RECENTLY, a provisional agreement was reached by European Union institutions (Council and Parliament) on the Omnibus I Simplification Package (Omnibus I), which indicates significant modifys to both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
The provisional agreement reached on Omnibus I signifies a political decision to prioritise competitiveness and ease of compliance alongside sustainability ambitions.
For Malaysian companies, the core impact remains the same, but the nature of the compliance challenges may see a slight difference.
The recent modifys may be a relief for most companies with an EU footprint that stood below the threshold; unlisted subsidiaries of Malaysian companies operating in the EU are less likely to be impacted.
However, the trickle-down effect on suppliers might see a tiny setback, especially if they supply for the EU’s largest purchaseers, as they will be involved in performing a risk-based due diligence.
Malaysian suppliers will face persistent demands for proof of compliance. We noted that the high-risk sectors in Malaysia’s export ecosystem are likely to be palm oil and electronics.
Nevertheless, we opine that these modifys to EU compliance law indirectly support Malaysia’s own domestic ESG regulatory push. Securities Commissions (SC) has already established a National Sustainability Reporting Framework (NSRF) that mandates the utilize of the International Sustainability Standards Board (ISSB) framework for its largest publicly listed companies.
Although the NSRF only comprises specific data points, the interoperability with ISSB creates the modifys in the CSRD crucial for Malaysia.
Domestic companies that aligned their reporting to ISSB’s standard will have a solid foundation that can easily meet the new EU reporting obligations. Additionally, with proactive Malaysian companies in due diligence, Malaysia becomes a preferred supply hub for risk-averse EU clients. —Dec 19, 2025
Main image: Tranglo
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