Empower suppliers to drive climate action

PETRONAS plays a vital role in stewarding Malaysia’s Oil & Gas Services and Equipment (OGSE) sector through the energy transition. Its supply chain consists of over 4000 licensed and registered suppliers,80% of which are SMEs, many of whom face awareness, technical capacity and financing challenges in adopting sustainable practices

Recognizing this, PETRONAS integrates supplier development into its Net Zero Carbon Emissions by 2050 (NZCE 2050) strategy and aligns efforts with national policies such as the National Energy Transition Roadmap (NETR) and National Oil and Gas Services and Equipment (OGSE) Sustainability Roadmap (NOSR).

The PETRONAS Supplier Support Programme (PSSP) was launched to:

• Prepare suppliers for tightening global disclosure regulations like the EU CS3D (The Corporate Sustainability Due Diligence Directive) and Malaysia’s upcoming National Sustainability Reporting Framework (NSRF).

• Build ecosystem-wide resilience by equipping SMEs to thrive in a low-carbon economy, safeguarding jobs and ensuring continued competitiveness.

The initiative is based in Kuala Lumpur, Malaysia.

PSSP was launched in August 2024 as a three-year programme to help suppliers progressively integrate sustainability into their operations while preparing for national and global ESG disclosure requirements. While PETRONAS’ NZCE 2050 ambition targets Scope 1 and 2 emissions from its operations, PSSP plays an enabling role by ensuring suppliers are future ready.

Key pillars of the programme:

Capacity Building: Structured training tailored to supplier maturity levels, covering climate action, human rights, and responsible practices.

Disclosure Enablement: Use of the Centralised Sustainability Intelligence (CSI) platform for simplified ESG data capture and reporting.

Access to Financing: Linkages to sustainability linked financing, such as Bank Negara Malaysia’s Low Carbon Transition Facility, enabling suppliers to invest in low-carbon technologies.

Note: PSSP is currently in its scaling phase. Its focus is on foundational readiness, with case study content to be fully validated as programme maturity develops.

Figure 1: Overview of PETRONAS Supplier Support Programme (PSSP)

Figure 2: Highlights and achievements of the initiative since 2024

Sustainability impact

Climate

PSSP indirectly supports PETRONAS’ broader decarbonisation strategy by enabling suppliers to:

• Measure and reduce their own Scope 1 and 2 emissions.

• Improve PETRONAS’ Scope 3 value chain performance through key GHG Protocol categories:

  • Category 1: Sustainable practices in goods and services.

  • Category 2: Investments in low-carbon technologies for capital goods.

  • Category 4: Cleaner logistics and transport practices.

As of September 2025:

• 1,347 suppliers engaged through awareness-building and training.

• Close to 100 suppliers have started formally disclosing their ESG performance on the CSI platform and early step toward greater transparency.

• ~RM1 billion (USD 238.6M) unlocked in sustainability-linked financing through partner banks with 161 suppliers registered their interest to apply for sustainability-linked financing.

This is an enabler programme, laying the foundation for measurable reductions over time rather than claiming direct emissions cuts at this stage

Social

• Protecting livelihoods: Safeguards SMEs by reducing transition risks and ensuring continuity during industry transformation

• Human rights integration: embeds responsible labour practices into supplier operations

Business impact

Benefits

PSSP supports PETRONAS and its supply chain by:

• Strengthening resilience: Reducing operational disruptions through a stable and responsible supplier base

• Improving compliance: Preparing suppliers to meet NSRF and CS3D requirements, boosting their attractiveness to financiers

• Unlocking efficiencies: Enabling SMEs to upgrade operations with access to financing and knowledge

Costs

The PETRONAS Supplier Support Programme (PSSP) is a three-year initiative fully funded by PETRONAS as a commitment to rally and support suppliers in navigating the energy transition. There are no direct costs incurred by suppliers, as participation, training, and resources are provided at no charge. This approach ensures that cost does not become a barrier for small and medium-sized enterprises (SMEs) to build the necessary capabilities to remain resilient and competitive.

Typical business profile

This initiative is most applicable to companies that operate within complex value chains dependent on a diverse network of small and medium-sized enterprises (SMEs). These companies often face challenges related to sustainability compliance, risk management and operational resilience, especially in industries undergoing rapid transformation.

It is particularly relevant for sectors where supplier readiness is critical for a resilient transition, such as oil and gas services and equipment, heavy industry, and other resource-based sectors. By targeting these industries, the programme ensures that suppliers, especially SMEs, are equipped with the knowledge, tools and access to financing necessary to meet evolving global sustainability regulations and customer expectations, while strengthening the overall resilience and competitiveness of the supply chain.

The programme is designed to support suppliers at various stages of maturity, from those at the early stages of sustainability adoption to those ready for advanced disclosure and performance management, ensuring a comprehensive and inclusive approach across the ecosystem.

Approach

Suppliers participating in PSSP are supported through:

• ESG knowledge and training tailored to the OGSE sector and designed for suppliers at different maturity levels.

• Centralised Sustainability Intelligence (CSI) Platform, offering tools to measure, manage, and report carbon emissions and sustainability risks.

• Access to financing, including Bank Negara Malaysia’s Low Carbon Transition Facility and High Tech and Green Facility, as well as other transition financing offered by partner banks to support transition investments.

Figure 3: PSSP Pathway

To be onboarded into the PETRONAS Supplier Support Programme (PSSP), suppliers must first undergo an ESG START Maturity Assessment. This assessment categorises suppliers into one of three levels -Beginner, Intermediate, or Advanced, based on their current sustainability practices and readiness.

Step 1: Beginner Level

Suppliers at the Beginner level are invited to attend physical training sessions focused on foundational ESG knowledge, human rights practices, and basic GHG emissions awareness.

Upon completion of the Beginner training, suppliers are required to demonstrate that they have started their sustainability journey by providing evidence of action taken. Examples include:

• Tracking basic metrics such as electricity consumption.

• Declaring adherence to PETRONAS’ human rights principles.

This step ensures that suppliers move from awareness to practical application.

Step 2: Intermediate Level

Once suppliers have demonstrated progress, they are invited to attend Intermediate level training, which covers more advanced sustainability practices and reporting requirements.

When suppliers are ready with their initial datasets, they are onboarded to the Centralised Sustainability Intelligence (CSI) Platform to begin their disclosure process.

Step 3: Advanced Level

Certain suppliers with higher readiness will proceed directly to Advanced level disclosure and training, enabling them to report detailed ESG performance data through the CSI Platform.

The Advanced stage supports continuous improvement and alignment with international sustainability standards.

Financing Access

At any stage in the pathway, suppliers can apply for sustainability-linked financing through PETRONAS’ partner banks, including UOB, Bank Islam, and Alliance Bank with access to preferential interest rates that have been pre negotiated specifically for PSSP suppliers.

To qualify, suppliers must submit either their ESG START Maturity Assessment report or their CSI disclosure report, demonstrating commitment and progress in their sustainability journey.

This structured pathway provides progressive capacity building, step by step disclosure enablement, and access to financing, ensuring that suppliers of all maturity levels can participate meaningfully and build long term resilience in alignment with the energy transition.

Stakeholders involved

• Project Leads: The initiative was led by PETRONAS Group Procurement

• Company functions: Corporate Sustainability

• Main providers: External partners provided technical expertise and platforms, including the UN Global Compact Network Malaysia & Brunei (UNGCMYB), Bursa Malaysia, Joint Committee for Climate Change (JC3) Greening Value Chain Programme, and partner banks including UOB, Alliance Bank and Bank Islam

• Other:

  • Suppliers: particularly SMEs, actively participated in training, disclosure, and financing opportunities.

  • Financial regulators and institutions: including Bank Negara Malaysia, enabled access to sustainability-linked financing facilities such as the Low Carbon Transition Facility and the High Tech and Green Facility.

  • Utilisation of Capital Markets Malaysia (CMM), Simplified ESG Disclosure Guidance framework for ease of disclosure for SME pool

Figure 4: PSSP Launch ceremony

Key parameters to consider

1. Ecosystem Readiness: Only 26% of PETRONAS suppliers had sustainable practices in 2023 (OGSE Survey 3.0), underscoring the need for a phased approach.

2. Regulatory Drivers: Upcoming NSRF (Malaysia) and EU CS3D require higher ESG disclosure readiness by 2030.

3. Cost-Free Participation: Suppliers incur no direct costs, with PETRONAS fully funding training, assessment, and onboarding.

Implementation and operations tips

Challenge: Supplier resistance due to perception that ESG adds cost without clear benefit.

Response: PETRONAS focuses on storytelling and practical value demonstration:

• Simplified disclosure pathways via CSI platform.

• Tangible incentives through access to sustainability-linked financing.

• Messaging that ESG compliance ensures long-term competitiveness, not just regulatory adherence.