PETALING JAYA: Environmental, social and governance (ESG) progress among Malaysia’s fast-moving consumer goods (FMCG) players is increasingly being driven by on-the-ground execution rather than improvements in disclosure.
UOB Kay Hian (UOBKH) Research, in its annual ESG assessment of the FMCG segment, said the latest findings show tangible gains in areas such as decarbonisation, circularity and supply chain engagement.
“ESG scores improved across most companies, with Farm Fresh Bhd
and Dutch Lady Milk Industries Bhd leading the gains, driven by stronger operational execution in decarbonisation, circularity and supplier engagement.
“Fraser & Neave Holdings Bhd (F&N) also saw a step-up from already strong levels, supported by an institutionalised climate strategy and governance, “ the research firm said in a report.
Heineken Malaysia Bhd and Carlsberg Brewery Malaysia Bhd recorded moderate ESG uplifts, underpinned by greater renewable energy adoption and clearer net-zero pathways.
Meanwhile, Guan Chong Bhd, a manufacturer of compound chocolate and confectionery products, benefitted from enhanced traceability and stronger integration of Scope 3 emissions, which are indirect emissions across the value chain.
ESG lens aside, the research firm maintained a “market weight” stance on the sector, citing persistent external uncertainties and expectations that the sector may lag the broader market recovery.
“At 23.4 times one-year forward price-to-earnings (around 1.0 standard deviation below its five-year mean), valuations are not particularly compelling, especially given a longer-term structural derating trend, most evident among sin stocks and large defensives such as Nestle Malaysia Bhd and QL Resources Bhd.’
It noted that shares of F&N and Heineken are currently trading at steep discounts to their historical valuations, with clear catalysts ahead that could help revive investor interest.
