ESG Funding in Malaysia 2026: Grants, Incentives, and Loans You Should Be Using
Share
In 2026, the question for Malaysian businesses is no longer whether to embrace ESG — it's how to fund it. With the National Sustainability Reporting Framework (NSRF) now in effect and a domestic carbon tax on the horizon, compliance pressure has reached a new peak.
But here's what many businesses overlook: you don't have to shoulder this transition alone. The Malaysian government has put together a substantial package of financial support — grants, tax incentives, and concessionary financing — specifically designed to help local industries go green without losing their competitive edge.
At System Veritas, we see sustainability as a driver of value, not just a cost centre. Here's a plain-language breakdown of every major financial aid available to support your ESG journey.
Available ESG Incentives at a Glance
1. ESG Training Grants — HRD Corp
If your company contributes to the HRD Corp levy, you can channel those funds directly toward ESG upskilling — at no additional cost.
What you get: Full reimbursement of training costs for programs covering Carbon Accounting, Sustainability Reporting, Double Materiality Assessment, and more.
Source: Human Resource Development Corporation (HRD Corp)
2. Domestic Investment Accelerator Fund (DIAF) — ESG Adoption
Aimed at Malaysian-owned SMEs and Mid-Tier Companies, this matching grant helps cover the cost of moving toward ESG compliance — including certification fees, carbon footprint assessments, and ESG data management tools.
What you get: A 50% reimbursable matching grant of up to RM500,000 per company.
Source: Malaysian Investment Development Authority (MIDA)
3. Business Accelerator Program (BAP 3.0)
SME Corp's BAP 3.0 provides financial assistance to SMEs looking to strengthen their operations — including obtaining ESG certifications and upgrading equipment.
What you get: Matching grants to fund machinery upgrades, ESG certifications, and productivity improvements.
Source: SME Corporation Malaysia (SME Corp)
4. PKSlestari Financing Scheme
This dedicated financing facility helps MSMEs fund their ESG adoption. Note that you'll need to complete the MSME ESG Assessment on the SME Corp platform before you can apply.
What you get: Financing of up to RM1 million at a 3.5% p.a. profit rate, with potential rebates of up to 30% tied to your sustainability performance.
Source: SME Corporation Malaysia (SME Corp)
5. Low Carbon Transition Facility (LCTF)
A Bank Negara Malaysia initiative that helps SMEs fund the operational shift to lower-carbon practices, often without the usual collateral requirements thanks to SJPP or CGC guarantees.
What you get: Financing of up to RM10 million per SME, capped at 5% p.a.
Source: Bank Negara Malaysia, via participating commercial banks
6. Green Technology Financing Scheme (GTFS 5.0)
GTFS 5.0 makes bank financing more accessible for businesses that produce or adopt green technology, with the government stepping in to reduce both interest costs and lending risk.
What you get: A 2% per annum interest subsidy and a government guarantee covering 60% to 80% of the financing amount.
Source: Managed by MGTC, guaranteed by SJPP
7. ESG Expenditure Tax Deduction
Introduced to ease the immediate financial burden of ESG compliance, this deduction covers a range of qualifying expenses — from report preparation and consultancy fees to carbon audits and ESG software subscriptions.
What you get: A tax deduction of up to RM50,000 per Year of Assessment, available until 2027.
Source: Inland Revenue Board of Malaysia (LHDN)
8. Green Investment Tax Allowance (GITA) — Assets
For businesses investing in verified green technology assets for internal use — solar systems, energy-efficient equipment, waste management technology — provided the asset appears in the MyHijau Directory.
What you get: A 100% tax allowance on qualifying capital expenditure, offsettable against 70% of statutory income.
Source: Malaysian Green Technology and Climate Change Corporation (MGTC)
9. Green Investment Tax Allowance (GITA) — Projects
For companies undertaking large-scale green projects as a Qualifying Activity — such as building a renewable energy plant or an integrated waste management facility. A tiered approach applies in 2026, with higher incentives for advanced activities like Green Hydrogen.
What you get: A 100% tax allowance on qualifying capital expenditure over 5 years.
Source: MIDA
10. Green Income Tax Exemption (GITE) — Services
Designed for companies that provide green consultancy or technical services to other businesses, such as ESG auditing, green building certification, or energy efficiency advisory.
What you get: A 70% income tax exemption on statutory income from qualifying green services, for 3 years.
Source: MIDA
11. Green Income Tax Exemption (GITE) — Solar Leasing
Specifically for businesses that own solar installations and lease them to third-party users.
What you get: A 70% income tax exemption for up to 10 years, scaled to the solar capacity installed.
Source: MIDA
Summary Table
| # | Incentive | Type | Maximum Benefit |
|---|---|---|---|
| 1 | HRD Corp Grant | Training levy | 100% claimable |
| 2 | DIAF – ESG Adoption | Matching grant | Up to RM500,000 |
| 3 | BAP 3.0 | Matching grant | Up to RM400,000 |
| 4 | PKSlestari | Financing | Up to RM1 million |
| 5 | LCTF (BNM) | Financing | Up to RM10 million |
| 6 | GTFS 5.0 | Subsidised loan | 2% interest subsidy |
| 7 | ESG Expenditure Tax Deduction | Tax deduction | RM50,000 per year |
| 8 | GITA – Assets | Tax allowance | 100% of CAPEX |
| 9 | GITA – Projects | Tax allowance | 100% of CAPEX (Tiered) |
| 10 | GITE – Services | Tax exemption | 70% of statutory income |
| 11 | GITE – Solar Leasing | Tax exemption | 70% of statutory income (up to 10 years) |
How System Veritas Can Help
Knowing an incentive exists and successfully claiming it are two very different things. MIDA grant applications and BNM green loan submissions can be just as demanding as the ESG reporting they're meant to fund — and most applications fall short not due to weak projects, but because the supporting documentation doesn't meet funder standards.
Bernard Business Consulting helps bridge that gap. Our services cover:
Incentive and Grant Advisory — We identify which financial aids your business qualifies for and manage the application from start to finish.
ESG Reporting and Disclosure — We help you build NSRF-compliant reports that satisfy both regulators and financial institutions.
Carbon Accounting — Practical, audit-ready measurement of your Scope 1, 2, and 3 emissions to support green financing applications.
HRD Corp Training — We offer HRD Corp-claimable ESG courses, so your team can upskill without additional out-of-pocket spend.
ESG Strategy and Implementation — Actionable roadmaps to improve your ESG ratings, reduce operational risk, and meet your compliance obligations efficiently.
Get in touch with our consultants to find out which of these financial aids your business can access — and how to make the most of them.