Bursa Malaysia is working towards establishing an environmental, social and governance (ESG) index to influence public-listed companies to adopt sustainability practices in their business operations.
The proposed ESG index is also expected to attract socially responsible investment (SRI) funds into the country.
Prime Minister Datuk Seri Najib Tun Razak said socially responsible investments looked at ESG factors, alongside traditional financial indicators, in identifying good investment opportunities.
“These factors increasingly guide investment decisions in developed markets and include issues such as climate change and community involvement as well as core business principles such as risk management and good governance,” he said in his keynote address at the launch of Bursa Malaysia’s business sustainability guide and portal here yesterday.
Najib said studies had shown that there was a positive correlation between companies’ sustainability practices and their share price performance.
He said many indices had emerged, such as the Dow Jones Sustainability Index and FTSE4Good, as well as the Fortune Most Admired Companies list.
Najib commended Bursa Malaysia’s initiative to raise the profile of sustainability practices in Malaysia.
“I hope that all Malaysian companies will make sustainability practices an integral part of their business functions.”
He said sustainability considerations must also be reflected in the Government’s broader policymaking agenda.
He cited the Government’s effort to establish the Talent Corporation to identify, recruit and retrain an expert workforce soon and its pledge to reduce Malaysia’s carbon dioxide emissions to 40% by 2020 as examples.
