ESG can drive investor confidence
01 Jul 2023
IN recent years, ESG (Environmental, Social and Governance) considerations have been gaining significant importance among businesses and investors in Malaysia. For instance, with a commitment to achieve carbon neutrality by 2050, the country recognises the pivotal role of ESG factors in accomplishing this ambitious goal.
Universiti Tunku Abdul Rahman (Utar) recently hosted its First International Environmental, Social and Governance Forum online where ESG issues were discussed among experts.
There are several compelling reasons why ESG holds great significance in Malaysia.
Firstly, the nation is faced with escalating environmental challenges, including climate change, water scarcity in times of crisis and pollution. By implementing ESG practices, businesses can address these challenges and minimise their ecological footprint.
Secondly, investors are increasingly placing emphasis on ESG criteria. Many investors now seek out companies that demonstrate a genuine commitment to ESG principles. This preference stems from the recognition that Esgcompliant organisations often exhibit enhanced sustainability and resilience in the long run.
As an example, the Employees Provident Fund, a well-known Malaysia institutional investor, through its sustainable investment policy will only invest in companies that are Esg-friendly.
Thirdly, ESG practices can assist businesses in attracting and retaining top talent. Employees are increasingly drawn to employers that prioritise ESG principles. This inclination arises from the desire to work for companies actively contributing to positive societal impact.
The Malaysian government recognises the importance of ESG and is actively supportive of its initiatives. In April, the government announced its intention to introduce an ESG standards framework by the year’s end. This framework will serve as a guide for businesses in their ESG endeavours and facilitate investors in evaluating the ESG performance of companies.
This can be seen as complementing the FTSE4GOOD Bursa Malaysia Index that has existed in Malaysia since December 2014 through the Bursa Malaysia initiative.
We foresee ESG is here to stay in the long term. With proper implementation and guidance, it will create a much-needed boost to our country’s economy.
Source: The Star
