How’s Your ESG Report Card?

How’s Your ESG Report Card?

by | Apr 19, 2022 | Social Impact Assessment, Sustainability Reporting

[Bursa Malaysia Sustainability Disclosure Listing Requirements]

More than just a fleeting buzzword, Sustainability has been catapulted as a business imperative for Public Listed Companies (“PLCs”) in Malaysia since May 2015 when Bursa Malaysia signed the voluntary commitment of the Sustainable Stock Exchange (“SSE”) to promote environmental, social and governance (“ESG”) performance in capital markets.

The SSE is a United Nations Partnership Programme jointly organised by four UN agencies namely (1) the United Nations Conference on Trade and Development (“UNCTAD”), (2) the United Nations Environmental Programme Finance Initiative (“UNEP FI”), (3) the Principles for Responsible Investment (“PRI”) and (4) the UN Global Compact. Launched in New York in 2009, the SSE initiative provides a peer-to-peer learning platform for stock exchanges to collaborate with investors, regulators and listed companies in advancing corporate transparency and performance relating to ESG matters as a means to encourage sustainable investment.

As an SSE Partner Exchange, the Bourse needed to introduce some changes to its Main Market Listing Requirements (“Main LR”) in October 2015. The amendments of the Main LR’s Practice Note 9 (Risk Management and Internal Control, Corporate Governance and Sustainability Statement) entail that all PLCs in Malaysia must include a Sustainability Statement with disclosures on the management of material economic, environmental and social (“EES”) risks and opportunities in their annual reports.  PLCs are encouraged to utilise the Exchange’s Sustainability Reporting Guide as a point of reference, particularly in identifying the material EES risks and opportunities (material matters). Moreover, the Sustainability Statement must contain balanced, comparable and meaningful information.

sustainability statement

Replacing the previous requirement of the Corporate Social Responsibility (“CSR”) statement, the Sustainability Statement must contain the following disclosures:

  • Governance Structure to manage the EES risks and opportunities
  • Scope of the Sustainability Statement and basis for the scope
  • Material Sustainability Matters with explanation on why the topics are material or important to the PLC’s business, how they were identified and managed, including details on
    • Policies to manage the material matters
    • Measures or actions taken
    • Relevant indicators demonstrating performance in managing the sustainability matters

PLCs are still required to continue reporting on their CSR activities or practices, or a statement signifying the absence of such activities. The predominant practice is to report the CSR initiatives under the Social component of the Sustainability Statement.

Updated as at 19 January 2022, Practice Note 9 allows PLCs the flexibility of preparing the Statement in accordance with the Global Reporting Initiative (“GRI”) Sustainability Reporting Guidelines, in which case they do not need to comply with the Main LR’s disclosure requirements.

Operating as the ESG performance report card, a data-driven and science-based Sustainability Statement can prove daunting and time consuming to produce. Unless the PLC has a dedicated Sustainability or ESG team, it would make more sense to outsource this gargantuan task to a competent consulting firm to ensure that the report is compliant with Bursa Malaysia’s requirements. Taking this option enables PLCs to focus on their core business while delivering on their ESG commitments leading to the achievement of the global sustainability agenda.

Embarking On a Sustainability Journey? Here’s Step One

Embarking On a Sustainability Journey? Here’s Step One

by | Apr 6, 2022 | Sustainability Reporting

There are multiple benefits to the development of a comprehensive sustainability roadmap in executing your organisation’s sustainability strategy. The roadmap provides a clear pathway to achieve each individual sustainability target, a particularly useful tool when the execution of the sustainability goals will be the responsibility of a team, such as when sustainability goals fall under the purview of multiple departments. Secondly, assigning a time-specific target to your goals will improve accountability and can help prevent deadlines from being missed by leaving the work to the last minute.

Once you have decided to create a sustainability roadmap, where should you begin? Below is a process you can follow to get started with your roadmap – the first step for your company’s journey to becoming more sustainable.

EMBARKING ON A SUSTAINABILITY JOURNEY

Step 1: Identify the gaps. This step is critical in establishing the base for your roadmap. Once you have identified the gaps in your sustainability performance, or the key areas you want to focus on, you will have narrowed down the spectrum of potential sustainability goals and targets into a manageable foundation for your roadmap.

Step 2: Determine your timeframe. By when do you want to achieve your results? Three-year roadmaps or five-year roadmaps are best. Any longer than that and the potential for organisational changes makes the roadmap less valuable.

Step 3: Start small. Start by identifying the “low hanging fruit” from your gap analysis. These are the targets you can focus on for “year 1” of the roadmap. This will give you some immediate achievements to boost morale and demonstrate your commitment to sustainability to your stakeholders. This will also help you establish momentum and get your team used to referring to the roadmap for tracking your goals and progress.

Step 4: Work backwards. After identifying the “easy wins”, shift your focus to the biggest challenges identified in the gap analysis. These goals can be set for achievement at the end of your roadmap (3 or 5 years). Then work backwards to determine the smaller steps required each year to enable you to complete the larger task within the required timeframe. This will break the target up into more achievable pieces, and keep you focused on your largest sustainability tasks, so that they do not fall to the wayside.

Step 5: Get approval. It is essential for your roadmap to have support and buy-in from the rest of the team. This can include obtaining official endorsement from the management team or Board of Directors. You should also “pitch” the roadmap to all relevant employees in the organisation. To truly embed a culture of sustainability within your company, you will need the support and enthusiasm of the whole team.

Step 6: Implement your roadmap. Now that you have identified your targets and broken down the necessary tasks onto a timeline, you can begin your journey! To ensure your annual targets do not become afterthoughts to be achieved at the eleventh hour , you should establish a schedule for monthly or quarterly meetings so that all team members involved in the roadmap can update their progress, flag any challenges, and keep sustainability on everyone’s mind throughout the year, not just during reporting season.