Urgent need to adopt ESG practices

PETALING JAYA: Industry captains are marching forward to adopt the best environment, social and governance (ESG) practices as part of their strategies – a topic which has come to the fore as economic conditions remain subdued – to ensure sustainability of their organisations.

The Covid-19 pandemic that is plaguing the entire world has put companies through an extreme stress test, alongside issues of climate crisis and social injustice.

While companies with deep pockets have little problems in seeing through the pandemic, what investors are concerned about is more than just balance sheets and profit and loss statements.

Stakeholders, including investors, feel the adoption of the best ESG practices were now a need, not a want, as it ensured that companies were well-run.

Petroliam Nasional Bhd president and CEO Tengku Muhammad Taufik Tengku Aziz said sustainability was not just good business, it was actually good for business.Petroliam Nasional Bhd president and CEO Tengku Muhammad Taufik Tengku Aziz said sustainability was not just good business, it was actually good for business.

It was exactly 19 years ago in October 2001 when Enron Corp shocked the world after it was unearthed that the company was embroiled in an accounting scandal, which led to its bankruptcy two months later, the largest in the United States until then. Then a Wall Street darling, the company also dragged its auditor Arthur Andersen down with its demise.

The term corporate governance has been around since the 1970s but it was not until the Enron scandal that it rose to the forefront of corporate prominence.

During a virtual CEO Action Network Members Meeting held by CIMB yesterday, some 100 corporate leaders comprising managing directors, chief executive officers, chief financial officers and management level executives brainstormed ideas to further the sustainability agenda.

Sime Darby Property Bhd independent non-executive director Datuk Seri Ahmad Johan Mohammad Raslan said leaders in the room recognised that they have a massive role in driving sustainability for the good of their companies, the people and the country.

“On the social side, especially with Covid-19, we’ve seen companies in Malaysia recently that were taken to task for not really considering the workers (well-being).

”The observers and stakeholders are talking not just about Malaysian workers but the migrant workers as well. The goalpost has really changed in our country and social injustice is on the rise and very much in the spotlight, ” he said, adding that corporate governance is of huge importance but failures were seen.

Ahmad Johan stressed that businesses must always be ready and ahead of the curve because anything could change the playing field overnight, such as a change in laws and regulations.

“Businesses do not operate in a complete vacuum. All of us use some kind of natural resource and that’s finite. We also need to have a successful society which is thriving or else, the businesses suffer. It’s not all just about shareholders and the next dividend. It’s the stakeholders out there, ” he said.

PwC recently forecast that by 2025,57% of mutual fund assets in Europe or 7.6 trillion euros (RM37.27 trillion) will be held in funds that consider ESG factors.

Some 77% of institutional investors surveyed said they planned to stop buying non-ESG products within the next two years.

Petroliam Nasional Bhd president and CEO Tengku Muhammad Taufik Tengku Aziz said sustainability was not just good business, it was actually good for business.

“There needs to be a distinction there. Perhaps sustainability is only seen as a burden, a new cost but the prospects and opportunities presented by sustainable practices are in fact, rather immense.

“At Petronas, we are committed to the sustainability agenda, which we apply through four lenses which have been aligned to the United Nation’s Sustainable Development Goals, which include climate action and affordable and clean energy.

“For the longest time, Petronas has been known for responsible governance. This has done wonders for us and it bodes well for our future. We believe these practices must and shall continue, ” he said.

Nestle (M) Bhd CEO Juan Aranols urged companies to begin embracing at least a sustainability effort in order to move forward.

“Intention without action is normally useless. We also believe the action starts at home. Each one of us should be embracing at least one of the multiple dimensions that you have behind this topic. Sustainability is just too broad. We can talk about sustainability for hours but if we don’t land anything concrete, nothing will happen, ” he said.

CIMB Group Holdings Bhd CEO Datuk Abdul Rahman Ahmad said that as Malaysia grappled with the grave economic and humanitarian consequences brought about by the pandemic, there was an urgent need for companies to remind themselves of the critical importance of sustainability and the need to assess the way they conduct their businesses.

Among those present at the virtual meeting were Dutch Lady Milk Industries Bhd managing director Tarang Gupta, EcoWorld Development Group Bhd CEO Datuk Chang Khim Wah, Fraser & Neave Holdings Bhd CEO Lim Yew Hoe, Heineken Malaysia Bhd managing director Roland Bala, Sime Darby Bhd CEO Datuk Jeffri Salim Davidson and Star Media Group Bhd CFO Sam Au.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 0
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Next In Business News

Bursa Securities to delist Scomi, dismisses regularisation plan extension application
Stocks rise after bank sale underpins investor confidence
TT Vision sees good growth potential in overseas market this year
Walgreens quarterly profit beats estimates on strong pharmacy performance
Kamunting Management to buy remaining 40% stake in E&O for RM46.95mil
Ringgit closes higher as demand for US$ weakens
PT Resources takes a longer-term view for growth
Press Metal, PChem lead CI rally on Bursa Malaysia
Alibaba to split into six units, likely to pursue separate IPOs
Carimin Petroleum accepts vessel supply order from PETRONAS Carigali

Others Also Read