This study examines how Malaysian business entities’ debt costs are affected by Environmental, Social, and Governance (ESG) scores. A panel regression analysis of 70 Malaysian public-listed firms from 2012 to 2022 shows that better ESG ratings lead to increased company debt costs. Malaysian lenders view ESG investments as potentially risky with reduced immediate profitability; therefore, applying these considerations during credit assessments, drives up financing costs for firms with better ESG scores. Although ESG practices help build a corporate reputation as well as equity-investor relations, they do not necessarily produce corresponding reductions in borrowing costs.