KUALA LUMPUR: The country's top 30 companies that form the flagship FTSE Bursa Malaysia KLCI (FBMKLCI) index are lacking depth and detail in environmental, social and governance (ESG) reporting.
In disclosing this, Global ESG Monitor (GEM) said Malaysian companies used internationally recognised frameworks, standards, and strategic tools in their ESG reporting but lacked the appropriate content and level of detail needed for optimal transparency.
Thus, they ranked in the midfield among global and regional peers, GEM said.
GEM co-founder Michael Diegelmann said FBM KLCI inclusion in GEM 2022 reflected the country's commitment to transparency and sustainable business practices.
Diegelmann said with an average score of 54 out of 100 points, the Malaysian index ranks joint fifth place alongside the Dow Jones among the 10 indices surveyed.
"This positions the FBM KLCI ahead of the S&P 50 USA (53 points), ASX 50 (53 points), WIG 20 (51 points), and BET 20 (41 points). Above FBM KLCI rank S&P Asia (56 points), Hang Seng (57 points), EUROSTOXX (66 points) and DAX (68 points).
"The FBM KLCI's ranking showcases progress in sustainability, but also highlights the need for deeper, more detailed ESG reporting in Malaysia," he said.
The GEM 2022 analysed the transparency of non-financial ESG data of 625 ESG reports from 350 companies listed on 10 of the world's largest stock market indices on four continents.
The ranking is based on the degree of transparency in reporting on ESG strategy, materiality, and disclosure of indicators and not their overall performance on such metrics.
The GEM Malaysia Regional Report 2022 marks the first time Malaysia was included in the benchmarking report, assessing the 30 companies listed on the FBM KLCI.
The report's findings were revealed today at a thought leadership event, 'Sustainability Perspectives', hosted by Perspective Strategies, the Malaysian regional partner of the Global ESG Monitor.
GEM's co-founder and head of research Ariane Hofstetter said while Malaysian companies excellef in adhering to international frameworks, it wad crucial they provide more comprehensive information on ESG aspects to truly embrace sustainability.
Hofstetter said the transparency of ESG reporting was critical to inform and engage stakeholders.
"After all, sustainability reporting has been mandatory for all Malaysian public-listed companies since 2016.
"While there are still many hurdles for Malaysian companies to overcome when it comes to transparency, overall, this is good news for investors and other stakeholders as we are moving towards the right direction," she added.
