FTSE4GOOD Bursa Malaysia (F4GBM) could become more prominent over time with increasing focus and scrutiny by asset managers on environmental, social, and governance (ESG) practices of investee companies. CGS-CIMB Research analyst Ivy Ng Lee Fang noted only 22 out of the 30 FTSE Bursa Malaysia KLCI (FBM KLCI) component stocks are in the F4GBM Index as the rest have low ESG scores or controversies. “Companies that fare well in their ESG ratings could fetch premium valuations versus peers over time. Our top three picks are members of the F4GBM Index. We believe the increased public disclosure of companies’ ESG rankings among their peers since June 2020 has allowed investors to track ESG scores of companies and to follow the index more closely,” Ng noted. As at June 30, 2021, Malaysia’s weightage in the FTSE4Good Emerging Market (F4GEM) Index was 2.72%, which is higher than its index weight of 1.71% in the FTSE Emerging Market (FEM) Index. This suggests Malaysian companies fared better in their ESG scores relative to some of its peers in the FEM Index, she added.

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