, and tailored resources to assist them on their sustainability journey. 
 

The Challenges that Companies Face in GHG Accounting

Broadly, there are four main challenges that companies face when they embark on their GHG Accounting journey. 

• Poor data collection and quality

Data is often gathered manually, increasing the risk of errors and fragmentation. Further, information is spread across multiple sources, further complicating the process. For example, different departments may have separate data owners and multiple external suppliers, who may be reluctant to share detailed data or lack the necessary information, which ultimately complicates the process.

• Scope 3 emissions challenges

Companies face significant challenges with Scope 3 emissions, which often make up the largest share of their carbon footprint. The main difficulties stem from limited visibility into suppliers’ and customers’ activities, unclear boundaries of responsibility across complex supply chains, and inconsistent or low-quality emissions data due to varying levels of reporting maturity among suppliers and end-users.

• Lack of a single global standard

There is a lack of a single global standard, forcing companies to navigate multiple frameworks such as the GHG Protocol, ISO 14064, GRI, and CSRD. Differences across these standards make it difficult to compare companies, even within the same industry.

• Resource gaps in GHG accounting

Companies often face resource gaps in GHG accounting, including the high costs of implementing robust systems and a shortage of skilled personnel, as the field is relatively new and experienced talent is limited and expensive.
 

Malaysia's GHG Reporting Timeline

Bursa Malaysia mandates that Group 2 listed companies (with a market capitalisation below RM2 billion) must begin their reporting for financial years ending on or after 31 December 2026. Full compliance, including the disclosure of Scope 1, 2, and 3 emissions, will be required by 2027 for Group 1 companies (with a market capitalisation of RM2 billion and above) and by 2028 for Group 2 companies. By 2028, comprehensive GHG accounting is expected to be completed across the entire listed market.
 

How BDO Governance Advisory Can Support Your Organisation:

BDO GA has supported organisations in navigating the complexities and challenges of GHG accounting.  This process includes defining boundaries, identifying Scope 1, 2, and 3 emissions, collecting high-quality data, applying calculation tools, and consolidating results for sustainability reporting and assurance reporting.  Our services are provided via access to specialised resources, technical skills, and deep expertise in sustainability practices which enables organisations to strengthen their internal capabilities whilst dedicating valuable time, resources and direct efforts to focus on and manage a clear and actionable sustainability journey plan.

Learn more about our ESG and Sustainability Advisory Services today.
 
Learn More