The Path to Sustainable Impact -
Sectoral Insights of Malaysian SMEs
Supported by:
In collaboration with our Knowledge Partners:
Other Strategic Partners:
Building on the success of the Bank’s inaugural report in 2023 (ESG 1.0), the follow-up report titled “The Path to Sustainable Impact – Sectoral Insights of Malaysian SMEs”, (ESG 2.0) was commissioned in collaboration with Monash University Malaysia, Zurich Malaysia as knowledge partners; and with UN Global Compact Network Malaysia & Brunei (UNGCMYB), SME Corporation Malaysia, Malaysian Green Technology and Climate Change Corporation (MGTC), and INCEIF University as supporting partners.
As we navigate the ever-evolving landscape of ESG, our report sheds light on significant shifts in ESG awareness across the various sectors in Malaysia. This year’s report goes further to guide businesses in their ESG journey by:
- Providing deeper sector-specific insights;
- Highlighting key opportunities that SMEs can seize from ESG adoption; and
- Offering key guidance in strategy planning and implementation
Key Questions Answered in This Report*
- Current ESG Adoption Level Among SMEs
- Similarities/Differences in ESG Adoption Among SMEs Across Segments and Sectors
- Challenges Encountered When Adopting ESG
- Assistance Needed by SMEs to Adopt ESG
- Support Provided by Service Providers/Financial Institutions
The interactive report also comes with hyperlinks for easier page navigation Download Report *The study focused on three ways of obtaining valuable data including online surveys as the main methodology, supported by secondary research and stakeholder engagement.
**The Bahasa Melayu version of this report will be available for download soon.
**The Bahasa Melayu version of this report will be available for download soon.
Key Highlights in The Report
ESG 2.0 shows that 80% of SMEs are now aware of ESG and 60% are now adopting it, this is a significant increase compared to ESG 1.0.Overall ESG Awareness
Overall ESG Adoption
Overall ESG Adoption by Sectors
Manufacturing Sector Takes the Lead in ESG AdoptionServices 
ESG 2.0
50%
ESG 1.0
30%
+20% increase
Manufacturing 
ESG 2.0
69%
ESG 1.0
28%
+41% increase
Construction 
ESG 2.0
60%
ESG 1.0
23%
+37% increase
Others 
ESG 2.0
60%
ESG 1.0
22%
+38% increase
Top 5 Reasons for Adopters to Implement ESG
Obtain cost savings from energy/waste efficiencies
To meet market demand
Promote innovation
Enhance risk management
Help to improve productivity
Top 5 Motivations for Non-Adopters to Implement ESG
To meet market demand
ESG 2.0
52%
ESG 1.0
50%
Obtain cost savings from energy/waste efficiencies
ESG 2.0
52%
ESG 1.0
37%
Help to improve productivity
ESG 2.0
43%
ESG 1.0
52%
Promote innovation
ESG 2.0
41%
ESG 1.0
33%
Market expansion/attract new customers
ESG 2.0
36%
ESG 1.0
46%
This ESG 2.0 Report stands out by delivering targeted ESG strategies and tools specifically designed for various industries. I am confident that you will find this report beneficial for your business and the broader community.”
KELLEE KAM Group Chief Executive Officer Alliance Bank Malaysia Berhad
The School of Business at Monash University Malaysia is dedicated to making a meaningful impact on how business is conducted, and we are very glad to be part of this nationally important project on the adoption of ESG practices among Malaysian SMEs. This initiative is a collaborative effort involving members from academia, business, and civic society, with the research component focusing on a nationwide study of ESG adoption by SMEs. The report from this study provides valuable insights, highlighting opportunities for policymakers to develop supportive measures and strategies that enable SMEs to integrate sustainability and ESG practices, helping them become more resilient and gain a competitive edge.”
DR AVVARI V. MOHAN Professor (Innovation & Strategy) and Deputy Head (Engagement & Impact) at the School of Business Monash University Malaysia
ESG has helped Malaysian SMEs to compete effectively within global supply chains and to advance the national goal of increasing SMEs exports to 25% by 2025. This ESG 2.0 Report provides a comprehensive update, highlighting progress while pinpointing areas where Malaysian SMEs can enhance their ESG practices. With an expanded focus on key segments, including halal SMEs, INCEIF is committed to be the thought leader in positioning sustainability within the Islamic finance industry and halal economy.”
DR MARJAN MUHAMMAD Deputy President Research of ISRA Research Management Centre INCEIF University
The ESG 2.0 Report highlights a promising rise in ESG awareness among Malaysian SMEs, yet underscores a pressing need to transition from awareness to action. In an era where sustainability shapes competitive advantage, this report serves as a critical tool for stakeholders to drive the accelerated adoption necessary for our collective future. At UNGCMYB, we stand by our commitment to empower businesses with the knowledge and tools to become ESG-ready. We sincerely thank our partners for their invaluable contribution to this pivotal work.”
FAROZE NADAR Executive Director of UN Global Compact Network Malaysia & Brunei UNGCMYB
With this ESG 2.0 Report, the ESG ecosystem readiness provides an indication of baseline understanding levels, and the gaps that need to be fulfilled by all stakeholders to support the nation’s net zero goals. In line with the government’s upcoming policy formulation for ESG under Ministry of Economy and supported by other government agencies such as MGTC, the findings from the research report certainly provides deep insights into various sectors for informed decision making. MGTC is committed to facilitating all the industry players from various sectors through government green incentives, supporting abatement initiatives through green technology adoption, and nurturing SMEs in their ESG reporting needs.”
ELINA BINTI JANI Chief Executive Officer Greentech Ideaslab, a subsidiary under Malaysian Green Technology and Climate Change Corporation (MGTC)
SMEs have the power to drive significant change, and by embedding ESG principles into their DNA, they can catalyse a ripple effect that transcends borders and industries. The future is in our hands, and with unwavering commitment, we can achieve a net zero impact that secures a thriving, sustainable world for generations to come.”
TERESA WONG Chief Risk Officer – General Segment / Head of Sustainability Risk Zurich Malaysia
The findings of this ESG 2.0 Report underscore the growing recognition among businesses that sustainability is not just a moral imperative but a strategic necessity. Embracing ESG unlocks transformative benefits for SMEs, from enhancing operational efficiency to building trust with stakeholders and accessing new growth opportunities. SME Corp. Malaysia will continue to play a crucial role in guiding and empowering SMEs on this journey, offering the tools, insights and support required to align sustainability with profitability and resilience. ”
RIZAL BIN DATO’ NAINY Chief Executive Officer SME Corp. Malaysia
Resources
ESG Survey Report for SMEs (2023)
This report provides an overview of the state of ESG among SMEs in Malaysia and aims to raise awareness among businesses on the importance of adopting ESG practices. View More
Sustainability Impact Programme (SIP)
The Sustainability Impact Programme (SIP) promotes sustainability in the business community through:- Advocacy
- Advisory services
- Answers and green financing solutions at preferential rates
