Mapping the sustainability landscape
The ways of doing business has evolved with time. Long gone are the days of operating a business purely for the want of generating profits; these days, it is crucial to consider of the impact our businesses have on our enviroment, society and economy as a whole.
In the midst of doing business, sustainability isn’t normally at the forefront of the minds of company leaders. It was thus a game-changing move back in 2015 when Bursa Malaysia released a 76-page Sustainability Reporting Guide, outlining ways for Corporate Malaysia to get on the sustainability bandwagon.
This came as there has been an increased focus on the way businesses are run globally, with greater attention given to how businesses impact the economy, environment and society.
“A holistic approach to business management, taking into consideration the economic, environmental and social (EES) risks and opportunities alongside financial implications, is being seen as a measure to generate long term benefits and business continuity,” Bursa said in the report.
“In light of this shift in focus, Mathis Mathis Sustainability Reporting Guide seeks to provide guidance on how to embed sustainability in your organisation and help you identify, evaluate and manage your material EES risks and opportunities.
“This will then aid you in your preparation of the Sustainability Statement in accordance with the Listing Requirements of Bursa laysia.”
This guide highlights the business case for sustainability, providing case studies to illustrate how sustainability may add value to organisations.
The guide is intended for all issuers listed on Bursa Malaysia’s Main and ACE Markets. Listed issuers are strongly encouraged to refer to this Guide in the implementation of sustainability practices, as well as reporting.
Bursa Malaysia developed this guide in recognising the fact that organisations may be at varying levels in understanding, and in their disclosures of sustainability information.
“We recognise that moving to best practice sustainability performance and disclosure is a journey and that preparing the Sustainability Statement can be challenging especially for early reporters or smaller listed issuers.
“Therefore, you are encouraged to apply this guide bearing in mind your own circumstances and in the context of your business operations.
“You may also choose to move beyond this guide and adopt a reporting approach in accordance with international sustainability reporting frameworks or guidelines such as the GRI Sustainability Reporting Guidelines.” Reassuring investors, building reputations
On a public- listed platform, sustainability reporting is a vital element in boosting investor confidence as it gives a stamp of approval of the organisation’s impact towards environtment, society and economy.
The focus on environment, society and governance (ESG) reporting heightened when Bursa launched a the FTSE4Good Bursa Malaysia (F4GBM) Index in December 2014. The index contains companies with strong ESG practices.
Bursa chief executive officer Datuk Tajuddin Atan said that the introduction of the F4GBM index would allow investors to look at value from a new perspective – one that took into consideration non-financial aspects such as a company’s environmental and societal initiatives.
“Investors, shareholders and clients are expecting greater responsibility and transparency from companies and their investments and the F4GBM will be the reference point and benchmark that companies can aspire to in efforts to step up the standards in stakeholder value creation,” he said during its launch,
As of its latest review back in June 2017, a total of 43 constituents make up the index.
Another key move made last month by the Securities Commission Malaysia is the release of Guidelines on Sustainable and Responsible Investment ( SRI) Funds to facilitate and encourage greater growth of SRI funds in Malaysia.
The new guidelines – which enable funds to be designated as SRI funds – will widen the range of SRI products in the market and attract more investors in the SRI segment.
“Capital markets play a critical role in facilitating fund raising and investments for sustainable initiatives.
“The introduction of the SRI Funds Guidelines is another significant step towards further development of the SRI ecosystem in the Malaysian capital market, reinforcing our positioning in the regional SRI segment and global leadership in Islamic finance,” said Tan Sri Ranjit Ajit Singh, SC chairman.
“Developing the SRI was identified as a key area of growth for the Malaysian capital market under the Capital Market Masterplan, and in 2014 the SC introduced the SRI Sukuk framework, now widely acknowledged as a pioneering regulatory development that integrates the principles of Shariah with those of SRI,” Ranjit added.
To note, in July 2017, the world’s first green sukuk was issued in Malaysia under the SRI Sukuk framework.
With Islamic funds being recognised as part of the SRI universe, Malaysia is currently the largest SRI funds market in Asia (excluding Japan). It has 30 per cent share of the region’s US$52 billion fund assets. Malaysia is also the second largest Islamic funds market globally (by domicile) at 29 per cent of the US$56 billion global total asset under management (AUM).
The SRI Funds Guidelines will apply to fund products within the SC’s oversight, such as unit trust funds, real estate investment trust funds, exchange- traded funds, and venture capital and private equity funds.
These guidelines will also introduce additional disclosure and reporting requirements that aim to encourage greater transparency in investment policies and strategies of SRI funds.
“Bursa Malaysia believes that there is a strong value proposition for companies to adopt, practice and report on sustainability in a meaningful manner. By placing sustainability at the core of the market, Bursa Malaysia sets to enable a win-win situation for key players across the value chain, especially for our listed issuers and investors.” Datuk Seri Tajuddin Atan, Bursa Malaysia chief executive officer