{"id":8538,"date":"2023-11-06T15:06:38","date_gmt":"2023-11-06T07:06:38","guid":{"rendered":"https:\/\/www.boardroomlimited.com\/my\/?p=8538"},"modified":"2024-10-09T13:49:14","modified_gmt":"2024-10-09T05:49:14","slug":"esg-framework-reporting-compliance-in-malaysia","status":"publish","type":"post","link":"https:\/\/www.boardroomlimited.com\/my\/2023\/11\/06\/esg-framework-reporting-compliance-in-malaysia\/","title":{"rendered":"From ratings to reporting requirements: an overview of ESG in Malaysia"},"content":{"rendered":"

[vc_row full_width=”stretch_row” css_animation=”fadeInLeft” el_class=”business-insights-content”][vc_column][vc_row_inner][vc_column_inner][vc_column_text el_class=”m-b-30″]With global markets increasingly focused on sustainability and responsible practices, growing businesses must embrace environmental, social and governance (ESG) factors if they are to survive and thrive. Companies that demonstrate a real commitment to reducing their environmental footprint, maintaining positive stakeholder relationships and improving their ways of operating are more likely to attract investors and position themselves for long-term success.<\/p>\n

New methods of measuring and showcasing corporate ESG<\/a> action and achievements are emerging throughout the Asia-Pacific region.<\/p>\n

The Bursa Malaysia stock exchange encourages action around ESG in Malaysia through the FTSE4Good Bursa Malaysia (F4GBM) Index<\/a>, an ESG rating system maintained in collaboration with FTSE Russell. The Index is designed to help guide investor decisions, increase the profile of high-performance companies, encourage transparency and support the move to a sustainable economy.<\/p>\n

To help businesses leverage ESG practices and reporting as investment strategies, Bursa Malaysia has also announced it will introduce a new framework on ESG standards<\/a> by the end of 2023.<\/p>\n

Ahead, we consult Tina Thomas, Head of ESG for BoardRoom, to learn more about ESG frameworks and sustainability ratings in APAC and how businesses can demonstrate high-level compliance.[\/vc_column_text][vc_custom_heading text=”Understanding the enhanced ESG framework” use_theme_fonts=”yes” el_class=”m-b-20″][vc_separator color=”custom” align=”align_left” border_width=”3″ el_width=”10″ accent_color=”#4f9e45″ el_class=”m-b-20″][vc_column_text el_class=”m-t-20″]ESG reporting requirements for APAC businesses differ from region to region. In Malaysia, public listed companies are having to adapt to tighter rules enforced by the Bursa Malaysia stock exchange.<\/p>\n

Since ESG reporting was made compulsory for listed companies in 2016, companies have had the flexibility to use the reporting framework of their choosing. Now, Bursa Malaysia is introducing more stringent reporting requirements in a phased, multi-year approach, with the view to bolster the resilience of listed companies and encourage more investment.<\/p>\n

\u201cIf you look at the reports that were done prior to last year, every report looked different, as it was up to companies to decide what to report,\u201d Tina says. \u201cFrom this year onwards, every company has to report against a mandatory set of factors.\u201d<\/p>\n

The new enhanced Sustainability Reporting Framework<\/a> will support businesses to adopt international best practices for ESG-related disclosures. It will require companies to report against common indicators, thus promoting standardisation of reporting in the region and boosting investor confidence.[\/vc_column_text][vc_single_image image=”8557″ img_size=”full” alignment=”center” alt=”AGM Logistics” css=”.vc_custom_1698842804717{padding-right: 30px !important;padding-bottom: 30px !important;padding-left: 0px !important;}” el_class=”m-t-30″][\/vc_column_inner][\/vc_row_inner][vc_row_inner][vc_column_inner][vc_custom_heading text=”About ESG ratings” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes” el_class=”m-t-10 m-b-20″][vc_column_text el_class=”m-t-20″]The evolution of Malaysia\u2019s ESG reporting requirements has also bolstered the significance of ESG ratings in the region.<\/p>\n

\u201cOne way that ratings agencies assess a company is by looking at their sustainability reports,\u201d Tina says. \u201cBecause companies have to disclose ESG information annually, ratings agencies can easily compare listed companies and rate them accordingly.<\/p>\n

\u201cThey will look at a company\u2019s commitments under their sustainability strategy and check their website to see if the information there aligns with their comments in the report.\u201d<\/p>\n

ESG ratings can be a useful tool in the pursuit of enhanced corporate sustainability.<\/p>\n

\u201cIt\u2019s an opportunity for companies to understand how they\u2019re performing against their peers and improve their ESG credentials,\u201d Tina says. \u201cSo the ratings can help encourage a culture of change within companies.<\/p>\n

\u201cIf a company has a poor ESG rating, it means that some elements of ESG have not been managed well. These elements might critically impact operations and, therefore, indicate a level of risk that a company is facing.<\/p>\n

\u201cThis gives companies an opportunity to implement actions to mitigate that risk.\u201d[\/vc_column_text][vc_custom_heading text=”The challenges of ESG ratings in Malaysia” use_theme_fonts=”yes” el_class=”m-b-20 m-t-30″][vc_separator color=”custom” align=”align_left” border_width=”3″ el_width=”10″ accent_color=”#4f9e45″ el_class=”m-b-20″][vc_column_text el_class=”m-t-20″]While ESG ratings may be a promising tool on the path towards sustainability, the challenges they pose for Malaysian businesses are as follows:<\/strong><\/p>\n