KUALA LUMPUR: The Securities Commission Malaysia (SC) and the World Bank's joint environment, social and governance (ESG) disclosure assessment report found that while most listed companies showed good corporate governance and social practices, they fell short in specific environmental areas, particularly climate change and biodiversity.
The report based on an in-depth assessment, conducted between August and December 2023, examined ESG disclosure practices of a representative sample of 90 companies listed on Bursa Malaysia, as well as processes among some of Malaysia's largest asset owners.
Other findings included that larger companies had significantly better ESG disclosure rates than smaller ones; and that regulatory compliance was the primary driver of corporate ESG reporting in Malaysia.
On ESG disclosure practices among four large Malaysian asset owners, the assessment indicated relatively low levels of ESG disclosure. They qualified however that interviews suggested greater efforts to strengthen ESG practices and processes other than currently publicly disclosed.
The joint report by the SC and World bank entitled, "ESG Disclosure Assessment of Malaysia's Listed Companies and Recommendations for Policy Development", offers key insights for companies and investors to enhance sustainability reporting to align with international best practices and remain competitive.
SC executive director of Islamic capital market (ICM) Sharifatul Hanizah Said Ali in a statement emphasised the importance of strengthening ESG disclosures amid growing global demand for sustainable investments.
"This joint report reflects our ongoing commitment to fostering a more sustainable capital market."
"Improved ESG disclosure practices are expected to strengthen investor confidence and ensure that our market remains competitive and future ready," she said in her speech at the SC-World Bank Conference 2024 here today.
Recognising the importance of building a compassionate economy, Sharifatul Hanizah said that larger corporations play a key role in leading ESG practices by adopting and reporting under standards such as International Financial Reporting Standards (IFRS) S1 and S2.
IFRS S1 and S2 outline the requirements to disclose information about climate- and sustainability-related risks and opportunities.
"Collaboration between large and small enterprises will also be crucial to ensure ESG adoption goes beyond regulatory compliance and becomes a shared value across the ecosystem and the value chain," she added.
The report concludes with a set of recommendations, including continuous monitoring along with consultations, to ensure effective implementation of the ESG disclosures in line with the recently launched National Sustainability Reporting Framework (NSRF).