Rise of ESG as buzzword in Malaysia

This essay on Environmental, Social and Governance (ESG) adoption in Malaysia is going to be pretty heavy for me as I write about it for the first time in my life. Do bear with me a bit as I put my thoughts down in writing, okay? 

Environmental, Social and Governance (ESG) criteria have been around for a while globally, but they've really picked up steam in Malaysia over the past decade. I began to become fascinated with it quite recently. To understand how ESG became the latest buzzword here, let's take a look at the journey, from regulatory changes to the shifting mindset of companies and the public.

In the beginning, which was in the pre-2010 years, ESG in Malaysia was mostly lumped together with Corporate Social Responsibility (CSR). Big multi-national companies operating in Malaysia started to blend in some environmental and social concerns into their business strategies, influenced by global standards. Frameworks like the United Nations' Sustainable Development Goals (SDGs) and the Paris Agreement started shaping how businesses thought about sustainability, and this set the stage for what would later become known as ESG.

The 2010s were when things started to shift. More and more Malaysian companies began to move from traditional CSR towards a more structured ESG approach. Regulatory bodies like Bursa Malaysia and the Securities Commission Malaysia began pushing for sustainability in their guidelines. A big moment arrived in 2014 with the launch of the FTSE4Good Bursa Malaysia Index, which showcased companies that had strong ESG practices, This nudged others to follow suit.

By the late 2010s, ESG was no longer just a niche topic but had gone mainstream. Companies began to see the benefits of strong ESG practices, both for their bottom line and their reputation. Investors also started paying more attention to ESG metrics, driven by a global shift towards sustainable investing. This put pressure on companies to be more transparent and accountable.

Many Malaysian companies started aligning their sustainability reports with international standards like the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD). This not only boosted their credibility but also helped them compete on a global level.

As we moved into the 2020s, the Malaysian government doubled down on its commitment to sustainability with policies and strategic initiatives. The 12th Malaysia Plan (2021-2025) emphasised sustainable development, and this showed that the government was serious about ESG.

Public awareness of ESG issues also skyrocketed. High-profile concerns about the environment and social issues, from climate change to labour rights, were all over the news. This forced businesses to address these issues more pro-actively. Major companies, especially in finance, palm oil and manufacturing, started embedding ESG deeply into their operations. 

These were several factors driving the rise of ESG in Malaysia:

1. Regulatory: Stricter sustainability reporting requirements from Bursa Malaysia.
2. Investor Interest: A growing number of investors preferring companies with strong ESG practices.
3. Global Trends: The influence of global sustainability movements.
4. Corporate Leadership: Leading companies in Malaysia setting examples by adopting and advocating for ESG.
5. Public Concern: Increasing awareness and concern about environmental and social issues among the public.

Wrapping up, I would say that the journey of ESG from a niche idea to a mainstream practice in Malaysia showed how regulations, corporate actions and public awareness came together to create real change. By the early 2020s, ESG was firmly planted in the business world here, and this fashionable buzzword is pushing to shape a more sustainable and responsible future.