ESG environmental social governance policy for modish business to set a standard to achieve high ESG score
LET’S be honest with the conversations that are taking place in many boardrooms of Malaysian corporations. Not all but many in private grumblings.
Many of us obediently sit through the discussions of the sustainability committee because of compliance.
Some of us even whine critically why consultants are being paid exorbitantly for their reports on this subject.
Among us, there are sceptical remarks that environmental, social and governance (ESG) is a Western import.
They point out that even US President Donald Trump has openly opposed ESG and has withdrawn from the Paris Agreement, which means that the United States and its companies are no longer formally committed to limiting global warming, and face fewer regulations related to emissions and environmental standards.
Some Malaysian company owners do not see revenue and profits in the reports of the sustainability committee.
But the transformation is already under way. More and more, directors are convinced that ESG is not just a checklist driven by regulatory compliance.
Younger directors understand that for Malaysia to compete globally, thrive economically, and ensure sustainability, our businesses must believe in and champion ESG.
It is not because the law demands it, but because it is the right thing to do – ethically, economically and strategically.
ESG is not a cost centre or a burden but in reality a driver of long-term value creation.
Consumer preferences have changed dramatically. It is not just international investors who insist on backing companies with strong ESG practices but also Malaysians.
According to a report, a study revealed that eight in 10 Malaysian consumers are aware of the environmental impact of consumption on society and plan to take steps to minimise their impact.
The study was carried out by Visa, a global leader in digital payments, from its consumer payment attitudes (CPA) study in Malaysia.
There is increasing awareness of climate change, social justice issues and corporate ethics.
Increasingly, investors are asking ESG factors when making investment decisions and rightly so.
Ranstan.com.my said environmentally sustainability matters to employees more than ever before, and ESG is a key area where they are looking for alignment with their employers.
“This is especially true for younger generations, who are looking particularly interested in working for companies that are committed to sustainable business practices and social responsibility,” it said in a 2023 study.
Unlike previous generations who often compartmentalised personal values and professional obligations, Gen Z workers increasingly demand that their careers align with their convictions about environmental sustainability, social justice and corporate responsibility.
This cohort, born between 1997 and 2012, has grown up witnessing climate change, social inequality and corporate scandals unfold in real-time through digital media.
As a result, they approach job searching with a critical eye toward companies’ ESG practices. For many Gen Z professionals, a firm’s commitment to reducing carbon emissions, promoting diversity and inclusion, and maintaining ethical business practices serves as a non-negotiable criterion when evaluating potential employers.
Research consistently shows that Gen Z workers are willing to accept lower salaries in exchange for meaningful work at organisations that demonstrate genuine commitment to positive social and environmental impact.
Deloitte’s research reveals that over 40% of Gen Z and Millennials have changed jobs or sectors due to climate concerns, or plan to do so, while the Chartered Management Institute (CMI) finds that Gen Z and Millennials (44%) are more likely than Baby Boomers (30%) to say they would look for a new role if their employer did not allow staff to work remotely – demonstrating their willingness to prioritise workplace values over traditional employment stability.
They scrutinise corporate sustainability reports, diversity statistics and executive compensation ratios with the same intensity previous generations reserved for benefit packages and advancement opportunities.
Companies have taken notice of this values-driven approach to employment. Many organisations now prominently feature their ESG initiatives in recruitment materials, highlighting everything from renewable energy commitments to community volunteer programmes.
However, Gen Z’s digital nativity makes them particularly adept at identifying “purpose-washing” – superficial attempts to appear socially conscious without substantive action.
CMI says this generational shift towards purpose-driven employment is reshaping corporate culture across industries.
As Gen Z workers increasingly occupy decision-making roles, their emphasis on ESG values is likely to accelerate the business world’s transition towards more sustainable and socially responsible practices, creating a feedback loop where purposeful work becomes both a competitive advantage and a business imperative.
A CMI poll of managers in February 2025 found over four in five managers in the United Kingdom (85%) agreed that they think all managers will be required to have an understanding of net zero and sustainability.
The CMI is a UK-based prestigious professional body for management and leadership. Eight in 10 managers (80%) agree that they will benefit from having training on net zero and sustainability.
However, it is worth noting that junior managers – those earlier in their careers – are significantly more likely than senior managers, directors and owners to strongly agree that they will benefit from having training on sustainability.
The sentiments in Malaysia will not be much different from their peers in the UK.
ESG should not just be a public relations exercise or a compliance of requirements to please Bursa Malaysia.
It has to be a genuine commitment to build trust with stakeholders, investors, regulators and most importantly, the Malaysian public.
A company that self-regulates and champions sustainability is seen not just as compliant, but credible.
Climate change is no longer an abstract matter. As travellers, we have felt that how the weather has become so unpredictable and the way we pack our clothes is testimony to that.
Floods have hit Malaysia in non-monsoon periods and often, the humidity has been unbearable.
Malaysia has already experienced worsening floods, shifting agricultural patterns and rising energy costs.
To put it simply, businesses that embed climate resilience, resource efficiency and social responsibility into their core operations are better prepared for disruption – whether from nature, regulation or market shifts.
Certainly, there are also the financial impacts on ESG standards. Global financial institutions integrate ESG into lending criteria.
The cost of borrowing will be more expensive for Malaysian firms that fail to adapt, or worse, find themselves excluded entirely from lucrative funding opportunities.
But leadership matters. There have to be champions in the top hierarchy to push for the ESG agenda to believe that it is a core value, an embedded culture, a moral responsibility and opportunity. It has to be translated into corporate action and governance.
