Malaysia

Malaysia’s current planning “bundle” for a green economy is centered on: (i) the National Energy Policy 2022–2040 (Prime Minister’s Department/Economic Planning Unit), which sets sectoral priorities and governance (including a National Energy Council) and anchors decarbonisation within economic policy; (ii) the National Energy Transition Roadmap (2023), which lays out investment pipelines and sectoral “flagship” projects and signals a long-term shift toward high shares of renewables; and (iii) the Government’s public pledge to reach carbon-neutrality “as early as 2050,” alongside work to prepare a Long-Term Low Emissions Development Strategy and an NDC Roadmap and Action Plan. These instruments provide direction and partially operational detail, though some elements (for example, legally binding economy-wide milestones to 2050 outside the energy sector) are still being finalised.

Malaysia’s corporate-governance framework embeds gender representation through Bursa Malaysia Listing Requirements (all listed issuers must have at least one woman director; phased compliance completed by June 2023) and the Malaysian Code on Corporate Governance (MCCG), which recommends 30% women on boards on a “comply or explain” basis. There is no statutory requirement for employee representation on company boards. ESG disclosure is being strengthened: from financial years beginning 2025/2026, listed issuers must align sustainability reporting with the IFRS Sustainability Disclosure Standards (ISSB/IFRS S1 & S2) under Bursa’s enhanced sustainability framework. These measures are exchange-/code-driven rather than a single binding national law mandating employee participation or SDG-linked incentives.

"Malaysia has formal consultation tools: the national “Unified Public Consultation” portal for draft policies and regulations, Good Regulatory Practice materials (including the 2014 Guidelines on Public Consultation), and mandatory public participation for “detailed” Environmental Impact Assessments under the Environmental Quality Act. Practice has improved but is uneven: consultation is not legally required in all policy areas or for all impact categories, and independent assessments note variability in coverage and depth, especially beyond the EIA regime.

The Department of Statistics Malaysia maintains beyond-GDP indicators (e.g., the Malaysian Well-being Index and open statistical dashboards) and is scaling up System of Environmental-Economic Accounting work (SEEA) across physical supply-use tables and environmental accounts, supported by national and UN statistical processes. These metrics inform planning, but a single, fully integrated comprehensive wealth framework spanning all capitals (human, social, natural, produced/financial) embedded in the budget cycle is not yet in place.

Malaysia operates a coordinated sustainable-finance architecture. Bank Negara Malaysia (BNM) issued the Climate Change and Principle-based Taxonomy (CCPT) (2021) to classify activities for the financial sector and published the Climate Risk Stress Testing (CRST) Methodology (29 Feb 2024). In March 2025, BNM released an updated Policy Document on Climate Risk Management & Scenario Analysis, setting principles and specific requirements for banks/insurers to manage climate risks and conduct scenario analysis. Capital-market tools include the Securities Commission’s SRI Sukuk/Bond frameworks (with SRI-linked sukuk) and the ASEAN Taxonomy alignment. Bursa’s adoption of ISSB standards further tightens entity-level disclosures.

"Malaysia’s 2025 Budget increased funding for the National Energy Transition Roadmap (NETR), introduced ecological fiscal transfers to states, and announced a planned carbon tax by 2026. However, there is no institutionalized program for environmental risk reviews in monetary policy, nor are climate stress tests mandated for banks or insurers. The Fiscal Responsibility Act aims to reduce the fiscal deficit to 3.8% of GDP, though integration of green goals remains sector-specific and limited.

Malaysia participates in major regional FTAs—CPTPP and RCEP—and in January 2025 resumed negotiations with the EU on a comprehensive FTA. These frameworks include sustainable-development or environment provisions (more advanced in CPTPP) but do not establish dedicated liberalisation schedules for environmental goods/services, UNFCCC/CBDR-linked market-access exemptions, or interoperability of carbon-pricing and green-taxonomy regimes. Domestically, Malaysia has two official taxonomies (Bank Negara Malaysia’s CCPT for the financial sector, and the Securities Commission’s SRI Taxonomy for capital markets). Carbon pricing is not yet operational at the national level; Malaysia runs a voluntary carbon market via the Bursa Carbon Exchange rather than an ETS or carbon tax.

Malaysia has announced a carbon tax to commence by 2026 for selected sectors (iron & steel and energy), as set out in the Budget 2025 speech; detailed design is being developed. At present there is no national ETS; Malaysia operates a voluntary carbon market via the Bursa Carbon Exchange (BCX) (launched Dec 2022, trading since Mar 2023). Broader transition policy is framed by the National Energy Transition Roadmap (NETR, 2023), which signals gradual carbon pricing among enabling measures. There is no legally binding, economy-wide carbon-budget law.

"Malaysia’s sectoral green efforts are anchored in the National Energy Transition Roadmap (NETR), the New Industrial Master Plan 2030, and the National Transport Policy. These frameworks include targets for energy decarbonization, electric mobility, and biodiversity conservation. Implementation responsibility is divided among ministries, and there is currently no central inter-ministerial body mandated to oversee integrated green economy planning.

Malaysia has adopted multiple national instruments underpinning circularity: the Circular Economy Blueprint for Solid Waste 2025–2035 (KPKT), the National Cleanliness Policy 2020–2030, and the Malaysia Plastics Sustainability Roadmap 2021–2030. These provide an implementation framework for waste prevention, recycling, EPR development and plastics circularity, alongside Government Green Procurement (GGP) roll-out across federal agencies with expansion to sub-national authorities. As of 2025, Malaysia has not set an economy-wide CMUR target, but it does set sectoral goals (e.g., recycling) and deploys procurement and standards tools supportive of circular practices.

Malaysia’s Low Carbon Mobility Blueprint 2021–2030 (LCMB) sets the policy pathway for land-transport decarbonisation, complemented by EV fiscal incentives (duty/road-tax measures) and a national charging-infrastructure target of 10,000 chargers by 2025. Public agencies report continued progress on charging deployment, while UNCTAD’s 2025 brief summarises the policy baseline and uptake challenges. There is no federal law mandating full electrification by 2030 across public, private and freight transport, and freight decarbonisation targets remain less developed.

"Under the Renewable Energy Roadmap (MyRER), Malaysia aims to reach 31% renewable installed capacity by 2025 and 40% by 2035. The government has expanded Net Energy Metering (NEM) and launched competitive reverse auctions. Ongoing investments are underway in grid infrastructure and solar deployment. The roadmap focuses on capacity rather than final energy consumption, and fossil fuels remain dominant in transport and industry.

"Malaysia’s green job agenda is progressing through the Green Jobs Guideline, unveiled at the 2025 Green Leadership Conference. The initiative involves partnerships between MGTC, HRD Corp, and PERKESO to develop training programs, job matching, and certification for green-sector employment. The Employment Insurance System (EIS) now includes provisions for retraining workers impacted by green transitions. A coordinated national strategy for green jobs and just transition is expected in the future.

Malaysia’s energy transition planning (NEP and the Energy Transition Roadmap) refers to governance, investment mobilisation and sectoral pathways, and government communications acknowledge skills and workforce issues. However, a single, national “just transition” framework with cross-sector guidance, benefit-sharing rules and tailored protections for affected workers and communities is not yet formalised.

Malaysia provides targeted green finance and capacity-building for MSMEs: the Green Technology Financing Scheme (GTFS) (latest iterations GTFS 4.0 and applications heading to GTFS 5.0) offers subsidised rates and partial government guarantees for green investments across six sectors; BNM’s High Tech & Green Facility (HTG) supports SME upgrades. For social enterprise, Malaysia runs a Social Enterprise Accreditation (SE.A) scheme (national certification) and adopted the Social Entrepreneurship Action Framework 2030 (SEMy2030), but no distinct statutory legal form exists—entities use existing company/NGO forms.

"Malaysia introduced the Social Exchange Pilot Programme (SEPP25) via the Securities Commission, enabling social impact investments through capital markets. Budget 2025 expands cash aid and pension coverage, with targeted support for informal sector workers. Pilot programmes include environmental and social criteria, though these initiatives are not yet fully integrated into a national green economy framework, and climate-focused social protection remains in early stages.

Malaysia’s National Policy on Biological Diversity (2016–2025) has been updated as “National Policy on Biological Diversity 2022–2030,” with national targets and actions; six-national report materials and official portals document implementation. Protected-area expansion (terrestrial and marine) continues through federal–state instruments and ecological fiscal transfers. A full, routine publication of Global Biodiversity Framework-aligned interim targets and consolidated national progress assessments is strengthening but not yet fully standardised.

The Department of Statistics Malaysia (DOSM) leads SEEA implementation. Malaysia has a SEEA Roadmap that prioritises energy, water, air-emissions (from energy use) and land accounts, with dissemination through DOSM portals and environmental statistical compendia. Malaysia participates in UN SEEA capacity-building projects (e.g., Environmental-Economic Accounting for Evidence-based Policy). While accounts and pilots exist, a comprehensive suite of regularly published natural-capital accounts (including ecosystem-extent/condition and monetised services across communities) and a dedicated independent advisory body formally embedded in budgeting and infrastructure appraisal are not yet established.

Agrifood policy is framed by the National Agrofood Policy 2021–2030 (NAP 2.0) and the National Food Security Policy Action Plan 2021–2025, supported by health-sector nutrition policy (e.g., National Plan of Action for Nutrition of Malaysia III 2016–2025) and SDG implementation guidance via the SDG Roadmap Phase II (2021–2025). These instruments target productivity, resilience, food security, nutrition and value-chain upgrading. As of 2025, Malaysia does not publish an overarching, SDG-aligned food-systems strategy with quantified economy-wide ecological-footprint targets or time-bound plans to phase out environmentally harmful subsidies.

Malaysia operates national biodiversity finance instruments alongside broader sustainable-finance measures. Notably, the federal Ecological Fiscal Transfer channels funds to state governments to incentivise protection of forests and other conservation outcomes (scaled up since 2019 within successive budgets); and Malaysia has supported biodiversity finance planning with UNDP’s BIOFIN. In parallel, the Bursa Carbon Exchange provides a voluntary carbon market platform. Fuel subsidies remain substantial, with targeting reforms underway, and no nationwide carbon tax is in force.

Malaysia’s New Industrial Master Plan 2030, NETR, and Budget 2026 include green recovery elements such as renewable energy investment, carbon capture, and regional energy integration. The government supports Hybrid Hydro Floating Solar (HHFS) and the ASEAN Power Grid, linking recovery to long-term decarbonisation. However, green conditionality in stimulus measures was not systematically applied, and support for high-emission sectors continues.