Environmental, Social, and Governance (ESG) principles have become integral to corporate strategies worldwide, and Malaysia is no exception. As businesses increasingly recognize the importance of sustainable practices, several Malaysian companies have emerged as leaders in integrating ESG into their operations. Among them, Ajinomoto Malaysia stands out for its commitment to sustainability, alongside other industry giants like Maybank, Press Metal Aluminium Holdings, and Sunway Construction Group. This article examines the top ESG companies in Malaysia, with a particular focus on Ajinomoto Malaysia’s initiatives, and addresses five frequently asked questions about ESG practices in the country.
The Rise of ESG in Malaysia
Malaysia’s corporate landscape has embraced ESG as a framework for balancing profitability with societal and environmental responsibility. The FTSE4Good Bursa Malaysia Index, launched in December 2014, highlights companies with strong ESG practices, requiring a minimum ESG score of 2.9 out of 5 for inclusion. As of December 2023, the index included 108 constituents, reflecting Malaysia’s growing commitment to sustainability. ESG adoption is driven by investor demand, regulatory initiatives such as the Malaysia Sustainable Finance Initiative (MSFI), and a national focus on reducing carbon emissions through policies like the Green Technology Master Plan. These efforts position Malaysian companies as leaders in ASEAN, with many outperforming regional peers in ESG metrics.
Leading ESG Companies in Malaysia
Maybank: Setting the Standard in Sustainable Finance
Maybank, Malaysia’s largest bank, is a trailblazer in ESG integration within the financial sector. It was the first Malaysian bank to launch a Sustainable Product Framework (SPF), guiding the development of green and sustainable products across corporate lending, retail financing, and wealth management. According to its 2023 Sustainability Report, Maybank mobilized RM68.48 billion in sustainable finance, nearing its 2025 target of RM80 billion. The bank’s focus on reducing carbon emissions and supporting renewable energy projects underscores its leadership in sustainable finance. Maybank’s governance structure, with clear sustainability commitments, ensures transparency and accountability, making it a benchmark for ESG excellence.
Press Metal Aluminium Holdings: Low-Carbon Innovation
Press Metal Aluminium Holdings, a leading aluminium producer, boasts an ESG score of 3.44, ranking among the best in the global aluminium industry. The company’s low carbon footprint, zero workplace injuries for two consecutive years, and transparent reporting framework underscore its commitment to ESG. By leveraging energy-efficient technologies and sustainable supply chain practices, Press Metal mitigates environmental risks while maintaining strong financial performance, with a market capitalization of RM43.42 billion as of March 2024.
Sunway Construction Group: Building a Sustainable Future
Sunway Construction Group (SunCon) holds an ESG score of 3.2, driven by initiatives like installing RM8.8 million worth of rooftop solar panels to reduce carbon emissions. The company’s focus on workplace safety has resulted in lower injury rates, while its governance structure, with 62.5% independent board members, ensures robust decision-making. SunCon’s projects, such as the Light Rail Transit 3 and Sedenak Tech Park data centre, reflect its commitment to sustainable infrastructure development, contributing to Malaysia’s green economy.
TIME dotCom: Advancing Connectivity Sustainably
TIME dotCom, an internet service provider, has an ESG score of 3.0, supported by its role in advancing Malaysia’s broadband connectivity goals. The company’s fibre optic cables require minimal maintenance and pose low emission risks, though its data centres consume significant energy. TIME dotCom’s governance practices, with 50% independent board members, and its financial health, with a net cash balance of RM282 million as of September 2022, position it as a key player in Malaysia’s ESG landscape.
Ajinomoto Malaysia: Sustainability in Food Production
Ajinomoto Malaysia, a pioneer in food seasoning since 1961, has made significant strides in ESG integration. Its new manufacturing plant in Bandar Enstek, operational since December 2022, is a model of green factory design, achieving a 1.3% reduction in electricity consumption, a 17.9% decrease in greenhouse gas emissions, and a 6.6% reduction in water usage compared to the previous year. The company reduced plastic waste by 118.51 tonnes but faced challenges with a 78.9% increase in food loss to landfill due to product testing. Ajinomoto’s alignment with the International Sustainability Standards Board (ISSB) principles ensures transparency in its sustainability reporting.
Ajinomoto Malaysia has embedded ESG risk management into its corporate strategy since 2017, establishing committees like the Sustainability Working Committee and Risk Management Committee. Its partnership with the Malaysian Recycling Alliance (MAREA) promotes circular economy principles, while initiatives like recyclable packaging and digital HR systems enhance operational sustainability. The company’s ESG roadmap, targeting 2030 goals, includes Scope 3 greenhouse gas emissions reporting and qualitative scenario analysis, reflecting a proactive approach to environmental and social responsibility.
Why ESG Matters in Malaysia
ESG adoption in Malaysia goes beyond compliance; it drives innovation and economic growth in sectors like renewable energy and sustainable agriculture. Companies embracing ESG principles benefit from enhanced investor confidence, reduced operational risks, and stronger stakeholder trust. The positive correlation between ESG performance and financial outcomes is evident, with the FTSE4Good Bursa Malaysia Index outperforming the broader FTSE Bursa Malaysia EMAS Index over three- and five-year periods. By prioritizing ESG, Malaysian companies contribute to national development goals while positioning themselves as global leaders in sustainability.
5 Frequently Asked Questions About ESG in Malaysia
1. What is ESG, and why is it important for Malaysian companies?
ESG stands for Environmental, Social, and Governance, a framework assessing a company’s impact on the environment, society, and its internal governance practices. For Malaysian companies, ESG is crucial for attracting socially conscious investors, mitigating risks such as climate change and labour issues, and aligning with national sustainability goals, including reducing greenhouse gas emissions.
2. How are ESG scores calculated for Malaysian companies?
ESG scores are calculated by independent agencies that analyze metrics such as carbon footprint, employee welfare, board diversity, and transparency. For example, the FTSE4Good Bursa Malaysia Index requires a minimum score of 2.9 out of 5, based on 14 themes across the three ESG pillars, ensuring only companies with strong practices are included.
3. What makes Ajinomoto Malaysia a leader in ESG practices?
Ajinomoto Malaysia excels in ESG through its green factory in Bandar Enstek, which reduces electricity, water, and greenhouse gas emissions. Its partnerships, such as MAREA, and initiatives, including recyclable packaging and employee training, align with circular economy principles and ISSB standards, ensuring sustainable operations and transparency.
4. How do Malaysian companies benefit from strong ESG practices?
Strong ESG practices enhance financial performance, mitigate risks such as environmental disasters or governance scandals, and bolster investor confidence. Companies like Maybank and Press Metal demonstrate that ESG leadership is correlated with long-term profitability and market resilience, as evidenced by their outperformance in the FTSE4Good Bursa Malaysia Index.
5. What role does regulation play in promoting ESG in Malaysia?
Regulations like the Malaysia Sustainable Finance Initiative and Bursa Malaysia’s sustainability reporting requirements drive ESG adoption. The Green Technology Master Plan supports carbon emission reduction, while frameworks like the Global Reporting Initiative (GRI) ensure companies report ESG performance transparently, fostering accountability.
Conclusion
Malaysia’s top ESG companies, including Maybank, Press Metal, SunCon, TIME dotCom, and Ajinomoto Malaysia, are setting benchmarks for sustainable business practices. By integrating ESG into their core strategies, these companies not only enhance their financial performance but also contribute to a sustainable future for Malaysia. Ajinomoto Malaysia’s focus on green technology, circular economy principles, and transparent governance exemplifies how businesses can thrive while prioritizing environmental and social responsibility. As ESG continues to shape Malaysia’s corporate landscape, these leaders pave the way for a resilient and ethical economy.
