6th June 2023
To my fellow Chairpersons,
As the Chair of our respective public listed company (“PLC”) Boards, we bear significant responsibility for leading and making decisions that steer the organisation towards fulfilling its purpose and achieving its goals and objectives. We are held to high standards in the integration of sustainability into company strategies and operations, way beyond just upholding the spirit of good corporate governance. This entails, among others, facilitating open and constructive discussions in the boardroom to ensure sustainable business practices as well as performance.
Today's business environment can be overwhelming with its sheer complexity and the need to consider a multitude of factors impacting overall success of the business. In tandem, as expectations on sustainability practices continue to advance and heighten, companies are facing increased pressure to ensure their sustainability-related commitments are of substance and not merely a form of greenwashing. At the same time, PLC stakeholders are also demanding for better ESG disclosures - more consistent and comparable ESG disclosures, particularly on related data, to make better-informed decisions. These pressures are compounded by the impending implementation of the European Union's Carbon Border Adjustment Mechanism (“CBAM”), set to begin its transitional phase on 1st October 2023.
The Importance of Sustainability: Beyond Compliance and Towards Effective Change
One of the things I believe is truly important is for corporate leaders to understand why sustainability, particularly environmental sustainability, is essential. Oftentimes, sustainability is viewed as a burdensome compliance exercise that must be checked off a list rather than as an opportunity to drive meaningful progress and impact. There is now more widespread recognition that growth strategy anchored on the principles of sustainability can help businesses anticipate emerging trends, better manage risks as well as meet evolving stakeholder expectations. We must always bear in mind that ultimately, without a healthy planet, there would be no market to begin with. Not only would the prosperity of businesses be profoundly impacted, the very survival of humankind would be put at risk.
As more countries and companies around the world make ambitious commitments to address the causes as well as impacts of climate change, it is important to first understand the wider purpose behind these that underpin such pledges. Within the Malaysian context, we have pledged to become a Net Zero greenhouse gas (“GHG”) emissions country by as early as 2050. Achieving this goal requires us to take a closer look at our current situation and understand the sources of our emissions. Only then can we take targeted and effective action to reduce our GHG emissions and work towards a more sustainable future.
Undoubtedly, there is still much work to be done with regards to the nation and our respective companies decarbonisation journey. In this regard, Bursa Malaysia has taken a significant step in encouraging and compelling our PLCs to be primed to meet and address the heightened expectations of key stakeholders including customers and investors, through the roll out of our enhanced sustainability reporting requirements, unveiled in September 2022. These enhanced requirements are designed to ensure the continued relevance of sustainability reporting to meet the evolving informational needs of PLC stakeholders and to propel our PLCs to adopt international best practices. We aim to not only elevate PLCs’ sustainability practices and disclosures, but to also facilitate the demonstration of greater transparency and accountability for their ESG performance along multiple dimensions. To ensure a successful rollout, the implementation will be phased, as we recognise that our PLCs would need sufficient time to adopt some of the required disclosures (and, by extension, the related underlying practices) that are on par with international best practices, including making TCFD-aligned disclosures.
Supporting PLCs on their Sustainability Journey
Following on from the above, we are committed to supporting PLCs at different stages of their sustainability journey – whether they only have the current capacity to ensure compliance – i.e. those who are grappling with adherence to our set of enhanced requirements – or those that are more advanced in their sustainability journey where their focus is now on adoption of various reputable international sustainability reporting – as well as practice-based frameworks, standards and best practices. I strongly invite all Chairpersons to wholeheartedly embrace sustainability and effect transformation within your organisations. To aid PLCs on this journey, Bursa Malaysia offers a wealth of supporting resources, such as our comprehensive Sustainability Reporting Guide and Toolkits (3rd Edition), and the PLC Transformation Programme Guidebook 2, entitled ‘Being Sustainable, Socially Responsible & Ethical PLCs’, which can be used together to infuse sustainability into your organisation’s operations.
It has been almost 15 months since we launched the PLC Transformation Programme. I am pleased to share that over 160 PLCs have formally joined the programme, availing invitations to knowledge sharing sessions on various topics. If you have not already done so, I highly recommend that you immediately nominate one of your management team members to understand more about the programme or register via this link. The PLCT Programme is non-prescriptive and participating companies decide on areas for enhancement. Most importantly, it signals to investors your intent to improve corporate performance across various dimensions.
The Centralised Sustainability Intelligence (“CSI”) Platform
More recently, Bursa Malaysia has been collaborating with the London Stock Exchange Group (“LSEG”) to develop a Centralised Sustainability Intelligence (“CSI”) Platform designed as centralised repository for companies to disclose their sustainability practices and manage their GHG emissions, including those from their supply chains. As announced by the Honourable Prime Minister in March 2023, the platform aims to serve as the single-source-of-truth for stakeholders in the ecosystem to facilitate decarbonisation through access to banks’ green financing products and services, encouraging effective management of emissions, while promoting the adoption of sustainability across the supply chain. To drive early adoption, we have signed Memorandum of Collaboration (“MOC”) with leaders from three industry verticals with higher ESG considerations- namely PETRONAS, UMW, Mah Sing, as well as financial institutions such as Maybank, CIMB, and Alliance Bank, to conduct proof-of-concepts to extract tangible business value via the CSI platform. Stay tuned for more information on how you can avail yourself of this tool once the Early Adoption Programme comes to a close in the 4th quarter of 2023.
The Imperative of Embracing Sustainability
I wish to emphasise that choosing to ignore sustainability can have real consequence for businesses, as some have learnt the hard way. It is a journey that many companies are still grappling with, and as responsible leaders, it is our duty to guide the companies we work with towards embracing meaningful sustainability practices. We must approach this journey with a constructive spirit, recognising that progress is necessary, and inaction will be costly. I thank you in advance for your attention and dedication in raising the bar in your organisation. Together, we can improve our business relevance, Malaysia’s competitiveness, and create a more sustainable future.
Yours sincerely,
Tan Sri Abdul Wahid Omar
Chairman
Bursa Malaysia Berhad