Companies that ignore ESG will be deprived of equity and debt financing

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KUALA LUMPUR: Companies that choose to ignore sustainability/environmental, social and governance (ESG) considerations in their operations will not be sustainable as they will be deprived of equity and debt financing to fund their projects.

According to Bursa Malaysia President Tan Sri Abdul Wahid Omar, these companies will have to pay a higher insurance premium to cover some of their risks and will struggle to recruit talent to drive their business.

“They will not be able to sell their products or become part of the global supply chain as customers become more demanding in buying only sustainable products in the future,” he said in his statement. welcome speech at the ESG Business Summit, on the topic “Driving Sustainability and Sustainable Transformation” today.

The summit was jointly organized by the Economic Club of Kuala Lumpur (ECKL) and the KSI Strategic Institute for Asia Pacific.

Abdul Wahid, who is also Chairman of ECKL’s Advisory Board, noted that as a strong supporter of sustainability, Bursa Malaysia strives to provide an environment that encourages sustainable practices among its market players.

“We do this through ongoing advice, advocacy and engagement within the market, alongside our role as a frontline regulator and market operator,” he said.

He added that Bursa Malaysia has also started collaborating with the Ministry of Environment and Water and the Ministry of Finance to create a voluntary carbon market.

“This is an important nation-building project that will help Malaysia achieve its climate ambitions, while creating a transparent, rules-based ecosystem that meets the needs of the intended market players,” he said. he declared.

Abdul Wahid also pointed out that ESG and sustainability issues are not new to Malaysian companies.

In 2014, Bursa Malaysia introduced the FTSE4Good Bursa Malaysia Index to recognize publicly listed companies (PLCs) that have taken steps to improve their ESG practices and disclosures.

Since then, the number of voters has more than tripled, from 24 in 2014 to 80 following the last review in December 2021.

On July 5, 2021, Bursa Malaysia launched the FTSE4Good Bursa Malaysia Shariah Index, comprising 54 Shariah-compliant constituents of the FTSE4Good Bursa Malaysia Index, according to the selection methodology of the Shariah Advisory Board of the Securities Commission.

“Besides introducing ESG-related indices, Bursa Malaysia has also played a pioneering role in requiring PLCs to adopt good ESG practices and disclosures.

“For example, since the inception of the sustainability reporting framework in 2015, all Malaysian PLCs now publish sustainability statements and reports annually, detailing the governance structure in place as well as the management approach to sustainability. their material sustainability issues, which cover a wide range of economic, environmental and social themes,” he said.

Abdul Wahid said the ongoing climate crisis is a massive wake-up call and is heartened to note that Malaysia is committed to becoming a net-zero greenhouse gas (GHG) emissions nation by 2050.

“Similarly, continued investment in public transit and tax incentives to promote electric vehicles (as announced in Budget 2022) bode well for a net zero goal,” he said.

He noted that Malaysia’s commitment to becoming a net-zero GHG nation was announced by Prime Minister Datuk Seri Ismail Sabri Yaakob during the tabling of Malaysia’s 12th plan on September 27 last year.

“This means that we are now part of the global community of countries that contribute 90% of global gross domestic product and have committed to net zero emissions by mid-century (2050 or 2060),” he said. -he adds. – Bernama

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