KUALA LUMPUR: Malaysian public listed companies (PLCs) are progressively adopting the corporate governance (CG) best practices as recommended in the Malaysian Code on Corporate Governance (MCCG).
This includes the new best practices introduced in the 2021 revision of the MCCG, particularly those relating to sustainability, according to the Securities Commission Malaysia’s (SC) CG Monitor 2022 report released today.
"Adoption levels of CG and sustainability best practices by PLCs remain positive and the PLCs continue to take proactive steps to address sustainability risks and opportunities," said the SC in a statement.
Among the proactive steps taken is ensuring that the board and senior management undergo regular training to stay abreast of sustainability issues relevant to the company, with 58 per cent of the PLCs having either a dedicated committee or a role in senior management in charge of the strategic management of sustainability for the company.
SC chairman Datuk Seri Dr Awang Adek Hussin said it is remarkable to see that PLCs continue to strengthen their CG best practices despite the challenging environment.
"Good governance remains the bedrock of business and is key to maintaining transparency and accountability. This ultimately fosters sustainability and helps companies realise long-term benefits including reducing risks, seizing growth opportunities, increasing shareholder value, and meeting evolving stakeholders’ expectations," he said.
Among the key findings from the CG Monitor are: PLCs have set emissions reduction targets, more women appointed as independent directors, and that disclosure of senior management remuneration remains low.
The SC found that PLCs are setting and committing to emissions reduction targets including achieving carbon neutrality by 2030 and net zero by 2050. This is based on the SC’s review of 50 PLCs comprising, among others, large PLCs operating in the energy, plantation, and transportation and logistics sectors.
The CG Monitor also reported that 34 per cent of individuals appointed to the boards of PLCs in
2022 were women, compared with 23 per cent in 2021. Eighty per cent of the women directors appointed were for the position of independent directors, allaying concerns that the mandatory rule of having at least one woman director on the board would lead to the appointment of related individuals such as family members.
Regarding the disclosure of senior management remuneration remains low, the report said, while the overall adoption of the MCCG is encouraging and there were improvements in the quality of disclosures for some of the best practices, there were areas that could have been improved further.
"In particular, the adoption of practices related to disclosure of senior management remuneration remained disappointingly low, with a slight improvement in 2022.
"Only 22 per cent (2021: 21 per cent) of PLCs disclosed senior management remuneration in bands of RM50,000 or by the exact amount," it said.
Stakeholders, notably institutional investors, have continued to advocate for greater transparency and alignment between pay and performance, including the Institutional Investors Council Malaysia as highlighted in its latest revision of the Malaysian Code for Institutional Investors.
"The SC and Bursa Malaysia will be undertaking a deeper review on this," said SC. - Bernama