Environmental, Social, and Governance (ESG) certification is a formal validation that an organization meets specific standards in managing its environmental impact, social responsibilities, and governance practices. This certification demonstrates a company’s commitment to sustainability and responsible business practices. It helps organizations build trust with stakeholders, attract investors, and maintain competitive advantages.
In the Malaysian context, ESG certification represents a growing priority, particularly as the country aligns with global sustainability standards. Bursa Malaysia, the national stock exchange, has implemented sustainability reporting requirements for listed companies since 2016. This certification is important for Malaysian businesses seeking to attract foreign investment and participate in global supply chains. Local companies are increasingly recognizing that ESG certification is not just an environmental initiative but a fundamental business requirement that affects their competitiveness in both domestic and international markets.
ESG Certifications
How Can Malaysian Organizations Obtain ESG Certification?
Malaysian organizations can obtain ESG certification through several channels including SIRIM and global certification bodies that operate in Malaysia. The most direct route is through SIRIM, Malaysia’s leading certification, inspection, and testing body. SIRIM offers various sustainability-related certifications and works closely with international standards organizations.
Companies can engage with global certification bodies that operate in Malaysia, such as Bureau Veritas, SGS, and TÜV SÜD. For locally listed companies, Bursa Malaysia provides comprehensive guidelines and frameworks for ESG reporting and compliance. The Securities Commission Malaysia also offers guidance and requirements for sustainable and responsible investment practices.
What Are The Main Benefits Of ESG Certification For Malaysian Businesses?
Malaysian businesses with ESG certification gain significant advantages in the local and regional markets. They become more attractive to international investors, particularly as Malaysia positions itself as an Islamic finance hub where ESG principles align well with Shariah-compliant investing. Certified companies often receive preferential treatment in government tenders and may qualify for green tax incentives under Malaysia’s various sustainability initiatives.
Local banks, including Maybank and CIMB, are increasingly offering better financing terms to ESG-certified companies. Furthermore, certification helps Malaysian companies meet the stringent requirements of multinational corporations looking for sustainable suppliers in Southeast Asia.
Which ESG Certification Standards Are Most Relevant In Malaysia?
Several ESG certification standards are particularly relevant in the Malaysian context. The Malaysian Sustainable Palm Oil (MSPO) certification is for the agricultural sector. For broader business applications, the FTSE4Good Bursa Malaysia Index provides a benchmark for ESG practices among listed companies.
The Malaysian Green Building Index (GBI) certification is essential for the real estate and construction sectors. International standards like ISO 14001 (Environmental Management) and ISO 26000 (Social Responsibility) are also widely recognized and valued in Malaysia.
How Is ESG Certification Maintained Over Time In Malaysia?
Maintaining ESG certification in Malaysia requires adherence to both local and international standards. Companies must submit regular sustainability reports to Bursa Malaysia if they are listed, and maintain documentation for periodic audits by certification bodies.
The process includes regular stakeholder engagement, particularly with local communities, and continuous monitoring of environmental impacts. Malaysian companies must also stay updated with evolving regulations from agencies like the Department of Environment (DOE) and the Ministry of Energy and Natural Resources.
Where Can Malaysian Companies Get ESG Certifications?
Malaysian companies can obtain ESG certifications from several key organizations:
- SIRIM QAS International is Malaysia’s leading certification body offering various sustainability certifications aligned with international standards. They can be contacted through their website or offices in major Malaysian cities.
- Bursa Malaysia provides ESG frameworks and guidelines for listed companies, including the FTSE4Good Bursa Malaysia Index certification. Companies can engage directly with Bursa Malaysia’s sustainability team.
- International Certification Bodies in Malaysia:
- Bureau Veritas Malaysia
- SGS Malaysia
- TÜV SÜD Malaysia
- DNV GL Malaysia
- Malaysian Green Technology Corporation (MGTC) offers green technology certifications and can guide companies through various sustainability certifications.
- Department of Standards Malaysia (DSM) is the national standards and accreditation body that can guide companies to appropriate certification bodies and standards.
- Professional service firms such as the Big Four accounting firms (EY, KPMG, Deloitte, PwC) have Malaysian offices offering ESG advisory and certification support. Local sustainability consultants can also help prepare companies for certification.
These organizations can provide different levels of certification depending on company size, industry, and specific ESG focus areas. Companies should first assess their needs and resources before choosing a certification path and provider.
Is ESG Training Important For Malaysian Employees?
Yes, ESG training is important for employees in Malaysian organizations pursuing or maintaining ESG certification. A well-trained workforce is fundamental to implementing and sustaining ESG initiatives effectively. Companies like Petronas, Maybank, and Top Glove have implemented comprehensive ESG training programs for employees at all levels.
This training typically covers understanding ESG principles, specific industry-relevant sustainability practices, and practical skills for implementing ESG initiatives. In Malaysia, organizations can access training through providers like the Securities Industry Development Corporation (SIDC), Malaysia Institute of Corporate Governance (MICG), and various professional bodies. The Capital Markets Malaysia (CMM) also offers specialized ESG training programs.
Many companies are now incorporating ESG modules into their onboarding processes and making regular ESG training mandatory, recognizing that employee awareness and participation are key to achieving their sustainability goals.
