PETALING JAYA: Companies, especially the micro, small and medium enterprises (MSMEs), should be assisted to adopt business practices based on environmental, social and governance (ESG) principles to improve Malaysia’s rank in the US State Department’s annual Trafficking in Persons (TIP) Report, says a leading business group.
SME Association of Malaysia president Ding Hong Sing said the improved rank this year helped restore Malaysia’s image in the global trade environment.
“ESG issues have been frequently talked about because they pose serious business risks.
“Companies, especially those that import and export, could face concerns from investors and buyers on whether they maintain proper practices, especially concerning human rights and dignity.
“That’s why a better ranking could impact businesses positively as it would instil investor confidence,” he said yesterday.
As ESG principles are gaining traction among business operators worldwide, Ding said it was relevant to educate our MSMEs on what ESG was and its importance.
“We are moving into Industry Revolution 4.0 and yet many SMEs, especially micro SMEs, are still clueless about sustainability and ethical practices in business.
“We need to look into how to educate them, as ESG practices provide a way to measure risks and opportunities, which can help improve our future rating,” he said.
Lauding the improved rank, Ding urged the government to do more so that Malaysia’s ranking can improved in the near future.
Relating his own experience, Malaysian Consortium of Mid-Tier Companies president Callum Chen said an improved ranking would boost businesses significantly.
Recalling a 2021 incident when Malaysia was in Tier 3, he said auditors sent to his factory became extremely meticulous.
“They had to note even the slightest error,” he said, adding that his company was eventually banned from producing products for two leading brands in the US for two years following a staff error in the number of foreign workers in the company.
“Had we been in Tier 1 or Tier 2 like we used to, the error could have been rectified without going into the report.
“We learned to be extra careful since then. And business is coming back again,” he said.
On inculcating the ESG culture within organisations, Chen said bosses should communicate better with workers.
He said while ESG encompassed a wide range of practices under the three main pillars, they were all about keeping the business sustainable, ethical and efficient,” he said.
