Companies that ignore ESG will be deprived of equity, debt financing


KUALA LUMPUR: Companies that choose to ignore sustainability/environmental, social and governance (ESG) considerations in their business will not be sustainable as they will be deprived of both equity and debt financing to fund their projects.

According to Bursa Malaysia chairman, Tan Sri Abdul Wahid Omar, these companies will have to pay a higher insurance premium to underwrite some of their risks and will have difficulty in recruiting talents to drive their business.

"They will not be able to sell their products or be part of the global supply chain as customers become more discerning in buying only sustainable products in the future,” he said in his welcoming speech at the ESG Corporate Summit, themed "Driving Sustainability and Sustainable Transformation” today.

The summit was jointly organised by The Economic Club of Kuala Lumpur (ECKL) and the KSI Strategic Institute for Asia Pacific.

Abdul Wahid, who is also the chairman of ECKL’s advisory council, noted that as a strong proponent of sustainability, Bursa Malaysia strives to provide an environment that encourages sustainable practices among its market participants.

"We do this through ongoing guidance, advocacy and engagements within the marketplace, alongside our role as a frontline regulator and market operator,” he said.

He added that Bursa Malaysia has also started collaborating with the Ministry of Environment and Water and the Ministry of Finance to create a voluntary carbon market.

"This is a significant nation-building project that will assist Malaysia in meeting its climate ambitions, while also creating an ecosystem that is transparent, rule-based, and meets the needs of intended market participants,” he said.

Abdul Wahid also pointed out that the ESG and sustainability issues are not new to corporate Malaysia.

In 2014, Bursa Malaysia introduced the FTSE4Good Bursa Malaysia Index to recognise public-listed companies (PLCs) that have taken steps to improve their ESG practices and disclosures.

Since then, the number of constituents has more than tripled from 24 in 2014 to 80 following the last review in December 2021.

On July 5, 2021, Bursa Malaysia launched the FTSE4Good Bursa Malaysia Shariah Index, comprising 54 Shariah-compliant constituents of the FTSE4Good Bursa Malaysia Index, according to the Securities Commission’s Shariah Advisory Council’s screening methodology.

"Apart from introducing ESG-related indices, Bursa Malaysia has also played a pioneering role in compelling PLCs to adopt good ESG practices and disclosures.

"For instance, since the establishment of the Sustainability Reporting Framework back in 2015, all Malaysian PLCs are now disclosing Sustainability Statements and Reports annually, detailing the governance structure put in place as well as the approach to managing their material sustainability matters, which cover an extensive range of economic, environmental and social themes,” he said.

Abdul Wahid said the ongoing climate crisis is a massive wake-up call, and is heartened to note that Malaysia is committed to becoming a net-zero greenhouse gas (GHG) emissions nation as early as 2050.

"Likewise, the continued investment in public transportation and tax incentives to promote Electric Vehicles (as announced in Budget 2022) augur well towards a net-zero target,” he said.

He noted that Malaysia’s commitment to becoming a net-zero GHG emissions nation was announced by Prime Minister Datuk Seri Ismail Sabri Yaakob during the tabling of the 12th Malaysia Plan on Sept 27 last year.

"This means we are now part of the global community of countries that contribute 90 per cent of global gross domestic product that has committed to net-zero emissions by mid-century (2050 or 2060),” he added. - Bernama
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Bursa Malaysia , GHG , PLCs , ECKL , Abdul Wahid Omar , ESG , GDP , COP26

   

Next In Business News

Domestic market remains little changed amid uncertainty
Trading ideas: Glomac, Khee San, Hiap Teck Ventures, Gamuda, SCGM and Bintai Kinden
S.Korean manufacturers' sentiment in July sinks to lowest for 1-1/2 years
Thai PM says weak baht good for exports; Malaysians among top tourists
S&P 500 limps to slightly lower close as quarter-end looms
ANALYSIS-Markets challenge Fed timeline, threatening more swings in Treasuries
Oil price slides 2% on rising US fuel stocks and output
Nod for Axiata and Telenor
Toyota misses May global output target
FBM KLCI poised to breach 1,600 points

Others Also Read