by NUR HANANI AZMAN / pic by MUHD AMIN NAHARUL 

THE Securities Commission Malaysia (SC) is aiming to promote environmental, social and governance (ESG) fitness and leadership of boards, among others.

In its Corporate Governance Strategic Priorities 2021 – 2023 (CG Strategic Priorities) issued today, the SC outlined 11 targeted initiatives including onboarding programmes for directors on sustainability, investor education series on corporate governance and sustainability and expansion of collaboration with universities to deepen conversations with youth on current corporate governance and sustainability issues.

SC chairman Datuk Syed Zaid Albar said ESG readiness is no longer a matter of choice for companies as stakeholders have come to expect more responsible, sustainable and climate-conscious behaviour.

He said this expectation is going to increase over time and thus, boards need to be ESG-ready.

“Recognising the need for boards to be agile and effective as they navigate challenging and uncertain times, the SC will implement measures to improve board diversity, including accelerating the participation of women on boards and in senior management.

“Listed companies are reminded that while it will be mandatory for boards to comprise at least one woman director, boards should put in efforts to achieve the target of having 30% women directors to further harness the benefits of having a diverse board,” he said in a statement today.

Currently, only 162 listed companies have at least 30% women on their board.

The CG Strategic Priorities is an important component of the Capital Market Masterplan 3 that was launched in September 2021 to chart the path ahead for the Malaysian capital market over the next five years.

The CG Strategic Priorities builds on the SC’s previous plan for 2017 to 2020, where a 90% implementation score was achieved.

Alongside the CG Strategic Priorities, the SC also released the Corporate Governance Monitor 2021 report to highlight progress made in the adoption of the 2017 edition of the Malaysian Code on Corporate Governance (MCCG).

Adoption levels across the majority of the practices remained positive, with 24 out of the 36 best practices recording adoption levels of at least 90% (2019: 23 practices).

The lowest adoption level was for practices relating to the disclosure of senior management remuneration where only 5% of listed companies disclose the detailed remuneration of their senior management.

“Transparency on pay is critical to promote alignment between pay and performance and for shareholders to evaluate if the incentive structure is driving the right behaviour,” he concluded.