Malaysian Global Compact network seeks to position country as ESG investment hub by 2025

Body aims to bring local private sector in line with global ESG practice

By: Khalid Azizuddin, Responsible Investor

A newly-minted initiative in Malaysia has set out a five-year programme to transform sustainability practices among corporates in the country, with the aim of attracting global and local ESG investment.

The Global Compact Network Malaysia Centre of Excellence (COE) – jointly established by the UN Global Compact and Capital Markets Malaysia (CMM), an agency of the Malaysian securities regulator – will take a three-prong approach to improve corporate sustainability performance and awareness among Malaysian companies:
It will conduct C-suite coaching sessions on communicating with investors on topics like supply chains, climate risk and carbon footprinting. It will also run workshops for corporate sustainability practitioners, looking at non-financial disclosure frameworks and mechanisms such as the CDP, the TCFD recommendations and science-based targets. However, the initiative notes that it is keen to push stakeholders beyond disclosure, to incorporating ESG into investment decisions and fundraising.

Finally, the COE will organise regional ESG-themed forums and conferences to connect institutional investors with local corporates.

“The aim of the COE is to ‘culturalise’ sustainability within the Malaysian private sector and to move away from a top down regulatory-driven approach. Decision-makers themselves must take into account ESG performance strategically when growing their businesses rather than viewing sustainability as CSR or philanthropy.” Faroze Nadar,
Executive Director – Global Compact Network Malaysia.

The first two years of the initiative’s five-year timeline will be devoted to capacity building and education but, by the third year, it plans to have prompted Malaysian corporates to begin leveraging ESG investment to make their operations more sustainable.

Workshops for CEOs, CFOs and sustainability practitioners will begin this year, and there will be trips to Europe – Italy, tentatively – to encourage Malaysian corporates to engage with existing best practice globally.

Faroze Nadar, Executive Director of the Global Compact Network Malaysia, said: “One of the issues for Malaysian corporates is a lack of proactive engagement with investors over ESG topics. Usually this function is outsourced to a big four accountancy firm or to external consultants which has led to something of a knowledge gap or a lack of capacity
to champion this internally at this point in time.

“The aim of the COE is to ‘culturalise’ sustainability within the Malaysian private sector and to move away from a top down regulatory-driven approach. Decision-makers themselves must take into account ESG performance strategically when growing their businesses rather than viewing sustainability as CSR or philanthropy.”

The COE secretariat currently has six staffers and receives seed funding and strategic support from CMM.

The timeline for the COE syncs up with a five-year roadmap SRI Roadmap launched at the end of 2019 by the SC which sets out 20 strategic recommendations to catalyse the Malaysian sustainable finance sector.

 

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