“In terms of quality of reporting, based on global surveys done, Malaysian companies score very highly," said Grant Thornton Malaysia's Kishan.
KUALA LUMPUR: Although Malaysia is ranked mid-range globally in terms of environmental, social and governance (ESG) reporting, the country is still considered to be far ahead of its regional peers, says Grant Thornton Malaysia.
Its country chief executive officer Kishan Jasani said in certain ESG reporting metrics, Malaysia is even ahead of Singapore and Hong Kong.
“In terms of quality of reporting, based on global surveys done, Malaysian companies score very highly.
“This is in terms of identification of material ESG factors, disclosure of stakeholder engagement, identification of climate-related risk and opportunities, disclosures of process for managing climate-related risk and opportunities and even with regards to disclosure of integrating climate risk into overall risk management policies of companies,” he told StarBiz on the sidelines of the seminar on “Developments and Impacts of ESG on Corporate Malaysia” yesterday.
Kishan added many local companies previously had complied with ESG reporting requirements simply because it was mandatory, but many are now beginning to view ESG reporting beyond compliance.
“There is still room to grow for Malaysia in ESG reporting. When it comes to things like supply chain reporting or social reporting, we are in line with our peers.
“Singapore may have a more developed ecosystem but I think the regulators in Malaysia have allowed the local companies to see what needs to be done, and a lot of Malaysian companies being good corporate citizens are taking a more proactive approach in ESG reporting,” he said.
While there is an increasing awareness on the need to be ESG-compliant, there is also much confusion over the many standards out there with an alphabet soup of different disclosure guidelines.
On this note, Kishan said the International Sustainability Standards Board or ISSB created by the International Accounting Standards Board will be pivotal in shaping the future of ESG reporting in Malaysia and globally.
“Malaysia has already begun taking steps to recognise this importance. The Securities Commission has established a national-level Advisory Committee on Sustainability Reporting to discuss it.
“This signifies that the country is moving in the right direction. The second point is that the Europeans are coming out with the European sustainability reporting standards.
“As such, whether we like it or not, if Malaysia wants to be part of the supply chain, it has to start reporting on these sorts of indicators,” he said.
Meanwhile, Thoughts In Gear Sdn Bhd chief executive officer Margie Ong said while there are small and medium enterprises (SMEs) that have incorporated sustainability due to their own passion or the nature of their company, the majority of SMEs do so due to pressure from their customers which consist of large public-listed companies (PLCs) and multinational companies (MNCs).
“These PLCs and MNCs have come in and told their suppliers that they need to conform to ESG and they need to carry out ESG reporting.
“Many MNCs around the world said they will switch suppliers to those that have a lower carbon footprint.
“The reason for this is because these suppliers’ carbon footprint is now factored into the large companies’ footprint as well as their Scope 3 emissions,” she said in a panel discussion.
Ong added there were SMEs that want to take advantage of preferential market terms in adopting ESG.
Not only are investors providing better terms, banks, financial institutions and insurance agencies are also providing preferential rates for more progressive ESG companies.
“SMEs can adopt sustainability through four ways; Know, Plan, Do, Tell. It does not get easier than that. ‘Know’ entails knowing what ESG is and upskilling the baseline.
“Plan entails strategising, determining your roadmap or action plan. ‘Do’ means to implement and track your data, and ‘Tell’ is to report and disclose what it is that you’re knowing and planning to do,” she said.
