Understanding ESG and the New CCUS Act 2025
For years, Malaysian corporations focused on profit and loss. Now, a new set of criteria is becoming a legal and commercial necessity: ESG (Environmental, Social, and Governance).
Investors, regulators, and consumers are all demanding that companies prove they are sustainable and responsible. The law is evolving to meet this demand.
1. The Carbon Capture, Utilization and Storage (CCUS) Act 2025
A major pillar of the “E” in ESG, this new Act, passed in 2025, creates a comprehensive legal framework for the CCUS industry in Malaysia.
- What it Does: It regulates the capture of carbon dioxide emissions, their transportation, and their storage underground.
- Why it Matters: This law is critical for Malaysia’s net-zero carbon goals. For corporations in heavy industries (like oil & gas), it provides a new, legally-defined pathway to manage their environmental impact.
2. Why ESG is a Legal Matter, Not Just a Trend
While ESG reporting is still developing, legal risks are already present:
- Investor Demand: Institutional investors (like EPF and PNB) are now screening investments based on ESG scores. Poor ESG performance is a direct financial risk.
- Supply Chain Pressure: Multinational corporations are legally required (by laws in the EU and US) to ensure their entire supply chain is compliant. Malaysian suppliers who fail an ESG audit risk losing major contracts.
3. Key Update: Cross-Border Insolvency Bill 2025
On a related corporate note, the new Cross-Border Insolvency Bill (based on the UNCITRAL model) will simplify procedures when a company faces insolvency with assets or creditors in multiple countries. This is a welcome move that provides legal certainty for businesses operating in Malaysia and Singapore, for example.
Leave a Reply