Strengthening Malaysia’s Competitiveness Through ESG-Compliant Supply Chains

As global investment trends shift toward sustainability, Environmental, Social, and Governance (ESG) compliance has become a defining factor in business competitiveness and investment attraction. Malaysia’s manufacturing ecosystem is embracing this transformation, anchored by national policies such as the New Industrial Master Plan (NIMP) 2030 and the National Energy Transition Roadmap (NETR) to ensure long-term competitiveness and global market access.

Recognising that the journey to ESG readiness requires collective effort, MIDA continues to work closely with industry partners, associations, and practitioners to accelerate awareness, adoption, and capacity-building. Among these efforts, practitioner-led movements such as the Environmental, Social and Governance Association of Malaysia (ESGAM) are helping to equip local enterprises, particularly SMEs, with the knowledge, frameworks, and tools needed to meet evolving ESG requirements.

While many SMEs recognise the importance of ESG, the journey from awareness to action remains complex.

Key challenges include:

• Complexity of Standards: Multiple frameworks such as Bursa Malaysia’s guidelines and the EU’s Corporate Sustainability Reporting Directive (CSRD), can be difficult for SMEs to interpret and apply.
• Limited Resources: Most SMEs lack dedicated sustainability teams or budgets for compliance and reporting.
• Greenwashing Risks: Without proper guidance, some companies risk superficial or inconsistent ESG practices that erode credibility with investors.

This ESG readiness gap extends beyond individual firms — it directly affects Malaysia’s investment attractiveness, particularly when investors assess supply chain resilience and carbon footprint (including Scope 3 emissions¹).

To ensure Malaysia’s ecosystem remains competitive, a coordinated effort between policymakers, industry practitioners, and support agencies is essential. This is where ESGAM’s ground-up approach complements MIDA’s investment promotion and facilitation initiatives.

¹ Scope 3 emissions” refer to indirect greenhouse gas emissions that occur across a company’s value chain — as defined under the Greenhouse Gas (GHG) Protocol, developed by the World Resources Institute and the World Business Council for Sustainable Development

Founded in 2022, ESGAM is driven by industry practitioners who understand the real-world challenges faced by SMEs. Unlike traditional advocacy groups, ESGAM operates as a volunteer-based, solutions-focused movement, dedicated to enabling practical, cost-effective ESG implementation.

Data for ESGAM Office Bearers as of July 2025

1. ESGAMConnect™ — Digital Empowerment for Sustainability

Officially launched on 30 June 2025 by the Minister of Digital, YB Gobind Singh Deo, ESGAMConnect™ is an AI-powered digital ecosystem that simplifies ESG adoption for Malaysian businesses.

Built on a 7-pillar framework, the platform provides:

• Access to ESG accreditation, carbon credit management, and green financing
• A digital learning centre with modular training, professional certifications, and self-assessment tools.
• An ESG marketplace connecting businesses with certified service providers and consultants.
• A financing hub integrating government schemes and sustainability-linked financial products.

Guiding users throughout this journey is ELIA (ESG Leadership & Impactful Action) — an AI assistant that personalises ESG pathways for businesses of varying scales.

ESGAM Primary Industry

ESGAM Membership as of June 2025

2. Capacity Building and Industry Partnerships

Beyond digital tools, ESGAM conducts workshops, training sessions, and networking programmes to translate ESG concepts into actionable steps for SMEs.

Its multi-channel approach includes:

• Ground-up Education: “ESG 101” workshops and a forthcoming multilingual podcast series, ESGAM Act Now!, featuring practitioners, regulators, and investors.
• Strategic Partnerships: Eleven (11) MoUs signed with organisations such as MDEC, PIKOM, SME Association of Malaysia (SMEAM), and the Malaysia–Cambodia Business Association (MCBA).

These collaborations ensure that ESG capacity-building efforts remain aligned with Malaysia’s national sustainability and digitalisation agenda.

As Malaysia intensifies its efforts to attract high-quality, sustainability-driven investments, aligning ESG practices throughout the value chain is key to maintaining investor confidence.

MIDA’s role in promoting and facilitating green technologies, and sustainable industrial ecosystems — is complemented by ESGAM’s industry-level implementation tools:

• Bridging ESG Understanding: ESGAM prepares SMEs to comply with ESG disclosure requirements and reporting standards, helping them qualify as credible local partners in global supply chains.
• Operationalising ESG: ESGAMConnect serves as a centralised digital platform where businesses can benchmark performance, access verified ESG service providers, and track progress in alignment with MIDA’s green investment initiatives.

Together, these efforts strengthen Malaysia’s overall value proposition to investors, demonstrating that Malaysia is not only investment-ready but also ESG-ready.

To accelerate Malaysia’s ESG transition and strengthen the industry ecosystem, collective action is required.

Key strategies moving forward include:

1. Public–Private Partnerships: Integrating ESGAM’s digital tools and resources into MIDA’s investment promotion and aftercare programmes to showcase ESG-ready supply chains.
2. Targeted SME Support: Focused ESG training for high-impact sectors such as manufacturing, logistics, and agriculture to address Scope 3 emissions and responsible sourcing.
3. Policy Alignment: Streamlining Malaysia’s ESG standards with international benchmarks to reduce compliance friction and enhance investor confidence.

As Chair of ASEAN in 2025, Malaysia stands at a pivotal moment to lead the region’s sustainability transition. ESG is no longer a compliance requirement — it is a competitive differentiator.

By working in synergy, MIDA and ESGAM are ensuring that Malaysian businesses, especially SMEs, can embrace ESG not as a barrier, but as a benchmark of excellence.

As MIDA continues to promote investments that create shared value and sustainable growth, partnerships with practitioner networks such as ESGAM demonstrate how industry collaboration can accelerate Malaysia’s journey toward a green, responsible, and future-ready economy.

Through practical tools, strategic partnerships, and policy alignment, Malaysia is poised to emerge as ASEAN’s ESG frontrunner — trusted, prepared, and resilient.

For more information, please contact the Sustainability Division, MIDA at https://www.mida.gov.my/staffdirectory/sustainability-division/

For more information on ESGAM’s initiatives, visit: