ESG reporting discloses how a company manages environmental, social and governance matters, while integrated reporting explains how a company creates value over time by combining financial and non-financial information into one connected story. ESG reporting is a topic-based disclosure, and integrated reporting is a whole-of-business reporting approach. In Malaysia, the two are increasingly linked, because the National Sustainability Reporting Framework (NSRF) pushes companies to connect sustainability information with their financial statements.

Companies often treat the two as rival projects, with separate teams, separate timelines and separate documents. That tends to produce duplication and inconsistency. The better question is how each one serves a different reader and how they can share the same evidence.

This article sets out the key differences, explains where Malaysian rules sit, and offers a practical view on combining the two.

What Is the Difference Between ESG Reporting and Integrated Reporting?

The difference is purpose and scope. ESG reporting focuses on specific environmental, social and governance topics and the metrics behind them, whereas integrated reporting presents a concise account of strategy, governance, performance and prospects, showing how they lead to value creation in the short, medium and long term.

Put simply, ESG reporting answers "how are you managing these issues?" and integrated reporting answers "how does the whole business create and preserve value?" ESG information can be an input to an integrated report, but an integrated report is broader than ESG.

What Is ESG Reporting?

ESG reporting is the disclosure of environmental, social and governance performance, risks and opportunities, usually with quantified metrics such as emissions, safety records and board composition. In Malaysia it sits under the Sustainability Statement for listed companies and, increasingly, under IFRS S1 and IFRS S2 through the NSRF.

What Is Integrated Reporting?

Integrated reporting is a reporting approach built on the International Integrated Reporting Framework. Its conceptual roots lie with the International Integrated Reporting Council, which merged with the Sustainability Accounting Standards Board in 2021 to form the Value Reporting Foundation and was then consolidated under the IFRS Foundation in 2022. The framework explains value creation through the company's use of and effect on different forms of capital, such as financial, human, natural and social resources.

What Are the Eight Content Elements of Integrated Reporting?

The framework describes eight content elements, which include governance, business model, risks and opportunities, strategy, performance and outlook. Malaysian academic studies have used these elements to assess how listed companies disclose information voluntarily, which shows that the structure has long been a reference point for local reporting.

How Do ESG Reporting and Integrated Reporting Differ in Audience and Style?

They differ because ESG reporting is typically detailed and metric-heavy, while integrated reporting is concise and narrative-led, linking strategy to outcomes. ESG disclosure serves investors, lenders, raters and regulators who need specific data, whereas integrated reporting speaks to providers of financial capital and wider stakeholders who want to understand the overall business.

Which Report Is More Quantitative?

ESG reporting is usually more quantitative, because it contains detailed indicators such as greenhouse gas emissions, energy use and injury rates. Integrated reporting also uses data, but it presents the key figures in context and focuses on how they connect with strategy and financial results.

Which Report Is More Strategic?

Integrated reporting is more strategic, because it explains the business model, resource allocation and outlook in one narrative. Under the NSRF, however, ESG disclosure is also becoming more strategic, since IFRS S1 and S2 require companies to explain how sustainability-related risks and opportunities affect strategy and financial position.

Do They Use the Same Materiality Approach?

Not always. The NSRF is based on IFRS S1 and S2 and applies financial materiality, meaning information that could influence investor and lender decisions. Integrated reporting also focuses on matters that substantively affect a company's ability to create value, so the two lenses are closely aligned, while broader impact frameworks such as GRI may use a different approach.

What Do Malaysian Rules Say About ESG and Integrated Reporting?

Malaysian rules require ESG-style sustainability reporting for in-scope companies and do not require integrated reporting. The NSRF, published on 24 September 2024 by the Advisory Committee on Sustainability Reporting, adopts IFRS S1 and S2 as the baseline, and Bursa Malaysia aligned its Main Market and ACE Market Listing Requirements in December 2024.

Integrated reporting remains a voluntary format, although some practitioners say it is becoming more common among larger listed companies as the NSRF rolls out.

Who Must Follow the NSRF, and When?

The NSRF covers Main Market issuers, ACE Market issuers and non-listed companies with consolidated revenue of RM2 billion or more for two consecutive years. Group 1, large Main Market issuers with a market capitalisation of RM2 billion or above, started for financial years from 1 January 2025. Group 2 follows on 1 January 2026, and Group 3, covering ACE Market issuers and large non-listed companies, starts on 1 January 2027.

Why Does "Connected Information" Matter?

Connected information matters because IFRS S1 expects sustainability disclosures to link with the financial statements, using consistent assumptions and the same reporting period. Advisers have described this as a shift toward connected financial and sustainability reporting, which echoes the thinking behind integrated reporting. In practice, finance and sustainability teams need to work from the same data and calendar.

What Reliefs Help Companies During the Transition?

Group 1 and Group 2 companies may focus on climate-related disclosures under IFRS S2 for their first two reporting periods and postpone Scope 3 emissions, except for categories a regulator already requires. Bursa Main Market issuers already report Scope 3 emissions from business travel and employee commuting. These reliefs make it easier to build the data foundation before widening the scope.

How Do Assurance and Data Quality Apply to Each Approach?

Assurance applies to both, but the Malaysian requirement currently targets one slice of ESG data. The NSRF plans mandatory reasonable assurance of Scope 1 and Scope 2 emissions for Group 1 entities, which the Advisory Committee on Sustainability Reporting deferred in September 2026 to annual periods beginning on or after 1 January 2028.

The deferral followed a review of the first reporting cohort that found disclosure quality needed to improve. Independent assurance must follow ISSA 5000, and listed issuers must continue to state whether their disclosures were internally reviewed or independently assured.

Why Does Data Quality Matter in an Integrated Report?

Data quality matters because an integrated report draws together many numbers into one story, so an error in one place can undermine confidence in the whole. A clear audit trail from each published figure to its source supports both ESG reporting and integrated reporting, and it makes later assurance far simpler.

What Does Research Say About Integrated Reporting in Malaysia?

Research suggests Malaysian companies have long disclosed many integrated reporting elements but have been uneven in how well they link them. Studies of Main Market companies found strong disclosure on some elements such as governance and weaker disclosure on others such as performance and business model, and they called for fuller adoption.

An earlier PwC analysis of Bursa's top 30 companies reached a similar conclusion: key elements were present, but the linkage between them was lacking, and only 27% of the companies surveyed reported their principal risks. These findings are older, so readers should treat them as historical context rather than a picture of current practice.

What Does This Mean for Today's Reporters?

It means the main challenge has been connection, not volume. The NSRF's emphasis on connected information gives companies a regulatory reason to address that gap, whichever format they choose.

How Can Malaysian Companies Combine ESG and Integrated Reporting?

Companies can combine them by building one controlled data set, using IFRS S1 and S2 for the mandatory disclosure, and drawing on that data for a concise integrated narrative. The aim is one version of the truth, presented in different ways for different readers.

What Is a Practical Approach?

A practical approach is to confirm the NSRF group, map current disclosures to IFRS S2 first, assign owners for each metric and align the reporting calendar with the financial close. Once the mandatory disclosure is stable, teams can decide whether an integrated report adds value for their stakeholders. Companies should avoid writing separate narratives that contradict each other.

What Are the Different Views on ESG Reporting vs Integrated Reporting?

Stakeholders agree that connected reporting is the direction of travel, but they differ on whether integrated reporting should be adopted formally. The debate is about format, cost and benefit.

What Do Supporters of Integrated Reporting Say?

Supporters argue that integrated thinking helps companies communicate long-term value more clearly and succinctly, and that it forces management to connect strategy, risk and performance. They see it as a natural partner to the NSRF.

What Do Supporters of a Standards-Led Approach Say?

Supporters of a standards-led approach say that IFRS S1 and S2 already deliver the connectivity investors need, so a separate integrated report adds cost without adding much. They prefer to invest in data quality and assurance readiness.

What Do Companies Say?

Companies commonly raise concerns about workload and duplication, especially in later NSRF groups with smaller teams. Many want regulators and advisers to clarify how voluntary formats fit alongside the mandatory framework.

FAQ: Common Questions About ESG Reporting vs Integrated Reporting in Malaysia

Is Integrated Reporting Mandatory in Malaysia?

No. The mandatory baseline under the NSRF is IFRS S1 and S2. Integrated reporting is a voluntary format.

Is ESG Reporting Part of Integrated Reporting?

ESG information is usually one input into an integrated report, but integrated reporting also covers business model, strategy, financial performance and outlook.

Which Framework Sits Behind Integrated Reporting?

The International Integrated Reporting Framework, now maintained within the IFRS Foundation after the earlier IIRC consolidation.

Does the NSRF Encourage Connected Reporting?

Yes. IFRS S1 expects sustainability disclosures to connect with the financial statements, which advisers describe as connected financial and sustainability reporting.

Do Both Types of Report Need Assurance?

Mandatory assurance currently targets Scope 1 and Scope 2 emissions of Group 1 entities from 2028. Other assurance is voluntary.

Can a Company Publish Both?

Yes. Many companies prepare an ESG disclosure for compliance and an integrated narrative for broader readers, provided the numbers match.

Conclusion

ESG reporting and integrated reporting are complementary rather than competing. ESG reporting supplies the detailed evidence on sustainability matters, and integrated reporting places that evidence inside a wider account of value creation.

Under the NSRF, the direction is clear: sustainability information is being tied to financial reporting. Companies that build one reliable data foundation will be able to meet the mandatory requirements and, if they choose, tell a more integrated story on top.