Directors’ Duties in Managing AI and ESG Under Malaysian Law: A Doctrinal Analysis

Abstract

The emergence of Artificial Intelligence (AI) technologies and Environmental, Social, and Governance (ESG) integration with corporate governance has redefined the company directors’ responsibility. This scenario has changed the important legal questions on the extent the which directors in Malaysia are obliged to oversee and govern emerging risks and opportunities related to AI and ESG. This article examines the directors’ duties under the Companies Act 2016 using the doctrinal legal research methodology to determine whether there are provisions in relation to AI and ESG governance. To answer the question, a systematic analysis of the statute, case law and other regulatory frameworks is explored to clarify the emergence of legal duties of directors. The positions from the United Kingdom, Australia and Canada are referred to highlight international trends and best practices as a basis of comparison. The article asserts that directors are increasingly required to be actively involved with ESG and AI-related governance risks, including ethical considerations, transparency and sustainability reporting. It emphasised the need for legal reform, board competency enhancement, and clear regulatory frameworks to ensure that the boards are well-positioned to address the growing challenges of AI and ESG. In essence, the article suggests that directors must adopt a strategic and principled approach to governance that aligns with both statutory obligations and stakeholder expectations in the digital and sustainability-driven business landscape.