Malaysia among global leaders in sustainability reporting — KPMG survey

Kasturi Nathan, Head of Governance and Sustainability at KPMG in Malaysia

Kasturi Nathan, Head of Governance and Sustainability at KPMG in Malaysia

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PETALING JAYA (Dec 15): Ninety-nine of the top 100 companies in Malaysia publish sustainability reports, just behind Japan (100) and ahead of other regional peers such as India (98), Taiwan (93), and Australia (92), according to the findings of a survey by KPMG.

The audit, tax and advisory services firm's International Survey of Sustainability Reporting 2020 also found that 97 of the top 100 companies in Malaysia included sustainability information in their annual reports.

“While Malaysia’s high inclusion rate of sustainability data in annual reporting is driven by Bursa Malaysia, we see this active participation from Malaysian top companies to be an encouraging sign, which sets the tone and example for other jurisdictions to follow," said Kasturi Nathan, Head of Governance and Sustainability at KPMG in Malaysia, in a statement announcing the findings.

“In fact, we’ve observed a growing understanding amongst Malaysian boards and companies on the importance of operating in a responsible manner and the impact of ESG [environmental, social and corporate governance] issues on society and economic sustainability which directly correlates to long-term financial performance and corporate value," she added.

However, she noted a few areas of improvements for Malaysian companies to focus on.

“For instance, the management of environmental matters such as water, waste, energy, air and GHG emissions is often viewed as compliance against environmental regulations. These matters are not integrated into strategy and business operations, nor identified against risks and opportunities and measured for both input and output for sustainable production and impact on financial implications,” she said.

Kasturi noted that many companies do not have a sophisticated understanding of how biodiversity-related risk could affect their business, or the tools and methodologies to help them model and disclose the risk impacts.

"The first step to address this lack is for companies to analyse to what extent their supply chains are highly dependent on nature and ecosystem services,” advised Kasturi.

“Our global survey makes it increasingly apparent that risk is the new lens through which to consider sustainability or ESG. This is especially true in the new reality as business leaders are pressured to secure long-term growth and concurrently manage the economic effects of the Covid-19 pandemic, which has not eased its grip. That said, the state and depth of sustainability reporting is encouraging, and it shows that companies have shifted from purely profit objectives to also consider their purpose in society," she concluded.

Overall, 80% of the world's 250 biggest companies now report on sustainability, while sustainability reporting in Asia Pacific has risen by six percentage points since 2017 to 84%.

The survey was conducted this year by climate change and sustainability professionals at KPMG firms. They reviewed corporate reporting from the 5,200 largest companies by revenue across 52 different countries and jurisdictions, including the world’s 250 largest companies as defined by the Fortune Global 500 ranking for 2019.

The team of professionals reviewed annual financial or integrated reports, sustainability reports, stand-alone reports and company websites published between July 1, 2019 and June 30, 2020.

Lam Jian Wyn