Internal Carbon Pricing (ICP) is a tool that assigns a financial cost to carbon emissions, helping businesses understand their environmental impact when making decisions. It allows companies to assess whether their investments, supply chains, and business operations can remain competitive as carbon prices and environmental regulations increase. It also encourages businesses to improve energy efficiency, use renewable energy, and develop low-carbon products to reduce emissions and operating costs. By linking sustainability goals with financial performance, ICP helps ESG teams and finance teams work together to improve investment planning, reporting, and corporate governance.
In practice, internal carbon pricing can be applied in three main ways. A shadow price helps businesses evaluate investments by estimating how future carbon costs could affect profitability. An internal carbon fee charges business units for their carbon emissions, with the money collected used to support emission-reduction projects. Meanwhile, an implicit carbon price estimates how much a company needs to spend to achieve its emissions-reduction targets. This helps businesses understand the cost of reducing emissions and identify the most cost-effective solutions. Overall, ICP makes carbon reduction a shared responsibility across the company rather than leaving it solely to the sustainability team.
13/10/2026 - Dr. Kuan
SSM's proposed amendments to the Companies Act 2016 will require subsidiaries of public listed companies to prepare sustainability disclosures and get them assured every single year, not just at the group level. Right now, a listed parent reports on a consolidated basis, and its subsidiaries don't have to report on their own. Under the new rules, each qualifying subsidiary becomes a reporting entity in its own right. It needs its own data systems, its own governance, its own external verification. And it has to do this every financial year.
The assurance part makes it even harder. SSM wants a phased approach: start with internal assurance, then move to limited assurance, and eventually reach reasonable assurance for the biggest entities. Malaysia is one of the few countries globally heading toward mandatory reasonable assurance on Scope 1 and Scope 2 emissions, which is the same level of rigour as audited financial statements. This isn't a one-off. It's a permanent, annual engagement.
The problem is that the supply side isn't ready. The current assurance market is dominated by a handful of firms, such as Big Four, Big Ten. Their sustainability practices were built for a voluntary, group-level market. Industry assessments keep pointing to the same thing: not enough people with verification-grade skills, not enough qualified verifiers. And the scale of demand is the real issue, a single group with twenty qualifying subsidiaries will need twenty separate annual assurance engagements instead of just one. Across hundreds of groups, the number of engagements could jump by an order of magnitude.
08/10/2026 - Dr. Kuan
CO₂ is going to be as vital as Profit Before Tax (PBT) soon. As according to Malaysia Budget 2026, Malaysia government is planning to impose new Carbon Tax policy, the Carbon Tax policy is now in its final drafting phase. As a result, the companies that treat carbon as a strategic priority will be the ones that thrive. Think about it, those who act early will understand their exact carbon exposure, reduce their tax liability before rates escalate, access government incentives like the RM1 billion Green Technology Financing Scheme, and stay ahead of mandatory NSRF reporting requirements. Early movers will also strengthen their market position as supply chains increasingly demand ESG compliance and make smarter investment decisions using internal carbon pricing models.
CO₂ is going to be as vital as Profit Before Tax soon, and the question is no longer whether carbon will be priced, but how much it will cost you and how prepared you are.
27/08/2026 - Dr. Kuan
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21/08/2026 - Cheston