PwC Malaysia executive chair Nurul A'in Abdul Latif
KUALA LUMPUR: Directors recognise the potential of board diversity, generative artificial intelligence (GenAI) and environmental, social and governance (ESG) but face obstacles in translating this into effective action, according to a survey by PwC Malaysia.
PwC Malaysia’s inaugural Corporate Directors Survey found that most directors are confident in fulfilling routine governance duties, with 96 per cent successfully establishing corporate governance structures and controls and 90 per cent effectively navigating policy and regulatory changes.
"However, concerns remain about agility in navigating critical emerging issues,” PwC Malaysia said in a statement today.
It said, for instance, while 75 per cent of respondents acknowledge the importance of GenAI and cybersecurity, only 4.0 per cent have developed sufficient skills to effectively oversee their company’s strategies in these areas.
PwC Malaysia said this underscored a critical skills gap that must be addressed for boards to evolve more swiftly and ensure ongoing business sustainability.
"Meanwhile, all respondents reported discussing at least one sustainability topic in board meetings over the past year, yet fewer than one-fifth fully understand how their company’s climate commitments impact capital allocation decisions.
"Additionally, only 25 per cent believe that board diversity leads to better board or company performance, even though 53 per cent of surveyed directors agree that diversity brings valuable perspectives to the boardroom,” it said.
PwC Malaysia executive chair Nurul A’in Abdul Latif said the finding reveals that it is crucial to move beyond mere checklists and positioning board diversity as central to the strategic agenda is essential.
"For example, our findings show that 44 per cent of directors seek a stronger connection between diversity initiatives and business results.
"With this report, we aspire to spark essential dialogue on the behaviours and standards that leaders should embody at the apex of organisational leadership,” she said.
Nurul A’in said that in this new era, a diverse board composition brings to the table diverse perspectives and better equipping boards to adeptly navigate emerging challenges and build trust across an organisation.
Meanwhile, PwC Malaysia said the survey outcome also suggests that some company boards continue to view sustainability through a narrower lens of regulatory compliance.
"This is driven by the lack of visibility and control over their company’s net zero plans and the accuracy of its sustainability report.
"In addition, there is also a noticeable lack of confidence in the board’s capabilities, particularly in overseeing GenAI and cyber security risks,” it said.
The survey also found that about 75 per cent of respondents recognise the need to invest in GenAI and have also invested in cyber security in the past 12 months.
"However, while the intent to invest in technology is evident, directors are not confident in their board and management’s ability to oversee and execute these initiatives,” it added.
During the launch of the survey today, Securities Commission Malaysia chairman Datuk Mohammad Faiz Azmi noted that diversity is an area where progress is essential.
He noted that while women make up 26.6 per cent of board members in listed companies, their representation in leadership roles remains limited, with only 66 out of 892 publicly listed companies having female chairpersons.
"Therefore, we welcome collaborations between stakeholders such as the Minority Shareholders Watch Group and The 30% Club Malaysia, particularly in amplifying advocacy efforts on gender diversity,” he said.
In addition, he said board renewal is equally important, with only 64 per cent or 307 independent directors being new appointees in 2024, a drop from 67 per cent in 2023.
"Without continuous renewal, boards risk losing fresh perspectives and the skills needed to address future challenges,” he added. - Bernama
