ESG grants, financing and incentives for Malaysian companies
As Malaysia takes a more eco-friendly and sustainability-focused stance, it is implementing various rules and regulations for businesses in the country to align with their plans for a greener future. And, it's not just changes in relation to environmental metrics that are afoot. Pressure to ensure the Social and Governance aspects of ESG are met is also coming from the government.
With the introduction of frameworks such as i-ESG and both Bursa and Capital Markets Malaysia requiring ESG reporting, all businesses in the supply chain must take their obligations in this regard more seriously.
Understanding that these changes could initially put some financial pressure on companies, Malaysia offers a range of incentives for multinational corporations (MNCs), small and medium enterprises (SMEs), and micro, small, and medium enterprises (MSMEs) to support compliance with Environmental, Social, and Governance (ESG) standards and drive sustainability efforts.
Here is an overview of some of the available help:
Government Grants and Incentives
Green Technology Financing Scheme (GTFS): Provides subsidised loans to companies from six (6) sectors adopting sustainable technologies. With financing available for up to 100 million RM through all banks, this programme can help fund up to 80% of spending on the green cost for companies dealing with waste and 60% for companies in the energy, manufacturing, transport, building and water sectors.
Deadline: December 31st 2025, or until funding runs out.
Domestic Investment Accelerator Fund (DIAF) – ESG Adoption: The Malaysian Investment Development Authority (MIDA) offers tax incentives and funding for sustainability-related initiatives like energy efficiency, waste management, and renewable energy. Funding can range from 50:50 or 70:30, depending on the case, with 500 thousand RM as the maximum granted per company.
Funding can help cover certification costs or purchase ESG tracking and data monitoring software, such as MyGreenlight's ESG reporting software.
Deadline: No current deadline.
Sustainable Development Goals (SDG) Funds: MSMEs working on socially impactful and environmentally friendly projects could apply for this UN programme. It is currently closed for applications but may reopen in the future. Aiming to support and improve the lives of the marginalised in Malaysia to gain from the country's development.
It invited proposals for projects targeting the critical areas of poverty, health and development for those left behind by Malaysia's growth and working to address economic imbalance for the more vulnerable in society.
Deadline: Currently closed.
Bank-Led Green Financing
Sustainable Financing Programs: Banks such as CIMB, Bank Negara Malaysia and Maybank offer green loans with lower interest rates for ESG-aligned initiatives.
Green Sukuk: Islamic bonds aimed at financing renewable energy and other green projects.
Development Bank Financing: Bank Pembangunan Malaysia supports businesses transitioning to sustainable practices with financing up to 100 million RM. This financing will run until the end of December 2025.
Private Sector and Global Partnerships
Carbon Offset Funding: Companies can secure financing for carbon reduction projects through partnerships with global carbon credit providers and local government programmes.
Collaboration Grants: Organisations like UNDP and international ESG funds support local enterprises adopting sustainability measures.
MSME-Specific Support
Low Carbon Cities Framework (LCCF): Grants and tax cuts to encourage smaller enterprises to align with green urban development goals.
SME Corp Malaysia: Offers guidance and has funding available for MSMEs, which can help them integrate ESG into their operations.
Tax Reliefs and Incentives
Tax exemptions for ESG-aligned projects, such as renewable energy installations, employee sustainability training and ESG-related products or services, are also available.
By leveraging these grants, financing opportunities and tax breaks, Malaysian companies can accelerate their ESG compliance journey, enhance operational sustainability, and contribute to global goals. Businesses should consult agencies like MIDA, SME Corp, or their financial institution for tailored support.
Make an appointment with us to discuss how MyGreenlight's ESG reporting software can help you collate, monitor, and report on your emissions levels and social and governance policies to allow you to grow a more sustainable business.
