Why is my customer asking for ESG data? A practical guide for Malaysian SMEs (2026)

Sources: SEDG; European Commission, CBAM; Capital Markets Malaysia, GHG calculator launch

Customers ask SMEs for ESG data because their own reporting, trade and financing now depend on what happens in their supply chains. Four pressures drive most requests.

Value-chain emissions reporting. Under the GHG Protocol, a supplier's Scope 1 and 2 emissions form part of its customer's Scope 3 emissions. Listed companies reporting under the NSRF must disclose Scope 3 once their transition relief ends: from 2027 for Group 1, 2028 for Group 2 and 2030 for Group 3. To report accurately, they need data from their suppliers.

Export requirements. The EU's Carbon Border Adjustment Mechanism (CBAM) has applied in its definitive regime since 1 January 2026. EU importers of cement, iron and steel, aluminium, fertilisers, electricity and hydrogen must report the embedded emissions of those goods and surrender CBAM certificates (European Commission). Malaysian producers in these sectors are asked for emissions data on what they ship.

Multinational supplier programmes. Many multinational customers have their own climate targets and supplier codes. They screen suppliers through ESG questionnaires, platforms or audits, and may favour suppliers that respond well.

Bank financing. Banks in Malaysia classify financing using Bank Negara Malaysia's Climate Change and Principle-based Taxonomy (CCPT) and manage climate risk across their portfolios (Bank Negara Malaysia). As a result, SMEs are increasingly asked about climate risks and emissions when applying for financing.

For an SME, responding well can help keep existing contracts and win new ones. Not responding can mean being scored poorly, or replaced by a supplier that can provide the data.

So what exactly will customers ask for? The next section sets out the most common requests.

Most supplier requests start with energy use and Scope 1 and 2 emissions, followed by basic policies on people and governance. More advanced customers then ask for targets, product-level footprints and evidence.

Customers often ask for evidence as well as answers, such as a policy document, a certificate or a calculation summary.

Most of this data already exists in an SME's bills, invoices and HR records. The steps below show how to pull it together.

An SME can respond credibly with limited time and budget by starting with the data it already has, and building from there.

Clarify what the customer needs. Ask which questions are mandatory, the reporting period, the deadline and the format, whether a questionnaire, a platform or SEDG disclosures.

Appoint one owner. Give one person responsibility for ESG data, supported by finance, operations and HR.

Collect energy and fuel data. Gather 12 months of electricity bills, fuel invoices and generator logs. This covers most first requests.

Calculate Scope 1 and 2 emissions. Use a recognised method, such as the GHG Protocol, or the free Capital Markets Malaysia calculator. Record the emission factors and assumptions used.

Put basic policies in writing. Short, signed policies on environment, health and safety, labour practices and anti-bribery answer many governance and social questions.

Use SEDG as your base. Prepare your disclosures against SEDG at the Basic level, then reuse them for each customer instead of starting from scratch.

Keep the evidence together. File bills, calculations and policies in one place, so each answer can be supported if the customer asks.

Plan the next step. Once Scope 1 and 2 are in place, consider an emissions reduction plan or product carbon footprints for key products, depending on what customers ask for next.

Two free tools make steps 4 and 6 easier: the Simplified ESG Disclosure Guide (SEDG) and the Capital Markets Malaysia carbon calculator.

The Simplified ESG Disclosure Guide (SEDG) is a free ESG disclosure framework for SMEs in supply chains, issued by Capital Markets Malaysia, an affiliate of the Securities Commission Malaysia. It gives SMEs a standard set of ESG disclosures that customers can recognise, instead of a different questionnaire for every buyer.

Source: SEDG website

Yes. In July 2025, Capital Markets Malaysia launched a free GHG emissions calculator alongside SEDG Version 2. It calculates Scope 1 and Scope 2 emissions using the GHG Protocol, with pre-filled emission factors for common Malaysian fuels and Energy Commission grid electricity data (Eco-Business, July 2025). It does not cover Scope 3.

Even with the right tools, a few common mistakes can undermine an SME's answers.

Most problems come from answers that cannot be supported, rather than from missing data.

Not yet. Most SMEs do not have to report under the NSRF today, but proposed changes to the Companies Act 2016 could bring many non-listed companies, including larger SMEs, into sustainability reporting from 2028.

The NSRF currently applies to companies listed on Bursa Malaysia and to non-listed companies with annual revenue of RM2 billion or more. Smaller companies are affected indirectly, through data requests from customers who report.

On 30 April 2026, the Companies Commission of Malaysia (SSM) published a public consultation on amending the Companies Act 2016 to introduce "comply or explain" sustainability reporting for non-listed companies. The consultative document was revised on 22 May 2026, the consultation closed on 16 June 2026, and the proposals are not yet law (SSM).

The proposals set out four size tiers, based on annual revenue or number of employees, and three phases that build up towards IFRS S2.

The proposals also phase in internal and limited assurance for each tier, with reasonable assurance deferred for now. Directors who fail to comply could face a fine of up to RM20,000.

What this means for SMEs: SMEs do not have to follow IFRS sustainability standards yet. Under the proposals as consulted, larger SMEs would mostly fall into Tier 3, starting with Scope 1 and 2 emissions from 2032, while only Tier 1 companies would move to full IFRS S2. Building Scope 1 and 2 data now, as set out in the steps above, prepares an SME for both customer requests and these proposed rules.

Why is my customer asking for ESG data? Your customer needs to report on its value chain, comply with export rules such as the EU CBAM, or meet its own climate targets. Your emissions form part of its Scope 3 emissions.

Do SMEs have to report under the NSRF? Not yet. The NSRF applies to listed companies and non-listed companies with annual revenue of RM2 billion or more. However, SSM has consulted on phased, comply-or-explain sustainability reporting for smaller non-listed companies from 2028.

Will SMEs have to follow IFRS S2? Not under current rules. SSM's April 2026 proposals would phase in climate disclosures by company size, with full IFRS S2 proposed only for the largest non-listed companies, from 2032. The proposals are not yet law.

What is the SEDG? The Simplified ESG Disclosure Guide (SEDG) is a free ESG disclosure framework for SMEs in supply chains, issued by Capital Markets Malaysia. Version 2 has 38 disclosures across 15 topics.

What ESG data do customers ask SMEs for first? Most customers start with electricity and fuel use, Scope 1 and 2 emissions, and basic policies on health and safety, labour and anti-bribery.

How can an SME calculate its carbon emissions for free? Capital Markets Malaysia offers a free GHG emissions calculator for Scope 1 and 2, with Malaysian fuel and grid emission factors built in.

Does an SME need to report Scope 3 emissions? Usually not at first. Most customers ask suppliers for Scope 1 and 2. Some may later ask for product carbon footprints or selected Scope 3 categories.

What happens if an SME does not respond? The customer may score the supplier poorly, use estimates instead, or prefer suppliers that provide data. Over time, this can affect contracts.

Does CBAM affect Malaysian SMEs? Yes, if they produce or supply cement, iron and steel, aluminium, fertilisers, electricity or hydrogen sold to the EU. EU importers need embedded emissions data for these goods.

Can an SME reuse the same ESG answers for different customers? Yes. Preparing disclosures against SEDG, with supporting evidence, lets an SME reuse the same core data for most questionnaires.

How long does it take an SME to prepare basic ESG data? With 12 months of bills and invoices available, a basic Scope 1 and 2 calculation and key policies can usually be prepared within a few weeks.

Scout360 supports SMEs responding to customer ESG requests, and larger companies collecting data from their suppliers, in three ways.

For companies that need it, Scout360 also offers a digital platform that simplifies data collection, calculation, review, evidence management and assurance preparation.