PETALING JAYA: RHB Research’s annual environment, social and governance (ESG) framework review revealed an improving sustainability profile.
The sector’s overall average ESG score ticked higher to 2.8 in 2026, up from 2.7 in 2025, primarily propelled by the “environment or E” pillar, which rose to 2.9 from 2.8.
The research house noted the improvement in the ‘E’ pillar is attributed to several key factors, namely, lower greenhouse gas (GHG) emissions intensity, which declined by an average of 3.8% across the sector, improved traceability and deeper compliance with international sustainability standards such as Malaysian Sustainable Palm Oil, Roundtable on Sustainable Palm Oil and Indonesian Sustainable Palm Oil.
“GHG intensity continued to ease (minus 3.8% year-on-year or y-o-y) with 11 of the 16 companies under our coverage recording y-o-y declines,” the research house stated in its latest regional sector report.
The sector also saw a 6.4% reduction in average water intensity and a transition toward higher renewable energy usage, particularly through biomass and solar technology.
RHB Research identified several local plantation companies instrumental in lifting the sector’s score.
SD Guthrie Bhd
(SDG) was ranked first globally in the 2025 Sustainable Palm Oil Transparency Toolkit assessment with a stellar score of 97.5%.
Sarawak Oil Palms Bhd led the sector in water efficiency, recording a 22.9% reduction in water intensity after extending successful efficiency initiatives across its mills.
The research house also raised the individual “E” scores for SDG, Johor Plantations Group Bhd, IOI Corp Bhd and Ta Ann Holdings Bhd.
The social and governance scores remained unchanged at 2.6 and 2.8, respectively due to a lack of material changes in qualitative disclosures and mixed results in board composition.
It added that although five companies improved gender diversity, nine firms in its sample still fall short of the 30% female board representation threshold.
RHB Research also maintained its “overweight” stance on the plantation sector due to a bullish price outlook for crude palm oil (CPO) due to the high probability of a strong El Niño event in the later part of this year.
The research house kept its 2026 CPO price assumption of RM4,400 per tonne, but raised its 2027 and 2028 assumptions to RM4,500 and RM4,400 per tonne, respectively from RM4.300 previously.
