PETALING JAYA, 7 November: About 97% of Malaysia’s top 100 companies (N100) include sustainability data in their annual reports, making the nation a global leader by percentage in the category, according to KPMG’s biennial survey of Sustainability Reporting 2022.
In addition, at 99%, Malaysia is one of seven Asia-Pacific countries, territories and jurisdictions that have sustainability reporting rates higher than 90%. Others include Japan (100%), Singapore (100%), South Korea (99%), Thailand (97%), Taiwan (94%) and Pakistan (91%).
The Asia-Pacific region leads in sustainability reporting, with 89% of its companies undertaking sustainability reporting.
The study also indicates a greater adoption of country stock exchange guidelines where Global Reporting Initiative or Sustainability Accounting Standards Board usage is lower. Leading adopters of stock exchange guidelines are South Africa (100%), Malaysia (95%) and India (89%).
KPMG head of sustainability advisory in Malaysia Phang Oy Cheng (pic) said the pressure on businesses to report on non-financial metrics is only expected to grow as regulations evolve.
“We should start to see some progress over the coming year as organisations such as the International Sustainability Standards Board roll out new global standards for reporting. By acting now, companies can make informed choices as a good corporate citizen to drive the positive change that their investors and customers demand,” said Phang in a statement today.
Phang added that while sustainability reporting has been largely voluntary over the past two decades, this year’s study reveal that regulation will make a difference in enabling companies to achieve solid progress in their environmental, social, and governance (ESG) ambitions and sustainability reporting.
“For example, while there has been marked improvements in companies reporting carbon reduction targets, plans remain vague, and actions are too slow to show real results. What’s needed more than ever is globally consistent standards from governments and a collective effort from the world’s major companies to report on all aspects of ESG, recognising the clear links between the environment and wider social equality issues,” she said.
Less than half of the G250 (the world's 250 largest companies by revenue based on the Fortune 500 ranking) provided reporting on social components such as modern slavery, diversity, inclusion and equity, community engagement, and labor issues, despite an increasing awareness of the link between the climate crisis and social inequality.
At the same time, less than half of companies disclosed their governance risks, for example corruption bribery and anti-corruption, anti-competitive behavior or political contributions. On average, only one third of N100 companies have a dedicated member of their leadership team responsible for sustainability and less than one-quarter of these companies link sustainability to compensation among business leadership.
ESG disclosures continue to be overwhelmingly narrative-driven, rather than publishing quantitative or financial data regarding impacts, an area of improvement for companies in Malaysia and around the world.
On a positive note, around three-quarters of reporting companies conducted materiality assessments and are disclosing material topics.
