ESG Global Vision

Environment, corporate governance

Varies between participating states 

CORSIA applies to airline operators who fulfil the following criteria:

• their annual CO2 emissions from international flights using aeroplanes with a take-off mass greater than 5,700kg exceed 10,000 tonnes (all major carriers meet this relatively low threshold);
• they are responsible for international flights (flights by state aircraft and humanitarian, medical, and firefighting flights, as well as flights before or after such flights which are carried out by the same aeroplane and are needed for these activities, are not included); and
• they are registered in one of the participating states (see the list as of 1 January 2026 here; notable omissions include India and China).

In 2010, the International Civil Aviation Organisation (ICAO), a United Nations Agency that sets global standards and regulations for international civil aviation, adopted a sectoral aspirational goal for carbon neutral growth from 2020 onwards. Whilst operational and technological improvements are seen as a key part of achieving this goal, the ICAO took the view that a market based scheme was required to fill the remaining emissions gap and to achieve carbon neutral growth. Accordingly, the International Standards and Recommended Practices for the implementation of CORSIA were adopted as an Annex to the Chicago Convention in 2016, to apply to all of ICAO’s 193 member states from 1 January 2019.

CORSIA is being implemented in three phases:

• The Pilot Phase (2021-2023) and the First Phase (2024-2026). During these phases participation by ICAO member states was voluntary. 126 member states participated, with flights between participating states subject to reporting and offsetting requirements.
• The Second Phase (2027-2035). During this phase, with some exemptions, such as for Least Developed Countries and Small Island Developing States, participation will become mandatory for all ICAO member states and all international flights will be subject to offsetting requirements. The Second Phase will be split into three-year compliance periods.

In scope airline operators are under the following obligations:

• To monitor and report emissions from international flights on an annual basis.
  • At the beginning of each 3-year compliance period, an operator is required to submit an Emissions Monitoring Plan to its administering state which, once approved, the operator will use for the entire compliance period.
  • Under the plan, the operator is required to monitor and record its fuel use for international flights over the course of each calendar year. The operator must then estimate their annual CO2 emissions and report them to the national authority of their administering state by 30 April the following year. To guarantee the accuracy of the data reported, operators will need their annual emissions report to be verified by an impartial third-party verification body prior to submission.
  • Aggregated emissions are required to be reported by each administering state to ICAO, which will publish the total emissions from individual operators.
• To offset their emissions.
  • Under the scheme, the administering state calculates the annual offsetting requirements for each operator by multiplying the operator’s CO2 emissions by a ‘Growth Factor’, which is calculated by the ICAO and represents the percentage growth of the aviation sector’s international CO2 emissions covered by CORSIA’s offsetting requirements in a given year compared to the sector’s baseline emissions (being 85% of 2019 emissions levels).
  • Upon completion of each 3-year compliance period, the operator will have to show they have met their offsetting requirements by purchasing and cancelling the appropriate number of certified CORSIA Eligible Emissions Units (“CEEUs”) (each representing a tonne of CO2). The price of these units varies considerably depending on the type of project ($0.50 to $45/tCO2e during 2020-2021 with a weighted average of $3.08/tCO2eq in 2021).
  • Operators can also reduce their offsetting requirements by using CORSIA Eligible Fuels (“CEFs”) that meet the CORSIA sustainability criteria, which includes fuels with at least 10% lower CO2e emissions on a life-cycle basis compared to a reference fossil fuel value of 89.1 gCO2e/MJ. It is worth noting that as the baseline for calculating emissions reduction targets is 85% of 2019 emissions levels, offsetting requirements will only cover the growth in emissions since 2019 and therefore it is anticipated that the percentage of their total emissions that operators will have to offset will remain modest for the first few years of implementation of the scheme.

For more information, please follow the link here.

Penalties and enforcement:

National aviation authorities of participating states determine the sanctions for non-compliance, so these vary between countries. In the UK, for example, typical civil penalties can include a £20,000 penalty with a further daily penalty of £500 for failing to: (i) apply or revise an emissions monitoring plan; (ii) monitor emissions properly; or (iii) submit emissions reports. In recent consultations, the UK government has indicated that the penalties for failing to cancel CEEUs on time in line with an airline’s offsetting requirements would be £100 for each uncancelled unit.

Legislation

In force

Individuals, any commercial organisation and any persons associated with that organisation.

• The main objectives of the MACC Act 2009 are: (i) to promote integrity and accountability of public and private sector administration by constituting an independent and accountable anti-corruption body; and (b) to educate public authorities, public officials and members of the public about corruption and its detrimental effects on public and private sector administration and on the community.
• There are four (4) main offences stipulated in the MACC Act 2009 which are as follows:

1. 1. Soliciting/Receiving Gratification (Bribe) [section 16 & 17(a) MACC Act 2009];
   2. Offering/Giving Gratification (Bribe) [section 17(b) MACC Act 2009];
   3. Intending to Deceive (False Claim) [section 18 MACC Act 2009]; and
   4. Using Office or Position for Gratification (Bribe) (Abuse of Power/Position) [section 23 MACC Act 2009].

• The MACC Act 2009 was amended, amongst others, to introduce corporate liability provision for bribery and corruption under section 17A, which came into effect on 1 June 2020. Section 17A (1) of the MACC Act 2009 now addresses corporate liability for corruption where directors and senior management will be held personally liable for acts of corruption committed by the organisation, either by personnel or parties acting on behalf the organisation. Penalties include fines up to RM1 million and/or prison sentences of up to 20 years for those in charge of the company.

Legislation

In force

Reporting institutions as listed out in the First Schedule of AMLA, such as a licensed bank, licensed investment bank, licensed insurer carrying on life business and an advocate and solicitor as defined in the Legal Profession Act 1976.

• The AMLA provides for the offence of money laundering, the measures to be taken for the prevention of money laundering and terrorism financing offences and to provide for the forfeiture of property involved in or derived from money laundering and terrorism financing offences, as well as terrorist property, proceeds of an unlawful activity and instrumentalities of an offence, and for matters incidental thereto and connected therewith. The enforcement of the AMLA is undertaken by various ministries/agencies based on the predicate offences under their respective purview.
• Under section 14(1) of AMLA, a reporting institution (i.e. any person, including branches and subsidiaries outside Malaysia of that person, who carries on any activity listed in the First Schedule of the Act) shall promptly report to the competent authority:

1. 1. any transaction exceeding such amount as the competent authority may specify;
   2. any transaction where the identity of the person involved, the transaction itself or any other circumstances concerning that transaction gives any officer or employee of the reporting institution reason to suspect that the transaction involves proceeds of an unlawful activity or instrumentalities of an offence;
   3. any transaction or property where any officer or employee of the reporting institution has reason to suspect that the transaction or property involved is related or linked to, is used or is intended to be used for or by, any terrorist act, terrorist, terrorist group, terrorist entity or person who finances terrorism.

• Section 56(1) of AMLA provides that where a property is frozen or seized and there is no prosecution or conviction for an offence of money laundering or a terrorism financing offence, the Public Prosecutor may, within 12 months of the date of the freeze or seizure or the date of the freezing, apply to a High Court judge for an order of forfeiture of that property if he is satisfied that such property is:

1. 1. the subject matter or evidence relating to the commission of the offence;
   2. terrorist property;
   3. the proceeds of an unlawful activity; or
   4. the instrumentalities of the offence.

• To succeed in a civil forfeiture under section 56 of AMLA, the prosecution must first establish the predicate offence of money laundering or terrorism financing on the balance of probabilities (as provided under section 56(4) of AMLA. If the prosecution succeeds in satisfying both these requirements, the burden then shifts to the respondent to show otherwise, for instance, that the property was received for valuable consideration in good faith.

Guidelines

In force

All listed companies. Certain policies in the MCCG are also applicable to Large Companies (companies on the FTSE Bursa Malaysia Top 100 Index or companies with market capitalisation of RM2 billion and above, at the start of the companies’ financial year).

• Under rule 15.25 of the Main Market Listing Requirements issued by Bursa Malaysia, listed companies must ensure that its board of directors provides an overview of the application of the principles set out in the MCCG, in its annual report. In addition, listed companies must disclose the application of each practice set out in the MCCG during the financial year, to Bursa Malaysia in a prescribed format and announce the same together with the announcement of the annual report. 
• The MCCG addresses the urgent need for companies to manage ESG risks and opportunities, with the introduction of new best practices that emphasise the need for collective action by boards and senior management of the PLC. The global commitment and acceleration of efforts to transition towards a net zero economy has resulted in demand for greater action on the part of corporates. The SC’s review of sustainability statements by large listed companies found that some have begun to address climate-related risks but more can and needs to be done. The MCCG also addresses the participation of women on boards. To accelerate the progress of women participation on boards, the MCCG 2021 recommends all listed companies to have boards that comprise at least 30% women directors.

Legislation

In force

Any employee (as included in any category in the First Schedule of the EA to the extent specified therein or in respect of whom the Minister makes an order) and employers. For example, workers covered under the EA are all workers whose earnings do not exceed RM2,000.00 a month and all manual workers irrespective of their earnings.

* This legislation applies to Peninsular Malaysia and the Federal Territory of Labuan only.

• The EA is the fundamental employment legislation in this country prescribing the statutory minimum standards of terms and conditions of employment.

• On 25 October 2021, the Human Resources Minister, Datuk Seri M. Saravanan, tabled the Employment (Amendment) Bill 2021 to amend the EA. The proposed amendments, among others, are to bring the EA in line with the standards and practices required by the Trans-Pacific Partnership Agreement, the Malaysia-United States Labour Consistency Plan and the International Labour Organisation. Some of the general amendments under such Amendment Bill is that the general penalty for offences has been increased from RM10,000.00 to RM50,000.00. The Amendment Bill also aims to create a new offence of “forced labour”. “Forced labour”, as provided in the Amendment Bill, is where any employer threatens, deceives, or forces an employee to do any activity, service or work and prevents the employee from leaving before the activity, service or work is done. The offence carries a penalty of a fine up to RM100,000.00 or to imprisonment for a term not exceeding two years or both.

Environment, corporate governance

Varies between participating states 

CORSIA applies to airline operators who fulfil the following criteria:

• their annual CO2 emissions from international flights using aeroplanes with a take-off mass greater than 5,700kg exceed 10,000 tonnes (all major carriers meet this relatively low threshold);
• they are responsible for international flights (flights by state aircraft and humanitarian, medical, and firefighting flights, as well as flights before or after such flights which are carried out by the same aeroplane and are needed for these activities, are not included); and
• they are registered in one of the participating states (see the list as of 1 January 2026 here; notable omissions include India and China).

In 2010, the International Civil Aviation Organisation (ICAO), a United Nations Agency that sets global standards and regulations for international civil aviation, adopted a sectoral aspirational goal for carbon neutral growth from 2020 onwards. Whilst operational and technological improvements are seen as a key part of achieving this goal, the ICAO took the view that a market based scheme was required to fill the remaining emissions gap and to achieve carbon neutral growth. Accordingly, the International Standards and Recommended Practices for the implementation of CORSIA were adopted as an Annex to the Chicago Convention in 2016, to apply to all of ICAO’s 193 member states from 1 January 2019.

CORSIA is being implemented in three phases:

• The Pilot Phase (2021-2023) and the First Phase (2024-2026). During these phases participation by ICAO member states was voluntary. 126 member states participated, with flights between participating states subject to reporting and offsetting requirements.
• The Second Phase (2027-2035). During this phase, with some exemptions, such as for Least Developed Countries and Small Island Developing States, participation will become mandatory for all ICAO member states and all international flights will be subject to offsetting requirements. The Second Phase will be split into three-year compliance periods.

In scope airline operators are under the following obligations:

• To monitor and report emissions from international flights on an annual basis.
  • At the beginning of each 3-year compliance period, an operator is required to submit an Emissions Monitoring Plan to its administering state which, once approved, the operator will use for the entire compliance period.
  • Under the plan, the operator is required to monitor and record its fuel use for international flights over the course of each calendar year. The operator must then estimate their annual CO2 emissions and report them to the national authority of their administering state by 30 April the following year. To guarantee the accuracy of the data reported, operators will need their annual emissions report to be verified by an impartial third-party verification body prior to submission.
  • Aggregated emissions are required to be reported by each administering state to ICAO, which will publish the total emissions from individual operators.
• To offset their emissions.
  • Under the scheme, the administering state calculates the annual offsetting requirements for each operator by multiplying the operator’s CO2 emissions by a ‘Growth Factor’, which is calculated by the ICAO and represents the percentage growth of the aviation sector’s international CO2 emissions covered by CORSIA’s offsetting requirements in a given year compared to the sector’s baseline emissions (being 85% of 2019 emissions levels).
  • Upon completion of each 3-year compliance period, the operator will have to show they have met their offsetting requirements by purchasing and cancelling the appropriate number of certified CORSIA Eligible Emissions Units (“CEEUs”) (each representing a tonne of CO2). The price of these units varies considerably depending on the type of project ($0.50 to $45/tCO2e during 2020-2021 with a weighted average of $3.08/tCO2eq in 2021).
  • Operators can also reduce their offsetting requirements by using CORSIA Eligible Fuels (“CEFs”) that meet the CORSIA sustainability criteria, which includes fuels with at least 10% lower CO2e emissions on a life-cycle basis compared to a reference fossil fuel value of 89.1 gCO2e/MJ. It is worth noting that as the baseline for calculating emissions reduction targets is 85% of 2019 emissions levels, offsetting requirements will only cover the growth in emissions since 2019 and therefore it is anticipated that the percentage of their total emissions that operators will have to offset will remain modest for the first few years of implementation of the scheme.

For more information, please follow the link here.

Penalties and enforcement:

National aviation authorities of participating states determine the sanctions for non-compliance, so these vary between countries. In the UK, for example, typical civil penalties can include a £20,000 penalty with a further daily penalty of £500 for failing to: (i) apply or revise an emissions monitoring plan; (ii) monitor emissions properly; or (iii) submit emissions reports. In recent consultations, the UK government has indicated that the penalties for failing to cancel CEEUs on time in line with an airline’s offsetting requirements would be £100 for each uncancelled unit.

Legislation

In force

Any individual or company in Malaysia.

• This EQA relates to the prevention, abatement, control of pollution and enhancement of the environment, and for purposes connected therewith.

• This EQA instates a Director General of Environmental Quality, responsible for amongst others, coordinating all activities related to the discharge of wastes into the environment, being in charge of pollution control and with the objective of enhancing environmental quality. It further refers to standards and criteria for the protection of the environment as well as the control of the volume, types, constituents and effects of wastes, discharges, emissions or other sources of pollution which impact or may impact the quality of the environment.

• The EQA requires the Director General of Environmental Quality to publish an annual report on environmental quality not later than 30th September of the following year and such other reports and information with respect to any aspect of environmental protection by the Director General of Environmental Quality [section 3(1)(i) EQA].  

• The EQA also includes the need to provide information and education to the public regarding the protection and enhancement of the environment [section 3(1)(l) EQA], the power to inspect facilities [section 38 EQA], and applicable penalties.

Guidelines

In force

Companies which hold a Capital Markets Services Licence granted by the SC pursuant to section 61 of Capital Markets and Services Act 2007 (“CMSL Holder”) and does not apply to an individual. 

• Effective 1 July 2022, the board of a CMSL Holder must undertake the necessary measures to ensure the board comprises at least 30% women directors.

• A director of a CMSL Holder must not be an active politician (i.e. a person who is a Member of Parliament, State Assemblyman or holds a position at the Supreme Council, or division level in a political party).

Legislation

In force

Persons with disability

This legislation safeguards the rights and interest of persons with disability to be entitled to a barrier-free and disability friendly environment to enable them have access to building, roads and other social amenities and equipment to promote their mobility.