As nations around the globe make long term climate commitments, and with Malaysia aspiring to have net-zero GHG emissions by as early as 2050, Bursa Malaysia is nudging our market participants via a multi-faceted approach that goes beyond compliance. Towards this, our ESG ‘blitz’ is not just about disclosure checklists and stakeholder engagements, but a comprehensive multi-pronged range that includes building a vibrant and inclusive ESG ecosystem where sustainable practices permeate every facet of business.
There isn’t a single silver bullet to tackle the many things to be done within our markets. Here are some of the efforts Bursa Malaysia undertook in 2023:
Enhancing regulatory frameworks
We have been bold in the mandates to listed issuers. The Enhanced Sustainability Reporting Framework will elevate the sustainability practices and disclosures of Malaysian listed companies, while encouraging them to adopt international best practices, ensuring transparency and accountability.
These enhanced requirements include a common set of prescribed sustainability matters and indicators that are deemed material for all listed issuers (“common sustainability matters”); climate change-related disclosures that are aligned with TCFD Recommendations (“TCFD-aligned disclosures”); at least three financial years’ data for each reported indicator, corresponding targets (if any) as well as a summary of such data and corresponding performance target(s) in a prescribed format (“enhanced quantitative information”); and a statement on whether the Sustainability Statement has been reviewed internally by internal auditors or independently assured.
In tandem, to support listed companies, the Exchange issued the updated Sustainability Reporting Guide and Toolkits which provide practical guidance to listed issuers on how to embed sustainability in their organisations. This includes the Illustrative Sustainability Report (“ISR”), a visual representation of the enhanced sustainability disclosure criteria with concise presentations, ensuring clarity and greater comprehension for stakeholders.
Harnessing Digitalisation for Sustainability
Importantly, we are cultivating a more robust ESG ecosystem among Malaysian businesses - through the Centralised Sustainability Intelligence (CSI) Platform being developed with the London Stock Exchange Group, which, among other objectives or features, will enable companies to calculate and track their carbon emissions impact, while subsequently facilitating green financing and decarbonisation efforts.
The CSI Platform is envisioned to be a scalable and affordable utility, for the entire ecosystem spanning public listed companies, small-to-medium enterprises (SMEs) in their supply chain, financial institutions, as well as regulators and policy makers.
Uniting for Collective Impact
In Malaysia, as part of the broader vision with the CSI Platform, we have entered into a collaboration with the Joint Committee on Climate Change (JC3) Greening Value Chain Programme, driving supply-chain sustainability to cover unlisted companies and SMEs.
Regionally, a collaboration between ASEAN Exchanges starting with Bursa Malaysia, Indonesia Stock Exchange and the Stock Exchange of Thailand, will build a cohesive regional ESG ecosystem, supporting micro, small and medium enterprises (MSMEs) and unlocking value across borders. We would be pleased to discuss further with other interested exchanges on how a common ESG platform can be leveraged, for scale.
A Carbon Trading Platform for a Greener Future
The Bursa Carbon Exchange (BCX) is another game-changer. This world-first Shariah-compliant voluntary carbon market (VCM) allows companies to offset their emissions and trade carbon credits, accelerating Malaysia's transition to a low-carbon economy.
Apart from providing a carbon trading market, Bursa Malaysia recognises that a thriving carbon ecosystem is critical to support the carbon exchange. In collaboration with the Malaysian government, industry agencies and stakeholders, we released a VCM Handbook as a guide and reference, defining roles and functions for entities keen on participating in carbon market project development and Malaysia’s VCM.
Beyond Borders, Building a Regional Ecosystem
Cognisant that sustainability knows no borders, we also actively pursue strategic collaborations with regional and global partners, such as the recent MoU signed with Gold Standard as well as the 4-way collaboration Bursa Malaysia signed with Sarawak Energy, I-REC Standard Foundation, and Hydropower Sustainability Alliance. Both collaborations were inked or formalised on the side-lines of COP28 in Dubai. We are hopeful that these partnerships will help us expand to the breadth of high-quality environmental solutions on our Bursa Carbon Exchange, for local and international participants.
Empowering and Equipping Boards, Companies and Investors
We recognise that achieving a sustainable future requires a two-pronged approach: empowering informed investors and equipping board members and companies with the necessary skills.
For Boards, we run training series such as the ”Mandatory Accreditation Programme: Leading for Impact” to equip directors with the skills to effectively integrate sustainability considerations into their decision-making processes, ensuring long-term value creation for stakeholders.
In addition, Bursa Malaysia regularly engages with directors through workshops, and roundtables, to foster a culture of sustainable leadership within listed companies. Most recently, we Rang the Bell for Climate Action at a jointly organised session with Climate Governance Malaysia on ‘Mastering Climate Action as a Chairperson: Managing Scope 3 emissions.’ This was attended by over 70 Chairmans and Directors of listed companies.
In improving the performance of PLCs, the PLC Transformation Programme which covers 5 key areas to improve the performance of listed companies, Book 2 specifically targets ESG through ‘Sustainable, Socially Responsible and Ethical PLCs’.
We also have ESG-themed indices like the FTSE Bursa Malaysia Top 100 ESG Low Carbon Select Index (FBM100LC) and the FTSE Bursa Malaysia Top 100 ESG Low Carbon Select Shariah Index (FBM100LS) to make it easy for investors to identify companies leading in low-carbon practices, allowing them to make informed investment decisions aligned with their values.
Our market’s ESG journey is not just about numbers and regulations; it is about a paradigm shift. It is about shaping a sustainable future where ESG data, environmental solutions, and long-term value creation, go hand-in-hand.
The views, thoughts and opinions contained in this Focus article belong solely to the author and do not necessarily reflect the WFE’s policy position on the issue, or the WFE’s views or opinions.