Bursa Malaysia pushes sustainability among listed issuers


BURSA Malaysia Securities Bhd will be launching a Shariah-compliant version of the FTSE4Good Bursa Malaysia Index, known as the FTSE4Good Bursa Malaysia Shariah Index, next month.

Its chairman Tan Sri Abdul Wahid Omar (picture) said this is part of Bursa Malaysia’s collaborative efforts working with financial institutions to offer sustainable financing products to public-listed companies (PLCs) that have shown interest and commitment in improving their environmental, social and governance (ESG) practices.

“This new index will comprise constituents of the FTSE4Good Bursa Malaysia Index that are Shariah compliant according to the Securities Commission Malaysia Shariah Advisory Council’s screening methodology.

“On our part here at Bursa Malaysia, we will continue to promote sustainability among our listed issuers,” he said in a keynote address at the JC3 Flagship Conference 2021 last week.

Abdul Wahid said the FTSE4Good Bursa Malaysia Index has played an essential role in recognising PLCs that have taken steps to improve their ESG practices and disclosures.

Since its launch in 2014, the number of constituents in the index has more than tripled from 24 to 76.

“The exchange has been engaging with our stakeholders to determine the need to incorporate more sustainable and responsible investment elements in the FTSE index that can better suit our local investment landscape,” he said.

Awareness and efforts to address climate change are gaining momentum in Malaysia, with a host of ongoing initiatives led by various ministries.

A climate change legal framework is still in the works and will further support the implementation of the Malaysian climate change commitments under the United Nations Framework Convention on Climate Change.

In addition, the government has put in place many different incentives to ensure Malaysia’s contract to meet its commitment under the Paris Agreement and accelerate the transition towards a more resilient and eco-safe economy.

Abdul Wahid added that over the years, investors and fund managers have increasingly relied on the value proposition of incorporating ESG considerations in asset allocation, and recognised the potential in the increasing client demand for value space investing.

He said based on a recent Deutsche Bank AG’s Global Sustainable Investment Alliance analysis, assets with an ESG mandate will reach US$160 trillion (RM665 trillion) by 2036, this would mean a close to 100% ESG integration in fund management.

Likewise, the global movement towards sustainability is also being supported by financial institutions.

“It is, therefore, important for corporations to invest in sustainability in their business. Companies that choose to ignore sustainability or ESG considerations will not be sustainable as they will be deprived of both equity and debt financing, as well as human capital talent that is necessary to drive their business,” he said.

Malaysia is expected to ramp up its climate ambitions as it has expressed its full commitment in being a key part of the global transition to low carbon and eventually carbon-neutral which is aimed to achieve by 2050.

The country has already pledged to cut national carbon emission intensity by 45% by 2030 based on 2005 levels.

Current data showed 75% of Malaysia’s annual greenhouse gas emissions are driven by the energy and transport sectors, contributing 252 million tonnes of carbon out of the total 335 million tonnes.