Simplified ESG Disclosure Guide (SEDG) for SMEs

The Simplified ESG Disclosure Guide (SEDG) is designed to assist small-to-medium enterprises (SMEs) within supply chains in Malaysia with their environmental, social, and governance (ESG) disclosures. It provides practical, structured guidance on the most commonly required disclosures related to ESG matters. Here are the key points:

1. Purpose: The SEDG aims to simplify and standardize ESG reporting for Malaysian SMEs.
2. Alignment: It aligns with global frameworks and reporting standards, as well as local requirements.
3. Indicators: The guide covers indicators that SMEs can track and disclose to measure their ESG progress.

Key Components of the SEDG

1. Disclosure Guidance Document: This document provides detailed guidance on the specific disclosures expected from SMEs. It covers ESG aspects such as environmental impact, social responsibility, and governance practices¹.
   
   

    

   Disclosure Guidance Document:

   1. • This document provides detailed guidance on specific ESG disclosures expected from SMEs.
      • It covers various areas, including:
        • Environmental Impact:
          • SMEs should disclose their environmental practices, such as energy consumption, waste management, and emissions reduction efforts.
          • Metrics like carbon footprint, water usage, and waste recycling rates are relevant.
        • Social Responsibility:
          • SMEs should report on their social initiatives, employee well-being, and community engagement.
          • Metrics may include diversity and inclusion efforts, labor practices, and community development projects.
        • Governance Practices:
          • Disclose information about board composition, executive compensation, and risk management.
          • Transparency in decision-making processes and adherence to ethical standards are crucial.
            
            
            
            
2. Additional Guidance Document: SMEs should read this document alongside the Disclosure Guidance. It offers further insights and clarifications on ESG reporting.
   
   
   

   1. Additional Guidance Document:

      • SMEs should read this alongside the Disclosure Guidance.
      • It provides further insights and clarifications on ESG reporting.
      • Examples:
        • How to calculate specific metrics (e.g., greenhouse gas emissions per unit of production).
        • Best practices for stakeholder engagement.
          
          
          
          
3. Template for Tracking and Reporting Disclosures: The SEDG provides a template that SMEs can use to organize and report their ESG disclosures².

1. 1.  

   2. Template for Tracking and Reporting Disclosures:

      • The SEDG offers a template for organizing and reporting ESG disclosures.
      • Key sections in the template:
        • Introduction: Briefly explain the purpose of the report.
        • Materiality Assessment: Identify the most relevant ESG issues for your business.
        • Metrics and Targets: Specify the indicators you’ll track (e.g., energy intensity, employee turnover rate).
        • Narrative Descriptions: Provide context and explanations for each metric.
        • Governance Structure: Describe your company’s governance practices.
        • Assurance and Verification: Explain any external verification processes.

SEDG Adopter Program

To encourage adoption, the Capital Markets Malaysia (CMM) launched an early adopter program. Various stakeholders, including large companies, SMEs, financial institutions, investors, and government agencies, commit to aligning their ESG disclosures with the SEDG. The program includes in-person training, workshops, and updates on SEDG developments¹.

• • Early access to updates and training.
  • Recognition as responsible businesses.
  • Enhanced credibility with investors.

How SMEs Can Benefit

• Standardization: The SEDG offers a consistent framework for ESG disclosures. Facilitates benchmarking and comparison.
• Visibility: SMEs can showcase their sustainability efforts to supply chain partners. Attracts socially conscious customers.
• Compliance: Aligning with the SEDG helps meet reporting requirements. Builds trust with stakeholders.

Remember, embracing ESG practices not only benefits your business but also contributes to a more sustainable future! 🌱🌏