KUALA LUMPUR: Malaysian companies equipped with strong environmental, social and governance (ESG) practices and reporting standards will likely have a distinct competitive advantage and access to business opportunities in the European Union (EU) and other international markets, a sustainability reporting expert said today.
Global Reporting Initiative (GRI) chief executive officer Robin Hodess said companies, including small and medium enterprises (SMEs), that align their sustainability reporting with globally recognised standards would inevitably be better positioned to gain entry into Europe.
This is because business-to-business (B2B) buyers in Europe were reportedly willing to drop unsustainable suppliers, while those that embrace verifiable ESG standards stand a better chance of securing business deals.
Hodess was responding to a question in a recent interview with Bernama on whether Malaysian companies that have adopted ESG practices and standards would be better placed to penetrate the EU market once Malaysia and the EU conclude the Malaysia-European Union Free Trade Agreement (MEUFTA).
"It would be a feather in their cap once the MEUFTA is concluded,” she said.
GRI is an international organisation that develops sustainability reporting standards.
Hodess said while it was impossible to assess the implications for business without knowing the details of the trade agreement between Malaysia and the EU, there is already a recognised global benchmark for sustainability reporting.
"It is impossible to say without knowing what is in the trade agreement, but it is clear that there is a global gold standard for sustainability reporting, and that is the combination of the Global Reporting Initiative (GRI) standards and the International Sustainability Standards Board (ISSB) standards," she noted.
She said Malaysian companies could demonstrate such alignment through both the National Sustainability Reporting Framework (NSRF) and GRI Standards, thereby strengthening their sustainability disclosures and enhancing their competitiveness abroad.
Beyond trade-related opportunities, Hodess said businesses across ASEAN continue to prioritise sustainability despite growing geopolitical and economic uncertainties.
"This is because they recognise that integrating sustainability into corporate strategy provides a competitive advantage and strengthens resilience amid an increasingly complex global environment.
"The way to do that is to embed sustainability into strategy so that it becomes part of the company’s market offering and positions the company ahead of its peers because it is focused on how to be sustainable," she said.
She said sustainability extends beyond energy transition efforts and encompasses a broader range of issues, including the impact of artificial intelligence (AI) on the workforce, the creation of new jobs, adaptation to changing urban environments and the company’s overall contribution to sustainable development.
Embedding sustainability into business strategy will continue to be a critical factor in maintaining a strategic edge as companies navigate future challenges and opportunities, said Hodess.
Nevertheless, she dismissed concerns that companies might be scaling back ESG initiatives due to economic and geopolitical uncertainties, saying most businesses remain focused on long-term survival and growth.
"I don’t see companies pulling back from that because most companies are trying to look long-term at how the company survives and this is built into future growth for business," she added. - Bernama
